He Who Does Not Work

My wife is suspicious of my indolent ways. I have to remind her that I'm making more money from my capital than she is from her labor, and even then she does not get it.

She cannot help thinking that he who does not work shall not eat. How is it that I can make money while doing nothing? Doesn't this amount to pure speculation or exploitation?

My wife is stuck in the dominant mindset of our time, the idea that labor is the only true measure of value, and that anyone not working is a parasite on everyone else. However, this idea is nonsense. It misses a central point which is the value of capital.

If I set up a fully automated garden that routinely produced enough food to provide the entire neighborhood with food, I would be entirely right to take it easy. Why should I labor when production is ensured?

This is the essence of capitalism. It is not labor that is the main contributor to the creation of value. It is capital. Labor has at times nothing to do with it. In fact, labor is often destructive.

A distant relative of mine was once a billionaire. His company is now bankrupt thanks to too much activity on his part. If he had sold everything at the peak, and put the money in gold, index funds and real estate, he would have saved himself a fortune.

He would also have saved a large number of people from engaging in futile activities. Not only was his own labor wasteful and destructive, so was the labor of everyone else involved in the failed venture.

My distant relative was a victim of the same mindset that has confused my wife. He was convinced that value was connected to his labor. This is the only way I can explain his irrational behavior. Why else didn't he cash out when he was rich enough to maintain an opulent lifestyle for generations to come?

It is easy to scoff at this as "easy come easy go". However, there is a huge loss to society as a result of this. Precious resources were squandered. We would have all been better off if he had taken his profits, especially if the new owners would have unwound the operation while it was still making a profit.

The capitalist, as he is portrayed in popular culture is a busy man. He is somehow endowed with a fantastic mind, able to produce vastly more value than us mere mortals. This is pure nonsense, and very destructive to boot. The capitalist is not rich because of his labor or his fine mind. He is rich because of his capital.

By Pi3.124 - Own work, CC BY-SA 4.0, Link