This is a really good question, and there isn’t a clear answer. I’m only answering this from the left point of view though, so take it with a pinch of salt.

Traditional labor theory can make arguments for both, if you put in most of the work, then you deserve most of the benefits. However the case for equal pay is also solid, especially if the fruits of labor are abundant. How much does 5 million give you that 1 million doesn’t, and why shouldn’t you settle for 1 million if it means everyone would get more?

But from a leftist perspective there is a fault in the question (but it is still a good question). Namely that you sell the business. In an ideal left world, you wouldn’t do that. The business belongs to the workers. If the workers can all form a consensus that it is time to leave the business and sell it to another set of workers—those that leave will be bought out basically—then this is a valid scenario. However if under a new leadership, some workers are receiving more benefits then others, then that is exploitation. I would say actually that the new leadership is exploiting their previous workforce by spending the money the workers created by buying a new business without their consent.

So in short, you as the founder of the business that was bought, are enabling exploitation by selling it to a larger organization (unless you sell it to a worker owned and operated business).

Workers can bank their paychecks and walk away at any time. They would deserve more of the benefits if they bore more of the risks of failure, like investors are doing.

Yes, as a leftist, I’m not a believer in that. I’m of the opinion that the supposed risk that investors take is overstated. The average investor is quite wealthy compared to most workers, and can afford to loose a bunch of that money without it causing significant harm, even leaving the investor still significantly wealthier then the worker. On top of that, many investors have insurance, or a wide portfolio of low risk stocks, guaranteeing them continued exploitation without risking much.

Compare this to a worker, most of whom can’t afford to go without paychecks for a single month. Meaning that the loss of a job is far riskier then the investor’s supposed risk of loosing their investment.

This transaction between an investor and a worker (if you look at it as a transaction) is always biased significantly towards the investor, they will grab proportionally more of the profit and tank less of the loss. So I would say the average worker is both risking a lot more and reaping less of the benefits.

I agree that investors self-select partly by their ability to weather losses, which is why workers tend to trade away speculative upside for the certainty of wages now. But investors need a reason to take on risk, we need to steer more resources under the guidance of the most successful of the competing decision makers, and profit solves those problems.

Argument for the meme:

Labor unions don't challenge the core structure of capitalism; even when they're working, they mostly serve to give a slightly bigger piece of the pie to workers. And in practice, they are hijacked by a certain bureaucratic caste that mostly optimizes for stability and self perpetuation. They become integrated with state sponsorship, which will never allow for substantive change. For instance, in the USA the general strike was a powerful tool in the arsenal of workers' power and drove substantial wage gains, but disrupted capital too much and as such is banned by the NLRB. Since unions' scope is limited to accounting, law, and mediation, they become mostly administrative organizations staffed increasingly by members of the professional services class. These people can never provide leadership that primarily serves the working class, as their economic interests diverge and they can't do anything that would threaten their social good standing.

Argument against:

An economy dominated by worker co-ops is just wishful thinking. We have no idea how to get from point A to B, and no idea if it would even work. The limited evidence we have for that kind of economic structure comes from post WW2 Yugoslavia and suggests it wouldn't ("they just didn't do it right!" invites the question of how we do do it right). Conventional unions do shift some of the capital pie to workers, and we shouldn't let a very hypothetical best be the enemy of the concrete good. And even if worker co-ops are the ideal, any path that gets us there requires more worker power, so stronger unions would be a good first step to getting us to that point.

Nothing is stopping anyone from forming a worker coop in the US. Yet few do. Have you ever considered this?

I have, yes, and I've gone as far as finding friends and former colleagues who would be interested in joining me. Unfortunately health insurance is tied to employment in this country and we all have families. The uncertainty in that regard leaves it a non-starter for people in our situation. At least for the time being.

I'm not sure I follow on how that would stop you from forming a worker co-op. Almost all businesses who have full time employees pay for health insurance. Are you implying a co-op would make less revenue and therefore could not provide its employees insurance?

Businesses get way different insurance rates than a single individual (or 12 individuals). It costs me $240 a month for full health coverage ($1000 deductible), dentistry, and eye from my current employer; for me to get something equivalent outside this company would cost me $3,000 to $5,000 a month. I can't afford that plus rent, plus energy, plus food.

Not all businesses are equal, not all benefits are equal.

When I worked in a call center the only insurance that wasn't pure garbage cost me $300 a paycheck.

Sorry but it's expensive being poor in America.

Have you ever tried to start a business? Myself and five of my friends simply can't afford that level of health insurance, even with our resources pooled together.

Just because you say the word "business" doesn't make insurance cheaper for small players.

1) That was a statement of arguments about whether or not a worker co-op driven economy is superior to labor unions, from a pro-labor perspective. Stating an argument doesn't mean endorsement of it; that's the entire point of steel manning.

2) To the extent I buy either argument, I don't think it's subtle that my sympathies lie with the criticisms of an economy of worker driven co-ops.

A highly successful worker coop leads to a bunch of people with comfortable lives and steady jobs.

A highly successful privately owned company leads to a handful of people with a ton of money and free time, which they can use to found other privately owned companies.

At least with startups, are most founded by affluent people with free capital and time, or by those who sign a deal with VC? Afaik YC founders aren't thousands of bored millionaires, they're average middle class people with a college degree who quit their jobs to live on their seed investment for a few years, and share the spoils in the end with their employees and investors if the project succeeds.

Can you get away without initial starting capital if your startup has a very low chance of success? You need someone to be willing to eat the 99% risk of failure in exchange for proportionally high returns.

I imagine the same problem is much ameliorated if you were opening a pizza shop, a daycare, or a hair salon, where the business is more predictable?

Also, in favor of point b, both can coexist, the same way that TV did not entirely eliminate the radio.

I forgot I posted this comment so just seeing this but as an upper middle class lefty tech worker I'll offer an answer.

I think your question is a bit too focused on the individual and not the system. I think it's actually difficult for founders to share the upside "equitably", whatever that means. Like, are there any examples of it actually happening? I suspect that the acquiring company frequently dictates terms that won't allow you to make every employee a millionaire because then what incentive do they have to work anymore. I think once you get to the multi billion dollar level of wealth it's difficult to get objective advice - many of the people surrounding you are just trying to please you to continue getting their slice of the vast wealth that you control. So just as a human it's hard to navigate that I think (this is me being sympathetic to billionaires, which I'm generally not).

The much easier answer to me is just much higher taxes on wealth. Capitalism is not a system built to share resources equitably, but inequality can be tamed through taxes. If you as a founder see most of the upside, fine, but a lot of it will get redistributed to society through taxes, and theoretically your workers benefit from that. It also means it's not up to the whims of the individual people or companies involved in something like an acquisition to try to make it equitable.

(another way inequality in capitalism can be tamed is through unions, but I don't know if there are any examples of unions being involved in something like an acquisition or IPO in tech)

Yes

The traditional view is that "The workers control the means of production".

Suppose you built a successful small company but, suddenly, every employee quit at once. Could your business carry on the next day? Could it survive until you hired and trained replacements?

If the answer is "no" then you have made the case that employees both deserve to share in the business's success and will probably be incentivised by co-owning the company.

Does the janitor deserve as much of the profits as the CTO? Well, what premium do you put on your other employees not getting sick, or injuring themselves?

(Wasn't there a case where a Google chef made a fortune from stocks? Much to the chagrin of some?)

The opposite argument is that those who risk capital are the only ones who deserve the reward. Without investment, a company can't launch or grow. Workers are an operational cost - they are paid for labour and no more deserving of reward than the electricity company. Both provide a service but neither takes a risk.

Can you build a house without a carpenter? If not, is he entitled to a part of your house even though you paid him to build it?

I would say that, yes, a carpenter is entitled to a share of the profits. They used their labour to build something which appreciates in value.

Traditionally, it has been too hard to track fractional ownership of an asset and calculate a share of profits. And most workers prefer cash up front rather than waiting for a payday which might not materialise for decades.

I'm not going to go full blockchain/NFT on this idea. But it is easy to see how in the future a long-lived guild of tradespeople could build your house at a discounted price now in return for a share of the sale profits in the future.

I don't know if that's a good or bad thing though.

And if the house depreciates, should the carpenter then help him with the mortgage payments?

No. The carpenter is entitled to pay for his work.

He's not entitled to additional value the recipient of the work may or may not get from him completing the job, unless he negotiates that up front. It seems likely that no one in their right mind would agree to pay the carpenter profit sharing for every transaction that may occur from that building. They'd find another carpenter.

Could you make the argument that the carpenter should be given the option to be paid in equity or in cash, if both parties agree to it? Is there any argument against giving people the option to choose the sort of compensation risk profile that works best for their individual situation?

This is a silly question, so silly in fact that I suspect it is only intended as reductio ad absurdum (which can be a fallacy if based on a false or inadequate premise).

A carpenter is entitled to the fruits of their labor, which can adequately be provided with money.

>> This is a silly question, so silly in fact that I suspect it is only intended as reductio ad absurdum (which can be a fallacy if based on a false or inadequate premise).

I commend you for knowing logical fallacies. Though it would be even better if you were able to demonstrate those fallacies instead appealing to your own authority.

>> A carpenter is entitled to the fruits of their labor, which can adequately be provided with money.

I agree. Unfortunately, some people here claim developers working for google are entitled to their share of google's profits and carpenters working for said developers are not entitled to a share of profits from what those developers earn.

There are plenty of examples of Reductio ad absurdum being a fallacy because of a false or inadequate premise. Zeno’s paradox[1] being a famous one. The false premise being that you can actually add infinite number of times (modern mathematics take the limit as n approaches infinity).

Here the prime candidate for the premise being wrong is to equate the work of carpenter working in their own enterprise at a project, to that of a google worker, working at Google’s enterprise for any project their management tells them to.

The former gets the fruit of their labor in full when the job is finished and paid for, the latter is suffering from a systematic exploitation as each time the stock goes up in price (or when dividends are issued) the shareholders get the fruits of the worker’s labor, as opposed to the workers them selves.

1: https://en.wikipedia.org/wiki/Zeno%27s_paradoxes

>> The former gets the fruit of their labor in full when the job is finished and paid for, the latter is suffering from a systematic exploitation as each time the stock goes up in price (or when dividends are issued) the shareholders get the fruits of the worker’s labor, as opposed to the workers them selves.

This is a bit hard to parse. Isn't the developer's work also paid for after each unit of time served. And why exactly is the developer being systematically exploited every time the stock price increases and the carpenter is not if the house appreciates? Doesn't the developer literally live in the fruits of carpenter's labor?

The difference here is in control. The carpenter has full control on which task they take, whereas the developer hasn’t. A developer is forced to work at a bad product that they know is gonna fail, but the carpenter can refuse to take on a job that they know is gonna cost them more then the customer is willing to pay. For the developer, after their project inevitably fails, it will probably cost them their job, despite the failure not being their fault. Given the option, the developer would have voted against the project, the carpenter can simply refuse it. Upper management usually never takes the responsibility of failure, opting instead to mass layoffs. Shifting the cost of failures onto their exploited workers.

Instead of looking at the house the carpenter builds, look at the carpenter as an enterprise. If the carpenter grows in skill, and is able to take on more complicated jobs, they are able to charge more. The carpenter’s enterprise grows in value, which means more pay for the carpenter them self.

This is not true of the developer. The developer might be able to demand more pay, but they are at the mercy of their upper management to relay that to the owners of the business, who might see more value in exploiting the worker for more profit for them selves. Being able to collectively bargain through a union the developer might approach the freedom of their enterprise as the carpenter, but it is still not nearly the same level as if they had direct control of the business, like the carpenter does.

If the carpenter is poor and has mouths to feed, he can't pass the task even if he knows it will fail. He needs money. On the other hand google's developer has earned so much money the previous year, he can then quit any time he wants and get a new job with ease. To me it looks like the carpenter is the exploited one.

> This is not true of the developer. The developer might be able to demand more pay, but they are at the mercy of their upper management to relay that to the owners of the business, who might see more value in exploiting the worker for more profit for them selves.

A typical developer at Google makes $200k-$500k. That was enough for me, I didn't feel exploited, so don't come here and tell me that I should feel exploited, I'm sure that even Marx would agree with me that such a huge salary is fair.

Please note that exploitation here is a technical term from marxism and should not be confused with how this word is commonly used in english as a synonym for oppression. In my native language of Icelandic there is a much nicer word arðrán which literally means “dividend burglary”, “profit burglary” or “stealing the fruits of your labor”. It doesn’t matter how much you personally makes, if someone else is taking money that someone else worked for, that is exploitation of labor.

I hope that clears things out.

https://en.wikipedia.org/wiki/Exploitation_of_labour

I didn't work for the money others were paid, I was paid the fruits of my labour, others was paid theirs, thinking that I would be worth more than I was paid is just hubris. Then after having worked a few years, getting 25% pay raises every year, I quit and can now easily work on my own projects because I made ridiculous amounts of money.

You might not feel exploited, and maybe you personally weren’t. But collectively you and your coworkers were, or at the very least, you and your coworkers were used to enable exploitation of other workers—within Google, or through Google’s third parties. The only way a shareholder of Google can make money off of Google without contributing any work is by exploiting people that do the work. In the context of distributing the wealth a company creates, who gets what is a zero sum game. And if shareholders are making money without working for it, it must be through exploitation. And given the power dynamics at play. It is the workers that are exploited. If not Google’s own workers, then the workers of the companies that are Google’s paying customers.

The Google founders did a lot of work initially. And then, my job was enabled thanks to that work and the investments.

Your point only works if the company is stable and the work is keeping that company running, but Google has expanded exponentially every year, it hasn't reached the stable rent seeking stage yet. All those profits were reinvested in the form of salaries and jobs, if those went to the early workers then I'd never have gotten a job there and I'd have to live with a much much smaller salary. Stable rent seeking businesses are a problem, yes, that is the bad kind, but modern tech is too young for companies to have reached that stage.

So with your model I'd have made less money, that isn't good for me. Your model only works momentarily, when you stop growing the company and suddenly start to pay everything to current workers. But all the future workers whose jobs were enabled by those reinvestments would then be worse off, and I'd be one of those workers since I joined close to two decades after Google was founded. By the time I left there were twice as many people working there, their salaries were paid by the labour done by the previous workers, and Google barely pays profits so far so most of this actually went back to the workers, just future workers and not current ones, that is why I can't say that I deserve more than I got, I paid it forward as thanks for those who made my job possible.

Edit: And about unions, did you know that Google also operates in countries with strong unions? I joined the company in one of those. And you know, Google started paying me much more when I moved from that country to a country where unions weren't strong? How is this possible if those strong unions would make me get more? So apparently unions don't make these jobs pay more, in my experience it is the opposite, they didn't even manage to get my salary up to par with my non union co-workers. Unions mostly cares about the median, they don't care about high end workers that already makes a lot, unions aren't for me.

With this kind of logic, you could then just as easily say the workers of google are exploiting the shareholder's capital to profit as they didn't bring any of their own with them. Just as soon as things will go bad for google, all the developers will find another jobs and shareholders will be left suffering the losses.

In most cases, they do co-own the company, through stock and options grants. Particularly so for the early employees who are not replaceable.

At Google's scale, everyone is replaceable, including Jeff Dean, Sundar Pichai, and everyone else who you think is "instrumental."

I imagine the steelman version of the argument here is: yes, they do own part of the company, that portion of upside and control is so minuscule that it's almost insignificant. And thus we're back to needing unions to advocating on behalf of workers so that they get to own a bigger slice of the pie.

Neither view will do.

The company can't succeed without the workers. The company also can't succeed without capital. Both deserve to get a cut of the rewards.

This neglects the reality that loans exist. In an ideal leftist world your local credit union redistributes wealth by collecting pepole’s savings from the community and hands them out as loans for slightly higher interest rate. That interest rate is the “cut” of the rewards. If an enterprise goes bankrupt and is unable to pay back the loan, there is usually some kind of insurance the credit union has to prevent going under with it.

That sounds like a world in which everyone ends up worse off. Maybe it’s more equal, but I value standard of living and opportunity more than equal outcomes.

Exactly.

That's the traditional Marxist view. It is not the traditional view.