Labour Vs Capital
When a debate rages, if it can be settled using one the very thing against which people are debating, what happens?
One of the oldest debates which has been running since the beginning of economic thought is, who creates value? Labour or Capital?
Adam Smith thought that both capital and labour were equally important. Without labour, it would not be possible to turn resources into products. But at the same time, it would take labour a lot more time to produce the product without the tools that capital can buy.
Since both sides want to win the argument, the suggestion for balance was never accepted.
The argument on the side of labour has been that without labour, there would be no product. All capital requires labour. Capital by itself is incapable of accomplishing anything. Also, those with capital pay labour less than what their effort is worth. This is what creates surplus value, which is referred to as profits. Capital always aspires to increase its profits while labour is constantly trying to get itself compensated for the effort that it is putting in.
Capitalism argues that, firstly, those with capital could have engaged in excess consumption, and by avoiding this, capital is created. They then take on financial risk and invest that capital to create opportunities. The argument has been that without capital, no factories would exist, and hence, capital is more valuable than labour.
This is a debate that has been ongoing for the last 300 years. Academics would say that the debate has not been settled. In reality, the debate has been settled because labour cannot buy politicians. Capital can.