Earlier this month, Sylvain Charlebois—known online as The Food Professor—posted on Twitter about how requiring companies to drives up retail prices.
I quotetweeted his post, pointing out that profit also drives up costs.
He did not like that too much and decided to build a strawman, claiming that profit creates jobs.
It is a strawman because I never claimed whether profit was good or bad, just that it adds to retail prices. In fact, profit itself is not a problem, but rather who has access to those profits.
So, I decided to respond to his claim, pointing out that profits do not actually create jobs.
No business owner decided to create jobs because they have profits. At least not exclusively. If they do have profit and hire more workers, it is because there is increased demand to justify the increase production that will come from hiring more workers.
Without that increased demand, business owners will spend money on hiring more workers. They will see it as a foolish allocation of resources.
Why would a business owner increase labour costs by, say, and extra $40,000 a year if it will not increase sales by an extra $40,000 a year?
So, if demand, not profit, creates jobs, then where does that demand come from?
Well, it comes from the rest of the working class. Every time they buy groceries or gas or smartphones, they create demand. Every time they pay rent or buy a house, they create demand. Every time they visit the dentist or hire a lawyer, they create demand.
And the vast majority of the population belongs to the working class, not the owning class.
As a result, the working class—not profit—drives job creation.
Not only that, but profit is derived from worker labour.
Profit is, in its basic form, revenue minus expenses. The revenue a company brings in comes from the products and services the company sells to its customers (who, once again, are primarily working class).
If a company brings more in revenue than it spends to make the products and services it sells, then it runs a profit. And one of the things it spends on—often the most expensive thing it spends on—is labour.
If a chair company, for examples, has no workers, then it has a pile of lumber. Worker labour converts that pile of lumber into the chairs. Worker labour converts a $100 pile of lumber into a set of $500 chairs.
But the entire point of the private ownership and control of the means of production is to divert surplus labour value into private hands. Surplus labour value is the value of a product after you pay your worker to build that product.
If a worker converts $100 worth of lumber into $500 worth of chairs and is paid $250 to do so, then the surplus labour value is $150 ($500-$100-$250).
Without the worker labour, that surplus labour value would not exist, and the business owner would not have profit to pocket.
So, not only does the working class create jobs, but it also creates profit.
As I said in my final tweet, without the working class, the entire economy would collapse.
