What is Labor in Rent and Interest?

Read a related article “Reason for Interest”

The labor is waiting!

Take a look at a person who invests $5 million dollars in bank for 10 years, and he earns (at 6%) $300,000 per year, a salary good enough for a 5 years exp project manager in America. You might say, that man is not working at all, and he is living off the interest. This is no labor, but here is the thing, he is deferring his enjoyment of those $5 million dollars. He is surely getting $300,000 every year, which is a quite a large sum of money and he is surely enjoying that too, but if he uses that $5 million dollars he can do a zillion things, he can buy a big house, a big yacht, a helicopter and scores of other things. BUT he is not able to do all those thing, for next 10 years. He is simply waiting, the 5 million dollars are right now being used by someone who needs it, and using it to make more money.
He is doing the labor of waiting.

Now you may say waiting is not labor. Well lets say a girl told you that she will meet you on the bus stop, and you forgot to ask her what time, so you decide that you will stay there for the whole day on the bus stop waiting for her. But instead you ask a jobless guy standing on the bus stop wanting to go to his home. Well he would be doing your part of labor if he waits for say till 6PM from 6AM in the morning. He had to go to his home, but can’t till the wait is completed. You are not only giving him compensation for deferring his departure to his home, you are paying him for his labor of waiting.

Lemme bring common story flowed across among socialists which has a big fallacy.
The story goes like this. OF course some agitated communist wrote it to me, but I couldn’t really get the actual text of story, I am sure you might have read it.

A Capitalist owns a pair of Nike shoes. He is a fat dumbass lazy bastard. So he decides to find someone whom he can exploit with the Nike shoes. There’s a 100 metres running race happening at a place. He finds a well built talented guy who can run very well but does not have a pair of shoes. This lazy bastard decides to hire the young guy and makes him run the race with the nike shoes. The young guy wins the race and gets a hot cash prize of 10,000 bucks. The capitalist immediately takes away the 10,000 rupees from the young guy and gives him just 100 bucks. And when we Communists ask the lazy capitalist bastard “why are you getting the money while the young guy ran and won the race?” And the capitalist bastard comes up with useless senseless answers which you would be knowing or comes up with ant grasshopper story.

Capitalist Athlete

Can the readers see the fallacy in this story?
The fallacy in the story is that it ignores the labor of the Capitalist in the athlete winning the race. It presumes that somehow its the duty of the Capitalist to provide the athlete with shoes.
Lets presume Capitalist himself is a hard working runner, and with proper training he can also win the race. But his problem is the same as the athlete, he does not have the shoes to run for the race. So both the capitalist and the athlete decide that the capitalist is going to use his time and resources to make the shoes for the athlete who will train himself and then run in the race, and once he wins the race they both are going to share the prize money.
My question is, do you now see the labor of the Capitalist? The capitalist didn’t run in the race, but he could have, in face he contributed in the athlete’s victory, by spending his time in doing something in which he is more proficient at, i.e. making shoes.

Lets see another scenario, lets say a trainer trains an athlete for a race. Trainer demands 50% of the prize money once athlete wins the race. Do you think the demand of the trainer is justified? If yes then the capitalist who provides shoes to the athlete is also justified in his demand. Its because of HIS shoes which enables athlete to win such a race, its because of HIS labor in the shoes that now athlete can win this race. There is no exploitation as long as athlete is free to reject the deal.

Now about the issue of Capitalist leaving only Rs 100 for the athlete and taking Rs 10,000/- with him, then we will have to look at some auxiliary conclusion we can derive from the example. First of all, the athlete and capitalist both must have agreed upon the prize money distribution, and if the athlete agreed upon such a deal it simply means that the marginal utility of Athlete’s labor was very little to the Capitalist and he could have gone to any other athlete and given him the shoes and have him win. If the athlete was irreplaceable, and still the capitalist insisted on such a deal, then the athlete could have gone to some other capitalist who would supply him with shoes and give him a better deal. Since the athlete did not go to any other capitalist that means there were no other capitalists available to supply him with shoes and since the deal really took place means Capitalist was in the position to replace the athlete with any other person.

So this means that irrespective of the fact that it was athlete who ran, without the Capitalist’s labor he couldn’t have won the race. Any other participant could have won the race using his shoes. That simply means that it was a win-win situation for both of them. The capitalist was irreplaceable to the athlete, and the athlete was easily replaceable to the capitalist. Therefore this 1:100 distribution of the prize money is perfectly justifiable.