Production and Risk

Sarah is an artist. She lives comfortably, holding a day job at the bank that pays well. She works on her art at night.

She spends almost no money on her artworks. For the most part, she uses as her materials things she normally would have simply thrown away.

About two years ago she was particularly inspired, and began work on what would turn out to be her Magnum Opus.

Now, Sarah never sells her work. Much of it she keeps around her own house, some of it she gives to friends. She doesn’t sign it. No art critic knows of her. It does happen to be true, though, that were some art critic to have her attention drawn to Sarah’s work, she would take Sarah’s work very seriously. Sarah is a great artist.

For two years, she’s been working in her spare time on her magnum opus, and tonight, she’s completed it. She’s quite proud of it. She recognizes it’s the best artwork she’s ever done and possibly ever will do.

Let’s make the following fact salient: She put a lot of labor into this artwork, but risked no–or almost no–capital in its production.

There’s a knock on Sarah’s door. When she opens it, she meets a stranger who introduces herself as Allison. Allison points to Sarah’s sculpture, and says, “I’ve come to take posession of that.”

Sarah’s taken aback of course. “But–it’s mine.”

“No,” Allison says, “It’s mine.” And she procedes to tell a strange tale.

Almost two years ago, Allison and her friend Michelle happened to be walking by Sarah’s house when they glanced through her window and saw her working on her sculpture. Both of them immediately recognized it for its greatness, but they had very different reactions to this.

Michelle is a nihilist, and believes things of beauty should be destroyed lest they fool us into thinking we live in a world where there is any real possibility of permanent happiness. So Michelle immediately began making every effort to destroy Sarah’s sculpture.

Allison, meanwhile, restrained Michelle, believing (as any normal person would) that great works of art should be nurtured in their production and preserved once created. The struggle between the two went on all night until, exhausted, they retreated. Each kept tabs on the others’ movements for the next two years. They hired security types to form small militias–Michelle’s militia being dedicated to the destruction of Sarah’s artwork, Allison’s militia being dedicated to seeing it preserved.

Michelle went the psy-ops route sometimes, trying to trick Sarah into abandoning her work. Allison’s group had to work quickly and carefully to prevent such contact between Allison’s people and Sarah from occuring–and minimizing its effects when some subliminal messages did get through.

Allison believed Sarah’s artistic impulses would be distorted, perhaps even quashed, if she learned anything about this huge conflict going on around her, so she made sure Sarah never learned anything of it.

As you can imagine, Allison’s operation cost a lot of money. Millions and millions of dollars.

Allison’s victory was never assured. Michelle could have won. Sarah could have spontaneously given up. Allison risked a lot–she risked millions and millions of dollars worth of capital–to make sure the Magnum Opus was produced.

“And so,” she said, “As you can see, I’m the one who undertook all the risk here. The Magnum Opus is able to exist only because of the immense investment in capital that I put forward. Therefore, all benefits of its existence belong rightly to me. So I’m taking posession of it. Don’t worry, I’ll cut you a check for your time. It’s a win-win! You risked nothing, and I’m writing you a check anyway!”

After a bit of hesitation, Sarah replied, “Yes, I see, that makes sense. I guess go ahead and take it then.”

So what was the point of that?

It’s a probably-too-long-and-silly way to illustrate a simple point: Our judgments about entitlement to the benefits of labor don’t rest, at least not in every case, on our judgments about who risked how much.

It is directly to the point to emphasize that Sarah never agreed with Allison that she should give the artwork to Allison. But that’s just to make the very point I’m making–Allison’s risk is irrelevant, because there was no agreement between Sarah and Allison in the first place.

The move from “X is the one who took all the risks” to “X deserves all the benefits of the product” is illicit. What is licit, instead, is “X and Y agreed that the one who takes all the risks shall get the benefits, therefore, X shall get the benefits.” What would be equally licit is “X and Y agreed that the one who did all the work shall get the benefits, therefore Y shall get the benefits.”

Neither of these is any more “natural” than the other. Neither more accurately reflects what anyone “really deserves”. Actual desert does not supervene on risk. It supervenes on agreements.

Attempts to make the discussion one about “who deserves what” are attempts to circumvene the more important and fundamental discussion about what agreements we should be entering into in the first place and what it takes to be entering into an agreement freely.


Another Capitalists/Conservatives/Rich are evil thread?



Not at all an accurate paraphrase of my point.

I did think about putting this in the “understanding risk” thread but that one’s already had a couple too many derailings so I figured I’d just start a new one.

Why? We get it. You think people who disagree with your politics suck. You don’t like capitalism, conservatives, or rich people. Unfortunately for you, rich conservative capitalists run the world. Deal with it.

I think people who disagree with my politics (which, btw, I have no idea what they are usually) very often rock. I like capitalism. I have good conservative friends, which I guess is something. Same with rich people–I’d never generalize about rich people as a class in any case. I don’t find it unfortunate that rich capitalists run the world, but I would like to question whether they ought to be (what you’re terming) conservative. A more “liberal” kind of capitalism may be more workable.

Your post has pretty much nothing to do with anything I said in any meaningful sense.

The story in your OP is a very thinly disguised and loosely reasoned critique of capitalism. Oooohhhh…EVIL ALLISON oppresses the noble worker peasant. Yawn.

No, it’s not. Allison is a bad capitalist. She doesn’t represent all–or even many, or possibly even ANY–capitalists.

Big clue that Allison is a bad capitalist: She’s an outright thief. No good capitalist is an outright thief.

ETA: Read my second post. My point isn’t “capitalism is bad” (I don’t think it is) but rather “capitalist systems aren’t built on natural desert but on agreements.”

This sounds more appropriate for IMHO, if the OP is asking for a critique of his very short story. Otherwise, what’s the debate?

Does anyone have a disagreement that doesn’t involve misrepresenting the OP? It’s neither a critique of capitalism nor an indictment of conservative philosophy, nor is it flash fiction. It’s a simple little parable, for Og’s sake.

I’ll restate it as I understand it: Risk is not a reliable sole determinant of any stakeholder’s interest, and in fact all stakeholder interests are negotiable separately from risk or other stakes.

OK, here’s another scenario, without Michelle. Sarah is a struggling artist, who creates works of art and displays them in her small gallery to the public. Allison is a secret benefactor, unknown to Sarah, who visits the gallery every week and drops $1,000 in the donation box. The $1,000 per week is Sarah’s only income: she uses it to pay for food, rent and materials for her art work. After 2 years, Allison comes along and says, “I’ve now given you $100,000 for your art work, so it’s all mine. After all, I paid for it, and without me you could not have created it.” Is Allison right?

I don’t know if my involvement will help or hurt this thread, but here’s my two cents as it pertains to risk:

  1. Sarah is considered a skilled tradesman. So her risk isn’t about capital, it’s about skill. She invested two years of her time to improve her skill resulting in a work of art that reflects her improved skill. So look at how her net worth increased over the two years, she went from nothing to $[the value of her art]. That’s a pretty good return. A student that goes to medschool starts with no earning potential and emerges a few years later a doctor with high earning potential. Art happens to be a funny example because it can involve zero cash.

  2. The risk Allison took, although capital intensive, was for her own benefit, not Sarah’s. She saved the art because having it in the world was considered important to her. She didn’t do it so she would get a cash return on investment, she did it because it made her world more beautiful. So in the end, her return paid off, the art was saved, she won what she set out to achieve. Getting the art has nothing to do with her stated goal, would we be willing to say she invested a lot to steal it, so it’s rightfully hers?

  3. Michelle is a criminal, and as such isn’t relevant to the discussion of risk. That Allison chose to be a vigilante was her choice, not Sarah’s. Michelle was attempting to destroy Sarah’s property which is against the law. Sarah shouldn’t have invested anything, she should have gone through the proper channels.

What you’ll notice is that if Allison had called the cops, and the cops stopped Michelle, the cops don’t have a claim to Sarah’s art.

No one else has a claim to Sarah’s investment, she put in the work, she gets the rewards. And hopefully she didn’t do any of that while at her day job, because then they might have a claim to it depending on her contract with them…

Risk is a perfectly reasonable determinant if you understand risk.

Allison risked a lot of capital to save the art, and she succeeded. Her reward is that the art still exists. She doesn’t have a claim to the art itself regardless of her involvement. But she can claim to be a hero that made the world a more beautiful place. It’s possible that the world will thank her and give her an award. But her risk has nothing to do with ownership of the art or it’s proceeds.

Sarah risked a lot. She spent two years of her life working on a sculpture that could have sucked. She could be forever known as the girl that made the Jesus sculpture out of dog crap. She could forever ruin her reputation in the art community. Now that she created a master piece, she has the potential to be commissioned for more work. Her net worth and her earning potential increased as a result of her investment. And it could have just as easily gone the other way. She took a risk and it paid off, the rewards are hers and hers alone.

Allison could have directly invested in Sarah as a partner. She could have used her capital to hide her on a remote island while she worked. And then she might have a rightful claim to *part *of the proceeds.

It’s also important to note that had Michelle been successful she’d face a very serious lawsuit for Sarah’s loss of earnings. Imagine if Michelle went up to a surgeon and smashed his hand with a hammer.

Exactly what I meant, thanks.

I probably should have put my original two posts in a single post, but for some reason, it felt right doing it the way I did it at the time.

It’s not a reliable sole determinant.

-I’m sure the OP is a reaction to the overemphasis on financial risk in conservative economic arguments.

But the weight of risk as a factor in determining an investor’s stake is not necessarily proportional to its monetary value, nor necessarily tied to its qualitative form, even though both the value and form of risk are meaningful. That meaning, however can’t really be determined outside of the applicable legal framework, product market and labor market(s).

So…what’s the debate?

Is this in response to some other thread floating around? If this is how debate threads are being started now a days, maybe SDMB should adopt what YouTube has: This video is in response to …

Let’s try saying this a different way:

There are a variety of things people can risk, some tangible some not. In return people get rewarded based on those risks.

A person that invests financial capital will receive financial gain, a person that invests skill will receive personal gain.

Like I said, Sarah invested herself, her reputation as an artist was at risk. In the end it paid off in the form of art that society desired. That then translates into higher earning potential for her next piece of work.

Now, if someone had invested cash into her project such as paying for her equipment, facility rental, marketing/promotions, they would have a claim to the financial gains made from the art. Once sold at auction they would get a portion of the proceeds in relation to their risk.

Watch this though: no one other than Sarah can claim to be an accomplished artist. Even if we assume Allison gets the art, she can’t say it’s her work. The proceeds (cash) might be hers, but the skill and reputation belong entirely to Sarah. Allison’s earning potential has stopped, but Sarah’s continues. No one is going to commission Allison for a sculpture.

Do you consider that fare? In my example of the restaurant, does the financial investor get to consider himself a skilled chef?

In the above example, Sarah is the only one who gains skill and reputation, and with that the increased earning potential.

Allison on the other hand could make a claim that she’s an expert private security consultant. Her investment protecting Sarah could pay off in any number of other ways, but none can be tied to the value of the art.

The problem I see is that a lot of people want to dismiss the financial risk, and highlight the personal risk. But then highlight the financial gain, while ignoring the personal gain.

With that, I’ll bow out.

Why has so much power/influence left labor and gone to capital, at least in the US

Understanding Risk

What should replace capitalism?

If anyone is doing that to an equal extent then they’re equally wrong. But I’ve seen very few ideologues attempting to dismiss financial risk outright. Pointing out that we socialize that risk on a large scale for very specific sectors while socializing the gains at a uniformly minor level is not the same thing.

Just so we’re clear, I’m a huge fan of socialist programs. I have no problem increasing taxes on the rich, or on capital gains.

I’m also against the idea of privatizing gains while socializing losses. If the “risks” associated with a venture include wide spread environmental damage, that needs to be spelled out before hand, and accounted for.

But what I won’t stand for are groups trying to claim ignorance. Anyone that entered into the stock market prior to 2007 should know that money was at risk. Anyone buying a house should know the value might go down. Anyone taking out a variable rate mortgage should know the rate might go up after 5 year. Anyone drilling a whole into the bottom of the ocean should know there is a potential for leakage.

And full disclosure, I owned a lot of stock in Transocean before the gulf oil spill, after which the stock price fell 50% in less than a month. But when I risked my capital, I knew the stock value could go to zero. I was approached and declined to be part of a class action lawsuit by stock holders against those involved.