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0 pointsanovikov6y ago0 comments

But owning capital comes about when you have a competitive advantage. Basically, if you make some profit but can't sell your company, you are just working your ass off: it's a job (say a typical software dev agency is). With maybe a modest premium for risks. Goal and only point of business is exactly rent-seeking, this is what capitalism is: profit you get on a capital is rent.

And yes, rent isn't value-creating. You created value when you well, created that capital which gives you rent. Value is the capital, not rent. Then yeah, you just sit on your ass and milk it, or just sell. Every capital is a monetary expression of the value of the unfair, rent-creating advantage you got. There's nothing wrong with that.

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RhysU6y ago

> And yes, rent isn't value-creating.

Some rents create value.

Say that I am a construction company and I need a huuuuge crane to complete a building. I can borrow money to buy the crane (rent goes to the person who lent me capital) or I can lease the crane (rent goes to the person who lent me capital in the form of a crane). Either way, no rent no new building. Someone values the building otherwise I wouldn't be building it. Hence, rent creates value.

Suppose I am a working stiff and I need a huuuuge house to raise a family. I can borrow money to buy a house (rent goes to the person who lent me capital) or I can lease a house (rent goes to the person who lent me capital in the form of a house). Either way, no living space no family. I value my family otherwise I wouldn't be building it. Hence, rent creates value.

clairity6y ago

no, you're confusing (and trying to redefine) basic economic concepts that are generally well-understood and well-defined by economists (particularly you're conflating profits with rents[0]).

by definition, profits are rewards for productive use of capital, while rent is the income gained from simply having capital.

some lazy and greedy market participants (e.g., plutocrats) contrive to rent-seek, but capitalism (and economics in general) considers such a misallocation of resources the worst kind of economic sin. so yes, there is something wrong with that.

capitalism expects such situations to be short-lived, as compeition drives such profits to zero. if that doesn't happen, then the market is distorted (by some expression of power).

[0] "The word 'rent'... [refers] to Adam Smith's division of incomes into profit, wage, and rent." - https://en.wikipedia.org/wiki/Rent-seeking#Description

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