The essay is about how to make wealth, not capture it. Know the difference.

The importance of capture is skimmed over a bit too much in pg's essay, in my opinion. He writes "for much of human history... the only ways to acquire [wealth] rapidly [was] by inheritance, marriage, conquest, or confiscation. Naturally wealth had a bad reputation."

Wealth-by-confiscation is far from dead, and is in fact alive and kicking. Excepting the government, no one can print money; hence, the only way to get it is from other people, who don't part with it willingly. The separation of others from their money is the real business, and those who specialize in it or aid others in it (salesmen, advertisers [Google, Facebook], lawyers, marketers, those who provide marketplaces [Amazon, eBay, Viaweb], payment facilitators [PayPal, banks]) will find themselves much better paid than those who "merely" create wealth. The same is true for those who guard wealth against those who would take it: tax accountants, lawyers, security system vendors (one of the more lucrative jobs in my town is sales for a security systems company---double whammy), and defense contractors (on a national level).

Today I threw a kill switch on work I'd done for a client that was seemingly impervious to invoices. In two hours I had an email titled "Urgent Matter," and two hours later I had a check in hand (five minutes later the client's software was working just fine again, if you're curious).

So while I would much prefer to think of myself as a developer, today I got paid for being an extortioner instead.

Marx's take on the labor theory of value doesn't argue that everyone is compensated according to the labor they put in. In fact his whole point is sort of the opposite, closer to yours, arguing that workers are not typically able to capture as income the value of the labor they produce, and in fact it's quite possible to produce a lot of value and get nothing out of it, depending on the way your labor is used within modern capital.

But the labor theory of value is still bunk. It's not just a matter of capture. 8 hours of digging a ditch with a shovel is more exhausting and creates less wealth than 8 hours of digging the same ditch with an excavator. 8 hours of programming Microsoft Excel creates more value for humanity than 80 hours of programming Duke Nukem Forever. Hard work can sometimes be directly proportional to wealth created, but only if everything else is equal, which it never is.

8 hours of ditch digging with an excavator does not represent a total of 8 hours labour time — there is a vast amount of labour embodied in the machine: its design, the extraction of the materials, the construction, the transportation, the extraction, refinement and transportation of the fuel and so on.

Thanks! I guess my first example wasn't very well thought out. (It probably still works, though: a mini-excavator costs about as much per day as five humans with shovels earning minimum wage, and should be way more efficient at tasks like digging up asphalt.) Maybe a better demonstration would be digging with shovels vs spoons.

If we consider the end product to be "the hole that is dug," then its value is composed of all the labor that went into it. However, we have to consider 2 additional things:

1. Marx says that this must be the "socially necessary" labor; that is, the labor required on average to dig a hole. In an area where mini-excavators are available, this would probably be factored in as capital input for digging holes. 2. Marx says that value is constantly changing, such as due to changes in efficiency (mini-excavators).

As such, Marx would agree that there is a difference between using an excavator and using a bunch of people, whether they have shovels or spoons (and shovels vs spoons would be a difference in capital input, also). Furthermore, this increase in efficiency causes the value of the hole to decrease, which is why you'd probably just rent an excavator as opposed to having a bunch of people try and dig through asphalt.

To return to your example of Excel vs DNF, consider the following from Capital: "The value of a commodity, therefore, varies directly as the quantity, and inversely as the productiveness, of the labor incorporated in it." While spreadsheet programs and first person shooters are different commodities, I think we can all agree that DNF did not receive the most productive labor! On the other hand, the excavator both decreases the labor involved and increases productivity. Yes, the excavator had to be designed and built, which required labor, but even with that the labor savings over time for a reproducible capital input are greater than if we had every hole in the world being dug by groups of people.

In terms of "wealth creation," Marx notes that there is a difference between the value of a commodity in use (its utility) and the value of a commodity in trade, and that these values are generally not the same. That is why Marx talks about labor in the first place: if utility is not the connecting factor whereby different commodities are traded for one another, then what connects them? He claims that the only thing left outside of utility (a commodities physical properties) is the labor input involved.

I've always found arguments about fixed-pie vs. variable interesting. Let's assume that each person has a limited potential value they can create. We'll all die at some point (unless the singularity is near) and we can boost our potential limit with things like technology, education, bio-tech, etc. But, in the end, each person has a limit to the value they can create. You could also argue that when people collaborate they can increase their potential yet again but there are limits.

If there are limits to the total potential a person can create then I would argue that fixing up a car in your yard is creating value but it is only the difference between what your true potential value contribution is and what you're actually doing (i.e. watching TV instead).

To me, it seems like the only way the pie gets bigger is through population growth or the multipliers I described earlier (tech, education). I would argue that although in the long term wealth is growing, in the short term it acts very much like a fixed-pie game. If the richest 1% are capturing wealth >= the rate of increase in the pie then those who aren't capturing it feel as though things are fixed and they are losing out.

PG also goes on to say it's not just hard-work. But hard-work AND leverage. Leverage being making decisions that have an impact.

I was reading through Hackers and Painters just yesterday and I did read this very essay then. I'm not sure if the above concept was part of this essay or any other that I might have read then.