Proposed New Capitalism

Today there is much discussion of income inequality. Though there are many complex reasons, most accept the argument that it is not good for a society, not just from the standpoint of justice but more because the loss of income for the larger portion of the population reduces demand affecting both business and labor. Following is a possible solution that may not be offensive to either end of the political spectrum. Capital is primarily risked on plant and to a slightly lesser extent materials. Labor then takes the material, using the plant and equipment, and converts it adding value. The resultant then is sold at a profit. Currently, the entire profit (with the exception of corporations with profit sharing plans) goes to the providers of the capital (owners)  My proposal would let the providers of capital reap the profit from its use on plant and materials and let labor claim the profit derived from the portion attributable to labor. (in labor I include direct, indirect, management and engineering and administrative) the distribution of profit to labor would be in proportion to base pay (the assumption is that there is some relationship between pay and contribution). Furthermore labor would have representation on the board of directors in proportion to the labor's input to the total cost.  Example: let's say there is a product selling for 10.00. The portion of the plant going into it  is $2.00, the material is $4.00 and the labor is $2.00. The $2.00 dollars remaining then is profit. Since the capital was at risk on the $6.00 and the labor was $2.00, let 3/4 of the profit or $1.50 go to the providers of the capital and 1/4 or $.50 go to labor.  A company with sales of $100 million with 500 employees making a 15percent profit and 50 percent of costs being labor, would have $7.5 million of profits divided  Between the 500 employees. The average employee would get $15,000. So if there are 400 workers earning $30,000 they would get $11,400 each, 90 engineers supervises and managers earning $70,000 get $26,000, 9 executives earning $100,000 would get $37,500 and the CEO earning $1,000,000 gets $371,000. Furthermore, to retain profits for growth,  regulations could be created allowing the corporation to pay some predetermine portion of the profit in shares of the company. This way everyone participating in the enterprise works toward the profit goal and shares in the success.