is this point rocksolid? [profits minus ownerfairpay = legal theft or beggary]?

Question

if we understand or define costs as including fairpay for the workinput of owners, as well as employee costs, overheads, advertising, accounting, costs of materials [which are ultimately labour costs] etc, then profits BY DEFINITION have to be money for no work = injustice [legal theft or beggary] = overpay, causing wealth concentration, causing tyranny, ie, the destruction of democracy?
is it rocksolid that there is nothing to limit profits to fair return to owners? - ie, that, after they have been paid fair returns for their labour, there is nothing stopping returns to go in excess of this, which by definition are money for no work?
profits can be for reasons of scarcity, monopoly, etc which are clearly not money for work, & therefore must cause work for no money [= underpay, wageslavery, slavery, evergrowing injustice, causing evergrowing violence [= misery], necessarily escalative to extinction [selfmurder of 6-7 billion]
it is IMPOSSIBLE for there to be doubt of this - yes?

Answer 1

There is nothing about this point that is rock-solid. What exactly is the "owner's fair pay"? Who is to decide if the pay is fair? Using which valuation method: valuation by multiples, valuation by discounted cash flows, real-option valuation, something else?

What you seem to be ignoring is the concept of risk; business owners are compensated primarily for risks they take by investing their time and money into their business rather than having a job and investing in mutual funds held in tax-shielded retirement plans.

As to the causes of "evergrowing" violence, you are repeating political scientisis' claims that have no basis in reality (if for no other reason, then because violence has greatly subsided since the end of the Cold War). Read "Economic Causes of Civil War and Their Implications for Policy" by Paul Collier:

http://siteresources.worldbank.org/DEC/Resources/econonmic_causes_of_civilwar.pdf

__________

Answer 2

No, you're wrong.

Profits accrue to owners. What do they own? Capital. Why should there be a payment to capital? It represents earlier work.

People can choose to take their money and spend it on themselves, or they can invest it. If they invest it, they deserve to be compensated for giving up that consumption.

They can invest two ways - they can loan money to companies, or they can invest equity in the company.

If they loan money, they receive an agreed upon rate of interest.

If they invest equity, they receive an agreed upon portion of profits (all of it if they own the whole company).

This payment is uncertain (in fact they may lose their capital) so the average payout has to be better.

Depending on the industry, the payout may be fairly stable, or it may be that some companies make huge profits while others routinely lose their capital.

There is nothing unjust about this.

What about a case where you have an owner operator with no initial capital (say a consultant). The salary they receive is going to be less then the salary they could get elsewhere - they are hoping to earn profits (in fact if they are the sole employee/partner, they probably have a salary of 0). They exchange a certain salary for a higher hoped for salary. Over time, their 'business' may have a value that extends beyond them. But that isn't theft, that is the value created by their work. If they choose to sell some of that value to an investor in exchange for a portion of future profits, that's fair too.

Answer 3

YES! It is rocksolid , but then again, rocks can also be broken.