9: The General Benefit from Private Ownership of the Means of Production (pp. 296-297)
This excerpt is taken from George Reisman, Capitalism: A Treatise
on Economics. Ottawa, Illinois: Jameson Books, 1996. Copyright © 1996 by George
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The influence of the division of labor on the institution of private ownership of the
means of production is almost universally ignored. Typically, people think of privately
owned means of production in terms that would be appropriate only in a
non-division-of-labor society. That is, they think of them in the same way that they think
of privately owned consumers' goods--namely, as being of benefit only to their owners.
They believe that before the nonowners can benefit from the means of production, they must
first become owners.1
This belief underlies the popularity of all forms of "redistributionism" and
socialism.2 People believe that so long as wealth remains concentrated in the
hands of a relatively small number of capitalists, the capitalists alone benefit from it.
For the great mass of noncapitalists to benefit, it is believed, the wealth of the
capitalists must first be taken away and given to the noncapitalists, or be held by the
government and used for the collective good of all.
Closely related to these ideas, of course, is the belief--held virtually as a
self-evident axiom--that capitalism is a system which operates only in the interests of
the capitalists, and that the defenders of capitalism must therefore either be capitalists
themselves or be in the pay of the capitalists, or else simply be perverse enemies of the
great majority of mankind. So deeply rooted are such convictions that it is often thought
to be a sufficient refutation of the arguments of an advocate of capitalism to intimate
the size of his bank balance or stockholdings.3
Similarly, in reporting election results, the news media routinely explain voting
patterns on the basis of the voters' wealth and income status. They take it for granted
that only wealthy, upper-income voters will favor "conservative," i.e.,
procapitalist policies, and that poorer, lower-income voters will automatically favor
"liberal," i.e., anticapitalist policies.
Even the alleged friends of capitalism often share the conviction that private
ownership of the means of production and capitalism serve only the capitalists: very often
their notion of how to fight the spread of communism is first to create more capitalists.
Only then, they believe, will there be a sufficient number of people with an interest in
The Benefit of Capital to the Buyers of Products
The first thing that must be realized is that in a division-of-labor society, all
private property that is in the form of means of production--i.e., of capital--serves
everyone, nonowners as well as owners. In a division-of-labor society, the means of
production are not used in producing for their owners' personal consumption, but for
the market. They are used in producing goods that are sold. The physical
beneficiaries of this private property--and it is the far greater part of the capitalists'
wealth--are all those who buy the products it helps to produce. In other words, it is the
general buying public who are the physical beneficiaries of the capitalists' capital.
Consider, for example, the question of who are the physical beneficiaries of the auto
plants of General Motors. That is, who physically receives the products of these plants?
Is it the stockholders and bondholders of General Motors? Of course not. The number of
GM's cars that is produced for the capitalists who own GM is relatively insignificant.
Almost 100 percent of General Motors' auto output goes to people who do not own a single
share of its stock or a single one of its bonds. The same is true of every other business
Indeed, the proportion of General Motors' auto output that is purchased by stockholders
or bondholders of any enterprise--by capitalists of any description--out of the proceeds
of profit or interest income, is relatively small when compared with the proportion that
is purchased by wage and salary earners. The far greater part of the automobiles purchased
from GM and almost all other auto manufacturers is purchased by wage and salary earners.
Wages and salaries, not profits and interest, are the source of the overwhelming bulk of
consumption expenditure throughout a capitalist economy. It is wage and salary earners who
consume the overwhelming majority of the automobiles, television sets, housing, furniture,
food, and clothing, and almost every other consumers' good that is produced.
Thus, the overwhelmingly greater part of the physical benefit derived from the
privately owned means of production in a capitalist economic system goes to nonowners of
the means of production--to wage and salary earners.
It cannot be stressed too strongly: the simple fact is that in a division-of-labor
society, one does not have to own the means of production in order to get their benefit.
One has only to be able to buy the products. In a division-of-labor society, one gets the
benefit of means of production owned by others--every time one appears in the
market as a customer. Indeed, it is of the very essence of a division-of-labor society
that one obtains the benefit of others' means of production, just as one obtains the
benefit of others' labor and knowledge, and that this occurs by means of the purchase of
products in the market. It is only in a non-division-of-labor society, in which there is
little or no production for the market, in which the producer and the consumer are almost
always one and the same person, that privately owned means of production benefit only
their owners, or virtually only their owners.
Implicitly, it is such a society that the enemies of capitalism have in mind. They have
not yet woken up to the fact that capitalism is a division-of-labor society. They are
unaware that in a division-of-labor society, the means of production serve everyone who
buys products, and that thus, under capitalism, there is a general benefit from the
capital owned by the capitalists--a benefit which everyone shares in his capacity as a
buyer of products, even if he himself does not own any means of production or capital.
This general benefit, it should be realized, applies to all of the means of production,
not merely to those which are employed in the direct production of consumers' goods. The
benefit of the steel mills that produce the steel that enters into GM's cars goes to the
buyers of the cars, along with the benefit of the auto plants, as does the benefit of the
iron mines that contribute to the production of that steel, and the benefit of the
factories that produce iron-mining equipment. The benefit of the land that grows wheat
goes to the buyers of bread, as does the benefit of the tractors used in the growing of
wheat, and the benefit of the factories which produce those tractors, along with the
benefit of the flour mills that make the wheat into flour, and of the bakeries that
finally turn out the bread....
1. Cf. Ludwig von Mises, Socialism (New Haven: Yale University Press, 1951), pp.
4042; reprint (Indianapolis: Liberty Classics, 1981). Page references are to the Yale
University Press edition; pagination from this edition is retained in the reprint edition.
2. For a discussion of its influence on the mentality of destructionism, see above, pp.
3. Cf. von Mises, Socialism, pp. 500504.