Capital Risks Nothing Compared to Labor

As I write this the WGA and SAG-AFTRA remain on strike with the producers’ organization refusing to come back to the table to negotiate. The producers’ organization has responded to the actors listing how the producers have failed to respond reasonably to their demands with a counter point document. It is mostly handwaving and spin, but one point stuck out to me as an example of how deeply the propaganda of capital has embedded itself in our society.

The producers claim that the actors’ demand to share in the profits made by shows on streaming services is not fair:

The Union is proposing that performers share in the rewards of a successful show, without bearing any of the risk. Under the Union’s proposal, performers would be entitled to receive not only the existing fixed residual – which is paid to the performer even if no one is watching the program – but also a new residual which “shares” in revenue that is somehow attributed to the show. The Union proposes to “share” in success, but not in failure. That is not sharing.

This is terrible for a host of reasons. First, bonuses are common in every business when things are successful. No one is asking Zaslav, the spectacularly terrible head of WB, to give back his stock options or past bonuses now that he has made Warner Brothers a debt-ridden disaster. Profit sharing on top of normal salary is also a common practice in business — no one blinks at this kind of incentive. But what really sticks out is the idea that writers and actors don’t share in the risks. This is absolute nonsense — labor takes almost all the risk in every business venture.

To be a bit simplistic, there are two components to creating a business: capital and labor. Capital is broadly speaking the money invested in a business and the people who control that money. Labor is broadly speaking the people who make the business run. The people who control the capital risk money. It is very often borrowed money, not their own, and corporations are setup in ways that limit the personal exposure of the people who invest in a business to just the money they invest in a business. By law, their losses are limited. When and if a company goes bankrupt, people who invest money have priority on the remaining assets when it comes time to make investors whole.

Labor invests their time and effort — and they can generally only do that for one company at a time. There is only so much time in a day and almost no companies pay wages that let people be part time workers and live a comfortable life. Even gig workers have to work multiple jobs because one job doesn’t cover their bills. When a company fails, labor’s wages and pension funds are generally considered unsecured debts and thus go to the back of the line — behind capital — and are often never made whole. Labor risks their time, effort, and intelligence in the enterprise. Absent a time machine, those are quite literally irreplicable assets. Capital, especially when you consider that it requires no time investment, comparatively risks almost nothing.

And that is just the basics. The power imbalance between capital and labor can often result in even more risk being pushed down to labor. Money, after all, does not need to eat. Very often, companies enforce poor wages and non-compete clauses on labor, further limiting their options and making labor’s participation in the enterprise even riskier. Hollywood is especially good at this. Actors are not consistently paid for auditions or taping screen tests. Writers are very often asked to produce scripts and treatments, months of work, for free with no guarantee of payment of employment at the end of the process. Writers who do get picked up can be held to non-compete clauses and then wait months only to have the show not picked up, leaving them with no work and destitute.

Labor. Takes. All. The. Risk.

But the propaganda of capital has so swamped our culture that the producers feel comfortable putting out a statement claiming that writers and actors are being unreasonable asking to share in the reward when their risk pays off. It is astounding how far from reality our society has strayed. Hopefully, this strike can remind people, especially people in power, of the realities of who takes risks and who creates value.