You're a cobbler, and on a good day you can cobble together $40 worth of leather into a $60 pair of shoes every hour. That means you are making $20 profit every hour. This is post-taxes, because we live in a libertarian wonderland now and taxes are a thing of the past.
The capitalist can supply the raw materials and pay them $10/hr, so that the capitalist makes $10 profit.
At first it might seem like the capitalist has the shittier gig, right? WRONG. Check this out.
After a while of exploiting his worker, the capitalist will have enough money to buy two sets of raw materials at once, and then hire two workers to construct shoes for him. Now he's making $20 profit every hour, and will be able to afford a third employee is half the amount of time as it took to get his second employee.
Now, you, the cobbler, see this happening and want to try it for yourself. So you spend a few weeks eschewing the almond milk caramel frapachinos every day, and soon you've got enough money to buy two sets of leather raw materials too. You go an do that, and then things start to get kind of confusing (lets just say you're not the brightest cobbler in town), you saw the capitalist hire two workers, so you go and construct two sets of shoes, which takes two hours, and you realize you're still just making $20 profit an hour. An idea pops into your head, "Eureka!" you guy and buy two sets of leather supplies again, an d this time you use both sets to build a set of a shoes, but those shoes turn out to be REALLY big, far too big for anyone to wear. Now you're out $80 raw materials, have no cash on hand left, so you sigh and sign up for a job at the capitalist's factory, where you'll only be making half of what your used to make.
The moral of the story is that regular everyday normal working people and more or less limited by a linear rate of profit.. On the other hand, fat cat ghouls like the capitalist can keep hiring more and more workers as their profits get larger and larger. In an idealized setting, the capitalist is only limited by an exponential rate of profit. No matter how hard the worker works, they will never have anywhere close to the amount of money the capitalist has, because their relationships with money are fundamentally different. Undisturbed, wealth inequality will grow in a n unbounded fashion until the gini index looks like an ideal laughter laffer curve.
To keep the metaphors dumb, because the Capitalist Boss can hire another employee to increase output, instead you the lone shoemaker, having to either work harder to make more shoes per hour to increase your margins, or use cheaper materials, realize you can't increase the amount of money you can make in the same way.
Because the capitalist didnt make his money skimming off of one person's work. It's everyone involved in the making of the shoes. Or Coats. The Capitalist didn't add $19.90 to the cost of the making of a coat. The coat, by the rules of Liberal Economics, should cost $30.10 because of the amount of work that went into it.
I usually also suppliment with this example.
You're a cobbler, and on a good day you can cobble together $40 worth of leather into a $60 pair of shoes every hour. That means you are making $20 profit every hour. This is post-taxes, because we live in a libertarian wonderland now and taxes are a thing of the past.
The capitalist can supply the raw materials and pay them $10/hr, so that the capitalist makes $10 profit.
At first it might seem like the capitalist has the shittier gig, right? WRONG. Check this out.
After a while of exploiting his worker, the capitalist will have enough money to buy two sets of raw materials at once, and then hire two workers to construct shoes for him. Now he's making $20 profit every hour, and will be able to afford a third employee is half the amount of time as it took to get his second employee.
Now, you, the cobbler, see this happening and want to try it for yourself. So you spend a few weeks eschewing the almond milk caramel frapachinos every day, and soon you've got enough money to buy two sets of leather raw materials too. You go an do that, and then things start to get kind of confusing (lets just say you're not the brightest cobbler in town), you saw the capitalist hire two workers, so you go and construct two sets of shoes, which takes two hours, and you realize you're still just making $20 profit an hour. An idea pops into your head, "Eureka!" you guy and buy two sets of leather supplies again, an d this time you use both sets to build a set of a shoes, but those shoes turn out to be REALLY big, far too big for anyone to wear. Now you're out $80 raw materials, have no cash on hand left, so you sigh and sign up for a job at the capitalist's factory, where you'll only be making half of what your used to make.
The moral of the story is that regular everyday normal working people and more or less limited by a linear rate of profit.. On the other hand, fat cat ghouls like the capitalist can keep hiring more and more workers as their profits get larger and larger. In an idealized setting, the capitalist is only limited by an exponential rate of profit. No matter how hard the worker works, they will never have anywhere close to the amount of money the capitalist has, because their relationships with money are fundamentally different. Undisturbed, wealth inequality will grow in a n unbounded fashion until the gini index looks like an ideal
laughterlaffer curve.To keep the metaphors dumb, because the Capitalist Boss can hire another employee to increase output, instead you the lone shoemaker, having to either work harder to make more shoes per hour to increase your margins, or use cheaper materials, realize you can't increase the amount of money you can make in the same way.
Because the capitalist didnt make his money skimming off of one person's work. It's everyone involved in the making of the shoes. Or Coats. The Capitalist didn't add $19.90 to the cost of the making of a coat. The coat, by the rules of Liberal Economics, should cost $30.10 because of the amount of work that went into it.