The Value of Capital Vs Labour

[Lee Wright]

Someone I think on this forum suggested that capital is simply "distilled labour". That's a very interesting idea. It got me thinking.

Let's say I go out & work for an hour to earn $10 of capital. Being a lazy a$$ I then think to myself, mmm I might send my $10 capital to work for an hour instead of going to work myself. How much could I expect to earn? Well if the stock market earns say 10% PER ANNUM, what would I get for 1 hour of use of that capital assuming 40 hours per week? Let's see, $10 x 10% /50 weeks /40hrs = 0.05 cents. 1 hour of labour is therefore 20,000 times more valuable than capital.

Am I missing something here? Have I stuffed up the maths?

 

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[Jobless]

The 10$ capital does not disappear when invested, and can keep earning a return every hour, year after year. An hour spent is an hour gone, but capital invested is not spent, it is exchanged for an asset that persists despite time passing.

The value of labour is measured in capital ($). But capital is not measured in labour. An hour of labour is a quantity of value not a fixed unit.

You measure mass in kilograms, but not kilograms in mass. 'Mass' is a physical quantity, not a unit.

 

[Johnny boy]

Now you see how valuable time is.

And it's the only thing you can't go get more of.

The stock market is not putting money to work for you.

It's just buying and selling. Just like sneakerheads, pokemon card collectors, etc. Just with tiny fractions of companies.

When I put money to work for me, I can buy a truck and trailer and hire a crew and make 70 grand of profit.

Thinking in either "work at an hourly job" or "invest in the market" terms exclusively is a very slowlane mindset.

If the returns of "putting your money to work" are 10% yearly, you should see the returns of putting your creativity to work for you. 10-100x returns.

 

[Kevin88660]

Someone I think on this forum suggested that capital is simply "distilled labour". That's a very interesting idea. It got me thinking.

Let's say I go out & work for an hour to earn $10 of capital. Being a lazy a$$ I then think to myself, mmm I might send my $10 capital to work for an hour instead of going to work myself. How much could I expect to earn? Well if the stock market earns say 10% PER ANNUM, what would I get for 1 hour of use of that capital assuming 40 hours per week? Let's see, $10 x 10% /50 weeks /40hrs = 0.05 cents. 1 hour of labour is therefore 20,000 times more valuable than capital.

Am I missing something here? Have I stuffed up the maths?

The terms Capital and labor come from the age of industrialization in the 18th and 19th century.

Capital meant machinery, which workers spend time and effort to produce stuff.

Capital can be viewed as a final product of labor. Since it takes human effort to build machine.

Which is more valuable depends on the relative scarcity. When labor is in shortage now snd corporate cash reserves are record high, labor can be said to be more valuable.

 

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