Contributions are not respected

Contributions do not need to be respected under capitalism.

Critique

Contributions do not need to be respected under capitalism.

Disconnect between contributions and ownership, governance and incentives

Capitalism adopts a capital share based ownership system where shares represent permanent ownership in an organisation. These shares will often give holders perpetual governance rights and influence in the organisation. Shares can also give holders perpetual incentive rights, where they’ll benefit from the growth of the organisation through share value appreciation and from any dividend payments. Capitalism does not necessitate that contributions are fairly rewarded. Capitalism can often lead to situations where some contributors receive shares and others do not. It can also commonly create situations where the distribution of shares is not based on the value and impact of the contributions being provided by each person. This outcome creates a disconnect between contributions and ownership, governance and incentives. This disconnect creates an environment that enables the exploitation of labour contributions.

Rewarding earlier contributions over future contributions

Capitalism most commonly rewards earlier contributions with shares of ownership due to the risk they took to create the organisation. As the company breaks even or raises more investment the incentive to issue more shares for future contributions is greatly reduced. New shares would dilute the existing shareholders. This incentive creates an environment where future contributions can become increasingly exploited due to a lack of incentive to fairly evaluate and reward these future contributions. The two class system that emerges in capitalism of capitalist owners and workers is inherently exploitative as it incentivises the over compensation of earlier financial and labour contributions at the expense and exploitation of future contributions.

Labour contributions are commonly not respected under capitalism

Capitalist owners pay employees a wage or salary. Owners benefit from the surplus value that is generated by workers labour. It is up to the goodwill of capitalist owners to determine what percentage beyond the wages or salaries, if anything, is going to be paid to the workers for the labour that has generated the available surplus.

Capitalism often focuses on the importance of maximising shareholder value. This objective can translate into an effort to minimise the amount of income that workers receive so that the maximum amount of profit can be achieved for shareholders. This goal of maximising shareholder value is a fundamental reason why labour can be commonly exploited due to the common priority of maximising shareholder value.

Disincentivising labour contributions

Labour is often alienated in a capitalist system as workers have little to no influence over the products and services they create or how their work is carried out. Workers are often not properly incentivised to reach their full potential as the surplus from their labour is often extracted for the benefit of capitalist owners. If labour is not fairly compensated based on the value of their contributions there is a lack of incentive for the workers to perform their best. Capitalism can often lead to workers becoming incentivised to minimise the effort they make within the organisation due to this exploitation. Workers also have an incentive to maximise the effort they make to create new organisations so that their labour won’t be exploited for someone else’s benefit.

Misaligned incentives to record, measure and evaluate contributions

Capitalism creates a two class system of capitalist shareholders and workers. A shareholder is incentivised to pay employees enough so that they stay at the company but not too much that it would reduce the profit margins that they benefit from. Due to this incentive, capitalism doesn’t have a large incentive or justification to properly record, verify and evaluate contributions. This incentive results in a lack of justification for owners to create systems that effectively record, verify and evaluate contributions as this could help to empower workers with more knowledge and awareness about the full value of their contributions.

Employees being able to more easily prove their value should more easily be able to find another job that would pay them for the full fair value of their contributions. Under capitalism, it is instead in the interests of the shareholder that a worker's contributions are not publicly recorded and evaluated as this could enable external organisations to identify the best contributors and offer them better compensation. The time and cost involved in recording these contributions is also not in the interests of shareholders as recorded contributions could result in the need to increase the salaries of workers that are now more easily able to find higher income jobs. Capitalist owners are incentivised to suppress a worker's understanding of their contribution value wherever possible for their own benefit. This can help to prevent the loss of their best performing talent and also could help with minimising the amount they need to pay their workers due to people's lack of awareness of their full value.