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Reply #96: The initial employees where I now work were offered a risk-cash trade-off... [View All]

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eallen Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-07-07 10:29 AM
Response to Reply #29
96. The initial employees where I now work were offered a risk-cash trade-off...
The initial employees were able to choose what they wanted to be paid, as a fraction of their market salary, for the first year of the company's existence, with the remainder to be compensated in stock options. If some chose 0%, as some did, their entire compensation would be stock options. Those who chose 100% salary would receive a market wage, but no stock options. Each individual chose her or his own risk profile.

Now, which group is "expropriating" from the other? Those who gave up salary for stock? Or those who took cash up front?

Since the future has not yet unfolded, I cannot yet tell you for certain which group will profit the most from the venture. I think this business will do well, and expect those who bet on the stock will do far better. But that is said against the background that a) most new businesses fail, and b) it is impossible to know all the facts about the market and events that might soon transpire that would affect our business's success or failure. It's quite possible that those who worked that first year without compensation will see a complete loss of that year's work.

The problem with the traditional Marxist analysis that you are peddling, besides the assumption of a particular moral frame of reference, is that Marx had a simplistic view of the role of capital. To him, capital was the means of production, and what mattered most about who owned it was simply who received its rewards.

But it matters a great deal to the direction of the economy how capital is deployed. The unique thing about capitalism are the mechanisms it creates to lure capital away from pure rent seeking and into the creation of new and risky ventures, seeding the evolution of business and technology processes that drive modern economies. Economic advance requires a lot of new businesses. Which means a lot of capital put at risk.

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