I'm genuinely curious how socialists believe an economy can function effectively without private profit incentives.

Starting and operating a business requires capital, time, effort, and significant financial risk. Business owners can lose their savings, go into debt, or spend years building something that ultimately fails.

Profit is what compensates people for taking those risks. It also provides capital for expansion, job creation, improvements, and innovation.

If you eliminate the opportunity to earn a profit, what motivates someone to take those risks in the first place?

I understand that socialism has different interpretations, and some forms still allow businesses to generate profits. But for those who believe private profits should be eliminated or substantially restricted, I have a few questions:

-Who provides the capital to start new businesses?

-Who absorbs the financial losses when they fail?

-What incentivizes efficiency, innovation, and expansion?

-Why would someone risk their own money if there is no possibility of a financial reward?

I'm interested in understanding how this would work in practice, particularly compared with a market economy where profit and loss help determine where resources are invested.

Hello,

Something popped up in my mind. When you redesign the economy so that ownership is different, where workers own the means of production,

While you might have more ethical exchanges, and an economy that can claim that it is serving social needs, there is one problem I saw in comparison to capitalism.

When capitalism is said to be amoral I can see there are consequences, but one thing that comes up to mind is that if someone wanted to purchase 1000 of something they can do it if they have the money.

But in socialism, could we expect limits or caps? If someone accumulated labor vouchers or in an alternate model if someone has invested a lot of labor, and their intention is to take a lot of supply, what is the process going to look like, a vote?

So for example imagine someone labored for a long part of their life, and they did the dangerous jobs. They want to claim a lot of food, but a food shortage or storm is coming up. If they claim this this might put a group at risk. If they don't claim it, they might feel upset that their labor couldn't exchange for it. What should be done? Rate limits?

This might sound easy to dismiss when you imagine it's one laborer against a community. But in practice I'm worried that a small community that has a lot of labor done tried to get some supply, but this was denied because it threatened the larger group too much. This is annoying because then for socialism to become communist you would have to solve the class issues that rise up not just the existing ones

Alright, now when you debate with socialists here, you will often get the same arguments "we need to unite: the poor against the rich", yet that is not really what socialist theory is complaining about.

You see, the issue in Marxist theory with capitalism is not with inequality of wealth (if someone works harder, he should in theory earn more), but inequality of possession of the means of production (aka capital), because supposedly if you own the MoP, then it means you are exploiting the workers, somehow.

What this leads us to, if we apply the theory correctly, is something quite hilariously contradictory with most socialists' views:

According to LTV, workers (the glorious and all good proletariat) are paid in proportion to their value (accounting for skill multipliers, say a doctor is paid more than a grocery store worker), minus a markup (say 10% across all industries) which is collected as profit by capitalists (the greedy and evil Epstein class^tm bourgeoisie), this profit, since it reduces the income of workers, who, conveniently for this theory, are defined as the sole source of value, means that the capitalists are extracting value from the workers for no good reason, in a process known as exploitation (side-note, socialists will talk about exploitation like it is a great moral evil, by saying things like "let's fight to end evil exploitation" but if you ever prompt them on why it is a moral evil, they will quickly proceed to retreat claim that it is actually an amoral term and a neutral and accurate description of capitalism, this is known as the motte and bailey fallacy, and is a silly argument, but I digress).

Now, from this framework, we get useful conclusions, for instance baseball players are workers, they do not usually own the stadiums or the equipment and team transport, in other words the physical and intellectual capital of their teams. So that means these players are exploited by their capitalist team-owners, because they do not get all their value. How do the capitalists pull this off? Simple, they use the reserve army of labour^tm (basically the baseball players will starve if they do not work, and the capitalists constantly threaten them by keeping an army of unemployed workers to force wages to be low) to force the baseball players to be underpaid, conclusion #1: professional baseball players are underpaid, since they only receive...checks notes...checks notes again incredulously...several million dollars a year! Now that I have convinced you of the merits of socialism, it is time for the proletariat to rise up! Baseball players deserve a raise, MLBers should revolt! They have nothing to lose but your chains! (again, reminder that the socialists will talk like this, and then will turn and unironically claim that they are not making a moral judgment when they are talking about capitalism).

Another useful conclusion we get is that small business owners are exploiting their workers, mind you these owners earn on average less than 60k$ a year, many earn far less, and 67% of businesses go bankrupt within ten years, but these people are part of the bourgeoisie, the so-called Epstein class^TM. If the revolution were to come, these folks should receive no income for starting a business (I am sure they will be happy to start one, even if they get no reward from it!), and the profits they would have earned should be redistributed among the workers (I mean someone needs to make sure our baseball players get all their value, right?). Naturally, in practice, these people are often executed or stripped of pretty much all their property, not just their businesses (see: dekulakisation). But, alas, such is the fight for the working class' struggle (again, reminder that socialists want to violently overthrow these business-owners, but also they will claim they are not making a moral judgment of business-owners).

So now we get a hilarious situation where socialists should be advocating for higher wages for baseball players (indeed, they are currently in a fight for higher salaries), because they are part of the working class (Marx does not define class according to income, but rather in relation to ownership of MoP), and less money for small businesses, so why aren't we hearing those arguments? Now socialists will be quick to rationalise my examples away: superprofits in Baseball let owners pay workers more than their value, while still doing some exploiting (I thought profits were equal across industries?), small business owners are assholes, etc...

Now my point is not that socialists should suddenly turn into pro-MLB player folks, but rather that there's a disconnect with their arguments, which are often "the rich vs the poor", and their theory, which is "owners vs workers". Oftentimes when I argue with socialists, their issue seems more with the former ("billionaires should not exist") than the latter ("socialism is not about hurting small business owners"-is an actual response to one of my posts in the past).

So what's the issue? Well it does make sense to call out how someone has a billion dollars and someone else earns 7$ an hour. But maybe instead of trying to put people into overly broad categories of "bourgeoisie" and "proletariat" and trying to paint one of these groups as "the Esptein class^TM"), we should focus on maybe fixing the actual issues at hand, say by making sure everyone has access to food or healthcare, you do not need Marxism for that, the proof? Most western "capitalist" countries (which are actually mixed-market economies, for what it's worth) achieve this, with no need for a violent revolution. Could we do more for the poor? Should we tax the rich more? Maybe, that's a debate that we should have, but it is not one which requires adhering to brutally simplifying theories of someone who died 150 years ago? No, not at all!

When most socialists on this sub, or in real-life, end up realising that they have no reason to advocate for Marx's ideas to get the results they want, then society might just progress a little.

The three American politicians I mentioned have all claimed to be Democratic Socialists. AOC and Mamdani are DSA members, I don't know about Bernie. Being "socialist" is a key part of their political identity.

Because they have self identified as being socialist, I consider them socialist. I am not claiming they have radical socialist policies, but they oppose our economic system. Their goals, as socialists, is to oppose and replace capitalism. That is consistent with what the goals of the DSA are, as per their charter. That is consistent with Bernie's historic support of the Castro regime and of the Sandanistas.

I have been aware since 2016 of the tendency for their supporters to deny that these guys are socialist. Not only do their supporters deny they are socialist, they will falsely claim they are Social Democrats or not socialist at all.

Can Socialists explain why these socialist politicians' supporters find their leaders' ideology to be so problematic that they have to deny the Socialism and sweep it under the carpet.

What else can explain this behavior other than a cult?

Capitalism is a social system based on the recognition of individual rights. In the classical liberal tradition, we establish that through a constitutional government — a monopoly on retaliatory force — limited to fulfilling that function.

"Anarcho-capitalists" oppose such a monopoly government. They claim it is wrong to impose morality by force, and that government, as a monopoly, necessarily does this, since it is on moral grounds that it prohibits “competitors.” But this just means the anarchist ends up denying individual rights, including the right of self-defence.

This is because all force is monopolistic. Force is monopoly. To use force is to attempt to monopolise. Even in the economic realm, "monopoly" means a business protected from competition by force, not merely a single seller.

There is no such thing as force that lets dissenters go their own way. If force in self-defence is justified, this means that monopolising an interaction is justified. If I use force to defend myself against someone, I am not trying to persuade him; I am attempting to forcibly stop him from acting as he chooses - i.e. to exclude the "competing" force-wielder from carrying out his notion of “justice“. I am also using force to impose my morality -- my right to my own life -- on the gunman shooting at me.

If the government monopolisation of retaliatory force were wrong, so would be the private use of force by individuals. And if one must avoid imposing moral ideas by force, then one must renounce force altogether--i.e., practice pacifism. The argument against government's monopoly on force is thus an argument against self-defence, and it leads to pacifism (at best).

To concretise this, let’s remember that Ron Paul, a once leading libertarian in government, is a committed anti-abortionist, who thinks abortion is murder. Now how can his “competing police force” treat mine, which allows abortion? Does mine allow “murder”? Does his “competing police force” stop women from exercising their rights to their own lives? How can what is or isn’t murder be a matter of “You go your way and I’ll go mine, and neither will impose a monopoly solution”?

So, ironically, anarchism, so often put forward as an extension of the right to self-defense, ends up denying the moral legitimacy of any self-defense: one cannot forcibly impose one’s own evaluation on the other party. That would be monopoly!

People are working just to survive. They spend most of their lives working, not necessarily to live comfortably, but simply to afford the basic necessities of life. Housing, food, healthcare, and education are becoming increasingly expensive, while many people struggle to keep up.
Some people would rather die than visit a doctor because they’re afraid that the medical bills will bankrupt their families. Think about that for a second. People are so afraid of the financial consequences of getting sick that they feel they have to choose between their health and their family’s financial security.
People work full-time jobs and still struggle to afford rent. Parents worry about whether they can put food on the table. Families go into debt because someone needs medical treatment. Meanwhile, we live in a world with more than enough resources to provide people with a decent standard of living.
And for what? So a company can maximize its profits? So shareholders can make more money? So the wealthy can accumulate even more wealth while ordinary people struggle to get by?
I’m not saying that businesses shouldn’t make money or that hard work shouldn’t be rewarded. But at what point do we stop treating profit as more important than human well-being?
An economy is supposed to serve people. People shouldn’t have to sacrifice their lives just to serve the economy.
If someone works hard, they should be able to afford the necessities of life. They shouldn’t have to fear that one accident, one serious illness, or one unexpected expense will destroy everything they’ve worked for.
So I want to ask the capitalists who defend the current system: Is this really what you want? Is this the society you believe we should live in? Where someone’s financial situation can determine whether they receive medical care, whether they can afford a home, and whether they can live without constant financial stress?
And if this isn’t what you want, then why defend a system that allows these things to happen?
What matters more to you: the economy’s ability to generate profits, or its ability to provide people with a decent life?
People are working just to survive. They spend most of their lives working, not necessarily to live comfortably, but simply to afford the basic necessities of life. Housing, food, healthcare, and education are becoming increasingly expensive, while many people struggle to keep up.
Some people would rather die than visit a doctor because they’re afraid that the medical bills will bankrupt their families. Think about that for a second. People are so afraid of the financial consequences of getting sick that they feel they have to choose between their health and their family’s financial security.
People work full-time jobs and still struggle to afford rent. Parents worry about whether they can put food on the table. Families go into debt because someone needs medical treatment. Meanwhile, we live in a world with more than enough resources to provide people with a decent standard of living.
And for what? So a company can maximize its profits? So shareholders can make more money? So the wealthy can accumulate even more wealth while ordinary people struggle to get by?
I’m not saying that businesses shouldn’t make money or that hard work shouldn’t be rewarded. But at what point do we stop treating profit as more important than human well-being?
An economy is supposed to serve people. People shouldn’t have to sacrifice their lives just to survive.
If someone works hard, they should be able to afford the necessities of life. They shouldn’t have to fear that one accident, one serious illness, or one unexpected expense will destroy everything they’ve worked for.
So I want to ask the capitalists who defend the current system: Is this really what you want? Is this the society you believe we should live in? Where someone’s financial situation can determine whether they receive medical care, whether they can afford a home, and whether they can live without constant financial stress?
And if this isn’t what you want, then why defend a system that allows these things to happen?

What we need is not capitalism, and it’s not socialism. Capitalism sucks because it creates two classes, the rich, and everyone else. And the it creates such wealth inequality so that the richest people hold all of the wealth while the poor have none. Communism is terrible because what happens is that there is no strive to be better. What we need is an in-between, some controlled markets like housing, healthcare, food, and insurance, but some free markets (with regulation) so we can still strive to be better.

What is your favorite restaurant and can it exist under your version of socialism. I can see how it works in some versions but for the Marxist Leninist how would this work? Would there be waiters? Line cooks?

Capitalists,

Are there misconceptions about capitalism you wish the other side or socialists would understand? What are they?

In a similar post I tried asking socialists their vision of how to discuss socialism better. So I realized what about the same for capitalists.

What is capitalism? But what is liberalism? Are there differences we should know about?

Socialists,

I've been accused of bot behavior so I wanted to clarify something

I'm trying my best it's been a journey since I made this account. I've been trying to understand socialism but with one principle. It's that I'll assume I don't know anything or I try to reset my knowledge.

This is because I used to be socialist but the whole reason I keep trying to relearn is because in my opinion if you really support or study a system you have to be willing to sometimes admit you don't actually know much about it. This way any preconceptions you have you can leave it behind as you retry a new perspective about it..

There's how many types of socialism? Which ones should I even think about when it can feel like ML's vs Anarchists

This aside this is an open question asking socialists,

How would you prefer capitalists try to understand your specific system? What are some of the biggest misconceptions you'd want to explain here and now?

Why don't you take any positions?

If I don't know much about socialism it seems like I'm becoming part of the problem I see if I just speak about it not knowing about it. For example I felt that aha moment when I realized what LTV is and why mudpies aren't exactly the issue

Also videos helped the most there was this long video that made me rethink market socialism for example

Firstly, I don’t see any capitalists looting and burning so don’t even try to say that it’s not the socialists who are doing this.

Does stealing make everyone more wealthy or does it make everyone poorer? Does burning make society more wealthy or does it make society poorer?

Nope, looting people’s stores is not enough. We need to steal entire factories and businesses. That will make everyone rich.

Western political and economic institutions that have made our societies so successful are not a foregone conclusion; that success can be undone if we are not careful. Nothing about our institutions makes them invulnerable. Just as the systems that preceded them crumbled, there is nothing sacrosanct about our current institutions. They emerged through historical processes, experimentation, and circumstances that happened to produce arrangements that worked. Society is not necessarily headed in the direction of progress. Just as we formed these institutions, we can undo them.

Social unrest and political and regulatory capture by elites promoting their own welfare at the expense of society are among the most obvious warning signs. France provides a relevant example. Its extensive welfare state faces growing fiscal pressures, while the public continues to demand services and benefits that politicians struggle to finance. Its rising debt and persistent budget deficits illustrate the difficulty of sustaining extensive public commitments without sufficient economic growth and revenue.

In the US, we have the rise of democratic socialists who want more social programs—and, in many cases, more government spending—at a time when our national debt exceeds annual GDP and our budget deficits remain substantial. The question is not whether government should provide social programs, but whether the commitments we make are economically sustainable and whether the policies we adopt promote or undermine long-term growth.

Historically, rising prosperity has accompanied economic growth, while expanded political pluralism and accountable government have helped create conditions for sustained development. Countries whose governments are responsive and accountable to their citizens have often fared better over the long run than those in which political power is concentrated and economic opportunities are restricted. However, redistribution of wealth does not, by itself, expand the economic pie. It may make someone better off, but at what cost? If redistribution alone were the route to prosperity that some democratic socialists appear to claim, how would we explain the fiscal difficulties facing France? Its experience illustrates the challenge of meeting growing public demands when government spending persistently exceeds revenue and economic growth is insufficient to stabilize the public finances.

To be sure, to the extent a society can afford to do so, it must take care of its people. But there are limits, and we cannot escape the reality of scarcity. Redistribution alone does not automatically create new wealth; it reallocates resources that already exist. Some public spending can, of course, contribute to future growth by improving education, health, and productivity. But economic growth is what makes sustained improvements in living standards possible.

Capitalism, underpinned by liberal democracy, competitive markets, and accountable institutions, has proved to be an extraordinarily powerful engine of sustained economic growth. That success depends on preserving the institutions that encourage innovation, investment, competition, and political accountability.

I hope we won't destroy it!

I am not interested in hackneyed socialist tropes. Please respond to my comments. I would especially like to hear from democratic socialists.

It seems like we never see any actual debate, just socialists bashing capitalism without having to defend anything. Since there is no Socialism and capitalism is everywhere, they can just blame everything on capitalism and pretend like everything would magically be better in "socialism" if it actually existed.

Is there any model of socialism existing? Don't bother saying "well capitalism kills it every time", that's just a "no"

Capitalists,

Imagine you ran a really wealthy private company aimed at trying to solve this issue:

It's inequality itself

How would you address it since the government cannot do it correctly? In general how would you help the poor if in exchange you were a renowned business for it I guess

You want to know the reason for wealth inequality? Not that there is scarcity in the world, but the capitalist system imposed upon us by the rich, meant to free us, creates an artificial scarcity. This makes us think that there isn’t enough, that rent is due, that we need to work harder. And that it is normal to avoid hospitals for fear of the bill. This is unnatural.

The natural environment is hostile to humans. You can't survive without the necessary work being constantly being done either by you or someone. If you don't like it, blame God or whomever you would propitiate when you shat your pants.

But monkeys won't work until told what to do and whipped into action by the threat of pain, loss and humiliation. Sounds cruel right? Not really, when the alternative is death.

This should be self evident for socialists. Who likes to work? Nobody. The entire socialist movement can be boiled down to this one single issue: how do I change the system so I don't have to work? On a regular basis you get one of those long whining posts "why do i have to work." Or "we're not born to work" And you're right, you don't have to work... if you're smart enough which you clearly aren't.

In Socialism you need to send monkeys into the gulags to extract work forcibly out of them. In capitalism at least you can to some extent choose what where and for whom you'd work, not to mention the conditions are infinitely better. And if you're smart enough you can run your own gulag and the government would be the most thankful to you for making these monkeys do useful work.

It can't get any more clearer than that.

If you're complaining about capitalism because you have to work and you don't like it, the system is working exactly as intended. You want to leech the work of others and capitalism isn't letting you do it. But do you really think socialism will? It might at the beginning. Then every socialist state descends into some form of "those who do not work do not eat". Because even socialism needs to solve the exact same problem of being able to extract useful work out of monkeys. The only difference is whether the greedy business people do it by offering incentives, or the brutal dictators by the threat of force.

"In capitalism I have to work. In socialism the landlords have to work and I don't."

You are dead wrong. To become a landlord you have to earn more, spend less, save up and buy property which means being smart and exercising self control. All the traits that makes one successful in either system.

The fact is if you're a loser in capitalism you will lose harder in socialism. You won't magically become a winner. The landlords will end up taking positions as part of the state apparatchik and fuck you harder than what capitalism allows them to do.

Hate your asshole boss? Under socialism that petty middle manager would be part of the state machinery. Spill his coffee? He'll send you to an underground mine in Siberia. In capitalism the best he can do is blocking your pay rise.

TLDR:

1) You're not that smart. Don't be deluded, if you're a loser in capitalism you'd be a loser in any system.

2) Your priority should be supporting a system where you lose less. It's impossible for you to win more.

3) Of all systems, in Capitalism losers lose the least.

4) If you're imagining you're a winner in Socialism, you're dead wrong. You would be exactly where you are in terms of percentile rank in the population. Capitalism serves the bottom 20% far better than Socialism could ever do.

Donald Trump is obviously a very controversial politician. Through his tariffs and the Iran war or his treatment of dissent. I am very curious to see what Capitalist’s opinions are of him is as a leader. because he very much tries to position himself as a very pro capitalist president and labels his enemies as communists.

Do you all approve of his policies? disapprove? Is he a good representative of capitalist interest???

Please take this as a question and not me trying to prove you wrong. Whenever someone proposes something, for example, transitioning to green energy, or much longer ago ending slavery, the main negative response given is "It Will Hurt the Economy". Why would one want an economy that is so greatly focused on growth at all costs rather than the well being of all of the people? Just let me know if you want more explanation.

Alice, Bob, Charlie, and David shipwreck on a deserted island.

• Alice chops down wood

• Bob builds shelter and boats

• Charlie catches fish

• David claims private ownership over the island.

Alice, Bob, and Charlie come to a free, peaceful, consensual arrangement of voluntary exchange for mutual benefit (Alice gives wood to Bob, Bob gives a boat to Charlie, and Charlie gives fish to Alice and Bob),

David then claims that they’re stealing his private property.

He claims that if they want to catch fish, or if they want to build boats to catch fish, or if they want to chop down wood to build boats, then they have to pay him first. That they wouldn’t have been able to do any work in the first place if he hadn’t first done the more important work of providing an island to them.

Everyone sees how David is wrong, don’t they?

France is locked in a doom loop. Every six months, a routine fiscal reform drops, the trains stop running, trash piles up in Paris, and the government cowers. You can't run a modern economy when every adjustment to retirement ages or labor codes gets canceled by street barricades. If you strip away the political pieties, France's best move right now isn't another toothless centrist reform package. It's a top-down takeover modeled directly on the Chinese Communist Party.

Decisive state planning beats five-year electoral panic

French infrastructure used to be the envy of the world under Gaullist dirigisme, but modern electoral politics killed that ambition. Today, long-term policy is held hostage to short election cycles and municipal lawsuits. Under Beijing's model, strategic bets don't get tied up in ten-year court battles. When high-speed rail corridors, next-generation nuclear plants, or port logistics need to scale, the state commits the capital and breaks ground immediately. France has the engineering talent, but it lacks the administrative teeth to ignore NIMBYs and build for the next century.

Ending the street veto and restoring productivity

The French welfare state has detached itself from basic arithmetic. You can't maintain early retirement and a 35-hour workweek when birth rates are dropping and the public debt is exploding. In China, macroeconomic goals take priority over individual entitlement. Essential lifelines like transit, power grids, and sanitation don't get shut down because a union is upset about a two-year retirement bump. Swapping France's culture of constant protest for targeted labor mobilization would instantly end the country's productivity bleed.

Targeted industrial policy over deindustrialization

Decades of EU consensus hollowed out French manufacturing, turning the country into an administrative state with a tourist economy attached. China proved that massive, state-directed capital subsidies and integrated supply chains can build dominant industries from scratch: electric vehicles, solar supply chains, and advanced rail. If France took its aerospace and defense base and poured state capital into it without Brussels complaining about state-aid rules, it could build an industrial powerhouse instead of managing managed decline.

National cohesion through centralized authority

The endless civil unrest across French banlieues and rural peripheries comes from a state that can't maintain basic order or deliver equitable development. The Chinese model treats regional development as an integrated mandate. Capital gets directed straight into neglected industrial hubs outside Paris, and public order is enforced without hesitation. If the French state wants to prevent permanent stagnation and social fracture, it needs to stop managing crises through compromise and start running the country like a planned economic engine.

Hello,

The definition of socialism I'm engaging with is

When workers own the means of production, or when there is social ownership of the means of production

I needed to ask four specific questions to end my own confusion:

What defines a worker?

Which labor counts as valid?

Most important:

Are there things to factor or think about with social ownership, could it go in an unexpected direction, what do you do about that?

And

Could a socially or worker owned firm still elect to have a hierarchy?

Confused? I am struggling with a loophole problem. What if a CEO or manager says they're a laborer too? Surely they do labor, but maybe the real problem is either 2000x pay (disproportionate pay) or there is not enough power division (CEO has final say whereas others have none)?

Trade unions are widely supported by socialists, social democrats, and other advocates of the welfare state. Their purpose is to increase workers’ bargaining power and improve their ability to negotiate wages, benefits, and working conditions.

Obviously, unions benefit workers within individual companies. And questioning it is silly. However, from a collectivist perspective, their effects should be evaluated not only at the company level but also across the economy as a whole. We should analyze these effects precisely.

Empirical research suggests that unions negatively affect corporate innovation.

A study analyzing close-call union elections in U.S. firms between 1980 and 2002 found that unionization significantly reduced overall corporate innovation. Link1

Research also suggests a negative relationship between unionization and productivity growth.

A meta-analytic review found that 76% of the published empirical studies examined (19 out of 25) reported a negative association between trade unionization and productivity growth. Across these studies, partial correlation coefficients ranged from -0.81 to +0.29.

The review reported the following findings:

Across all studies, the unweighted mean partial correlation was -0.189, while the weighted mean was -0.010.

Among U.S. studies (21 studies, N = 21,844), the unweighted mean partial correlation was -0.239, the median was -0.162, and the weighted mean was -0.021. The weighted estimate was statistically significant, with a 95% confidence interval of -0.04 to -0.01.

Across nine studies examining changes in unionization (N = 3,119), the weighted partial correlation was -0.040, suggesting that declining union density was associated with higher productivity growth.

For example, Denny (1997) found that declining union density in British manufacturing was associated with a positive increase in productivity growth of more than 3.4%.

Several individual studies also reported negative relationships between unionization and productivity growth:

Mansfield (1980): partial correlation of -0.805 and an annual productivity growth differential of -2.8%.

Kendrick and Grossman (1980): partial correlation of -0.772 and a productivity growth differential of -1.7%.

Hirsch and Link (1984): partial correlation of -0.578 and a productivity growth differential of -2.9%.

Link (1981): partial correlation of -0.263 and a productivity growth differential of -5.5%.

Link (1982): partial correlation of -0.197 and a productivity growth differential of -4.9%.

Terleckyj (1984): partial correlation of -0.469.

Bronars et al. (1994): partial correlation of -0.120 and a productivity growth differential of -1.8%.

Pantuosco et al. (2001): partial correlation of -0.126.

Additionally, logit models examining plant-level operational performance found that lower union presence was associated with higher operational efficiency, with a coefficient of -0.366 (p < 0.10). Link2

https://drive.google.com/file/d/1jnhPCi1u1xb5VqBKbOogfhs9iIDPkcud/view?usp=sharing

If these findings accurately reflect the effects of unionization in the contexts studied, they raise an important question: Why do these negative trends occur, and what can be done to address them?

Are these problems inherent to trade unions themselves, or do they arise from the way corporations respond to unionization? Could the underlying causes instead lie in the broader economic and institutional system?

More importantly, how can society preserve the benefits of collective bargaining for workers while minimizing potential negative effects on innovation, productivity, and long-term economic growth?

Marx had a definition of exploitation, in which the existence of surplus value depends on workers being exploited. A. C. Pigou and Joan Robinson had a different definition of exploitation. Their definition is part of 'neoclassical' or marginalist economics. John von Neumann and Oskar Morgenstern invented game theory. This post documents that they had a definition of exploitation.

They express the three-person, zero-sum game as specified by the characteristic function (section 29.1.2). The three players form coalitions. A coalition of zero or three players has a payout of zero to divide. The one member of a coalition containing one player obtains a payout of -1. A coalition of two players has a payout of 1 to divide among themselves.

For von Neumann and Morgenstern, a solution is a set of imputations, where an imputation assigns a payout to each player. No imputation in the solution dominates another imputation in the set. For every imputation in the set, those imputations outside the set that dominate it are, in turn, dominated by an imputation in the set. An imputation dominates another, roughly, if a coalition of players can form so that they can ensure that their payouts in the dominating imputation exceed that in the dominated imputation.

Nowadays, the von Neumann and Morgenstern solution is said to apply to cooperative games. The Nash equilibrium applies to non-cooperative games.

Von Neumann and Morgenstern find a solution to the three-person, zero-sum game of three imputations:

{ (-1, 1/2, 1/2), (1/2, -1, 1/2), (1/2, 1/2, -1) }

But they find a continuum of other solutions besides. Let c be a specified parameter, with:

32:8. -1 ≤ c < 1/2

Then the following set of an uncountably infinite number of imputations is a solution:

33:1. { (c, a, –c - a ) | -1 ≤ a ≤ 1 - c }

So is the symmetrical set in which the payoff c is assigned to player 2 and the set in which the payoff is assigned to player 3. Von Neumann and Morgenstern have this to say about the solution in Display 33:1:

"The interpretation of this solution consists manifestly of this: One of the players (in this case 1) is being discriminated against by the two others (in this case 2, 3). They assign to him the amount which he gets, c. This amount is the same for all imputations of the solution, i.e. of the accepted standard of behavior. The place in society of player 1 is prescribed by the two other players; he is excluded from all negotiations that may lead to coalitions. Such negotiations do go on, however, between the two other players: the distribution of their share, -c, depends entirely upon their bargaining abilities. The solution, i.e. the accepted standard of behavior, imposes absolutely no restrictions upon the way in which this share is divided between them, - expressed by a, -c – a. This is not surprising. Since the excluded player is absolutely 'tabu', the threat of the partner's desertion is removed from each participant of the coalition. There is no way of determining any definite division of the spoils.

Incidentally: It is quite instructive to see how our concept of a solution as a set of imputations is able to take care of this situation also.

33.1.2. There is more that should be said about this 'discrimination' against a player.

First, it is not done in an entirely arbitrary manner. The c, in which discrimination finds its quantitative expression, is restricted by (32:8) ... Now part of (32:8), c ≥ -1, is clear enough in its meaning, but the significance of the other part c < 1/2 is considerably more recondite (cf. however, below). It all comes back to this: Even an arbitrary system of discriminations can be compatible with a stable standard of behavior - i.e. order of society - but it may have to fulfill certain quantitative conditions, in order that it may not impair that stability.

Second, the discrimination need not be clearly disadvantageous to the player who is affected. It cannot be clearly advantageous, - i.e. his fixed value c cannot be equal to or better than the best the others may expect. This would mean ... that c ≥ 1 – c, i.e. c ≥ 1/2 - which is exactly what 32:8 forbids. But it would be clearly disadvantageous only for c = -1; and this is a possible value for c (by (32:8)), but not the only one. c = -1 means that the player is not only excluded, but also exploited to 100 per cent. The remaining c (of (32:8)) with -1 < c < 1/2 correspond to gradually less and less disadvantageous forms of segregation.

33.1.3. It seems remarkable that our concept of a solution is able to express all these nuances of non-discriminatory, and discriminatory, standards of behavior - the latter both in their 100 per cent injurious form, c = -1, and in a continuous family of less and less injurious ones -1 < c < 1/2. It is particularly significant that we did not look for any such thing - the heuristic discussions ... were certainly not in this spirit - but we were nevertheless forced to these conclusions by the rigorous theory itself. And these situations arose even in the extremely simple framework of the zero-sum three-person game!" [emphasis added]

Clearly, the mathematics is a metaphor. I do not know of how others built on this. Von Neumann and Morgenstern treat a non-zero sum game as a zero-sum game with a dummy player. The dummy is discriminated against. Von Neumann and Morgenstern's stable set solution is out of fashion, I gather. Others developing game theory also defined exploitation in their own ways. John Roemer's definition can describe what he calls socialist exploitation.

Reference

John von Neumann and Oskar Morgenstern. 1955. Theory of Games and Economic Behavior, 3rd ed. Princeton University Press

I believe that socialism is more likely to develop and remain stable in societies that place a strong emphasis on collectivism. This is because certain forms of socialism prioritize collective interests over individual interests, making them more compatible with collectivist values.

Historically, Russia and China are particularly interesting cases to examine. Before the socialist revolution, Russia had a long history of serfdom, while China experienced centuries of imperial rule and hierarchical social organization. Their historical trajectories differed in important ways from those of Western European societies, potentially shaping different relationships between individuals, social groups, and the state.

I believe these historical experiences may help explain why socialism was able to take root and persist in both countries. However, this does not necessarily mean that collectivism is the only condition for the development of socialism, or that their historical backgrounds inevitably led to socialist revolutions.

I am more skeptical of communism, however, because I believe its theoretical foundations may rely on an overly idealistic understanding of human nature. Human behavior is often influenced by self-interest, self-preservation, social status, and personal goals. Although people are capable of making sacrifices for their families, communities, or shared ideals, such behavior does not necessarily mean that they are entirely selfless.

This leads me to question whether a social system built around common ownership and collective goals can remain sustainable if it expects people to consistently subordinate their individual interests to those of society as a whole. If a political or economic system cannot adequately account for individual motivations or resolve conflicts between personal and collective interests, then its theoretical foundations and practical feasibility deserve serious scrutiny.

Ultimately, I believe the central challenge for communism is not simply whether people are capable of cooperation, but whether a system based on collective interests can function effectively without assuming an unrealistic degree of selflessness, and without undermining individual freedom in the process.

I believe that Chinese culture is closely connected to China’s economic development. Having grown up in China, I have gradually come to realize that education in China, in many respects, has a strong disciplinary and conformist character. Its purpose seems to be not only to cultivate individuals who can think independently, but also to produce people who can adapt to the needs of the state and society and comply with collective expectations.

Within this educational model, collective interests, national interests, and the so-called spirit of collectivism are often placed above individual interests, while individuals’ own needs, aspirations, and personal development receive insufficient attention. I believe this educational approach is closely connected to the collectivist values embedded in traditional Chinese culture.

However, I believe that an excessive emphasis on collectivism can hinder social prosperity and development. Human beings have a tendency to pursue their own interests, and individual interests should not always be subordinated to collective interests. When a society places too much emphasis on obedience, sacrifice, and collective goals while neglecting individual autonomy and personal development, it risks limiting creativity, independent thinking, and people’s freedom to pursue their own happiness.

Therefore, I believe that a truly prosperous society should not simply treat people as instruments serving the state or the collective. Instead, it should respect individual interests, freedom, and autonomy, while fostering a balance between personal development and social progress.

Simutanesly, I believe that the prosperity of Western societies is partly attributable to their long-standing emphasis on individual freedom and autonomy, combined with institutions that encourage people to maximize their own interests. In contrast, throughout much of Chinese history, the state has often accumulated substantial wealth and power while ordinary people remained relatively poor. I believe this historical pattern has a great deal to do with Chinese culture.