Although Labor Day was conceived and established as a way of honoring and promoting the interests of the organized labor movement and the unions that control it, the day can have a much more important meaning than that, if we choose to see it as commemorating the fundamental importance of work as an element of the human condition.
In “The Wealth of Nations,” Adam Smith noted that work is essential to the creation of wealth, calling labor “the real measure of the exchangeable value of all commodities.” Karl Marx turned this “labor theory of value” into a very different concept, the theory of surplus value, arguing that human labor is the source of all economic value, ignoring the contribution of other resources. That fallacy is the cornerstone of Marx’s thinking and the basis of communism, socialism, and many other authoritarian schemes for controlling humanity.
Property ownership is a social good. While work creates wealth, wealth also creates work.
Economists of the Austrian School recognized the flaw in Marx’s thought. Austrian economists observed that value is subjective, as Smith intuited but could not fully explain (the “diamonds and water paradox”), and that the value of a good or service is established by its marginal utility, “the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service,” as Brittanica.com puts it.
“Utility” is the important concept here. It refers not only to practical returns on spending but to all “satisfaction or benefit” one may derive from a product or service. That makes the theory applicable to production activities and consumer expenditures alike. It also accommodates all contributions to value, regardless of the source.
Those refinements enable us to see the true value of human labor and appreciate its full importance in human endeavor. All wealth comes from work. All work is applied to property. That includes “intellectual property,” of course. Without property, there is nothing to which to apply our work and nothing to consume. Humanity would die out.
Even animals work for their food, acting on the “properties” around them (plants, other animals, water, etc.) in accordance with instinct. The same is true of plants and all other forms of life. Work is essential to life.
The Marxian fallacy of valuing labor to the exclusion of all other factors tempts its adherents to view humans as no different from animals. As nearly two centuries of history have shown, Marxism creates an unstoppable urge to denigrate property owners. They do not “work,” Marxists claim. Property owners are parasites, according to Marxist theory. Communist governments have commonly gone to the extremes of eliminating property owners — such as the kulaks and mid-century Chinese rural landowners — justifying it by this dehumanization.
The claim that property owners do not work is false and scurrilous. Even if they do nothing else in creating goods and services, property owners perform essential work by directing human efforts toward activities that most enhance human welfare. They do this because they naturally seek to maximize the value of their holdings, increasing their own wealth by focusing on what others value most. This strategy pays off because providing what people want most yields the best returns.
Adam Smith’s observation about the butcher, brewer, and baker applies equally to property owners. Just as we receive our dinner from food merchants through “their regard to their own interest,” which we serve by paying them for their wares, so too do we receive capital by serving the interests of its owners.
This system is entirely beneficial. Property owners, seeking to maximize the value of their assets, will use them in the most valuable ways. If consuming the property brings the owner the most satisfaction, he will do so. If selling the property, using it in a wealth-producing activity like a business, or saving it for future use offers greater returns, the owner will choose that course.
Of course this might seem like easy work, and maybe it is — I haven’t enough wealth to know from experience. Value, however, is measured not by the amount of work put into something but by the quantity and quality of satisfaction the end product or service brings. You could put a massive amount of work into stacking rocks in a pile, but you will not get much money for it if nobody benefits from it.
Property ownership is a social good. While work creates wealth, wealth also creates work. Property owners direct work toward resources and activities that most improve human well-being because it benefits them to do so.
Marxists and the American left argue that property ownership is unnecessary for producing goods and services and that it hinders the fair distribution of wealth. Governments, however, enforce this so-called fair distribution by forcibly taking property from some and giving it to others. This practice undermines the pillars of human achievement: It rewards people who receive benefits without working for them, reducing the incentive to produce goods and services, and it deprives those who would use their property in socially beneficial ways, diminishing the ability to create wealth.
With Democratic presidential candidate Kamala Harris suggesting imposition of a nationwide wealth tax, this is a critical time to understand, acknowledge, and share the truth that property ownership is a social good and is in fact the foundation for the value of all human labor. As we celebrate the work of our neighbors across the land, we should also acknowledge the great and vital work that property owners do.