I’m not the other poster, but there’s at least 3 reasons.
Competition doesn’t just happen for consumer goods, it happens for every single commodity traded on the market. Labor is a commodity. Because of the immense supply of labor, and the capitalist class’ deliberate decision to maintain an unemployed section of the population which deflates wages by adding more desperate people willing to work for less. Generally, you can think of a market as a battle between 2 armies who also have internal battles. If the attacking army is better at organizing itself and doesn’t get mired in the internal conflict, while the defending army is divided and has constant mutinies, the attacking army is bound to have a better chance in the battle. The capitalist class is smaller and has a much easier time coordinating, most workers don’t have large enough unions to contend with that.
Competition only goes on for so long, and eventually the whole point of a competition is that someone wins. If you have several companies competing to set the price of a commodity in a market, odds are one of them has enough capital to starve out the other ones. That happens in the real world all the time. What’s worse, the more times you capture parts of the market, the easier it is to capture more. That’s one of the fundamental tendencies in capitalism, the centralization of capital under fewer and fewer hands. Of course, once this process has run its course the result is monopoly, but even if the companies step short of monopolizing the market entirely to avoid anti trust regulations they are still likely to draw agreements between themselves to keep prices at a certain level to maintain profits. Recall the armies analogy above.
Even if nobody won in a competition and there was some permanent state of lowering the price of goods, while this is “good” for consumers, it’s still bad for the workers producing the goods, which most consumers are. Capitalists have no problem investing more fixed costs in the process of production if it leads to larger profits in the short term, but the issue comes down to the way profit is made in the first place. In a capitalist system, a cycle of production takes place when a capitalist exchanges money for commodities, pays a wage to workers who improve the commodities through their labor, then sells the commodities for more money than they spent during the cycle. The difference in the selling price and the fixed cost (capital) plus the variable cost (wages) is profit. Since the fixed cost is paid for at the same rate everywhere, i.e. no one should be buying the same commodities for significantly different prices at least locally, the only place where the difference could come from is the wages being smaller than the value added to the commodities through labor. Therefore, profit comes as a result of using labor that the capitalist bought at a discount. That discount we call exploitation. Now consider what happens if more capital is invested: the fixed costs grow in relation to the variable costs, but profit only grows if more labor is exploited. That means that the only way to keep commodities cheaper and cheaper still, while generating more profit relative to investment, is to ramp up exploitation. Practically we see this in reality in the way the production of some goods take place once competition runs its course; factories close down and capital moves abroad to where there are fewer regulations, sweatshops replace the factories and production can keep taking place because exploitation was increased.
Yeah we talk about it all the time! And it’s ok to be skeptical. All this stuff is just a model to see the world through and no model is perfect. Sometimes models are very good at making predictions though, and it’s worth trying to understand the logic behind something different so you spot concepts and functions that you hadn’t considered.
Because it is unprofitable. Sooner or later competitors will realize cooperation is more profitable overall. That is why unions are strong and big companies are not really competing
and:
-This hits at one of the core flaws of libertarianism. They tend to hold as a core axiom that competitive markets and free markets are one in the same, i.e. that the “natural state” of the markets are highly competitive, and if there is a lack of competition, it must be an “unnatural state”, i.e. there is some sort of top-down interference, government policies, which restrict competition.
-Libertarians thus see cronyism as happening from the top-down, where governments interfere with the markets, create monopolies, and all for the purpose of enriching themselves. Hence, they conclude the problem is government, that you have to get rid of government and then the problems will be solved.
-This is the direct opposite view of Marxists. Marxists instead argue that markets inherently lead to a gradual increase in monopolization over time, what Marx referred to as the “laws of the concentration and centralization of capitals”, and that market economies have a natural tendency to move more and more away from competition over time.
-More than this, Marxists also see political power as not ultimately originating from the superstructure of society (the politics), but instead from the base of society (the economics). Any government policy requires enforcement, but any enforcement inherently presupposes an economic system which can produce tools of enforcement and allocate them appropriately to the enforcers. Politics is inherently derivative of economics.
-The reason the political system favors the wealthy is not because of some laws implemented by some evil cabal that if they were just abolished, then capitalism would “work”. No, the reason the political system favors the wealthy is because the wealthy are the ones who control society’s wealth, and so of course the political system will favor them.
-No law you write on a piece of paper will make a billionaire like Jeff Bezos have equal political influence as a minimum wage worker barely making ends meet. Production is the most fundamental basis of human society and those who control production control society’s wealth and will inevitably have more influence. Even if you write laws saying bribery is illegal then they can just bribe those who enforce it.
-Hence, Marxists do not see cronyism as a result of top-down processes implemented by a corrupt superstructure, by some evil cabal within the government that corrupted “true capitalism” and turned it into cronyism.
-Rather, Marxists see cronyism as originating from a bottom-up process, that stems from the economic base in and of itself. Markets inevitably lead over time to greater and greater monopolization, creating a larger and larger gap between the working masses and the capitalists, and even if there is a “rising tide” and workers’ wages rise as well, the profits of capital increase disproportionality faster, and capital continues to centralize rapidly, leading to an increasing social chasm between the rich and the poor.
-This is why libertarianism/conservatism has never worked in history and will never work. They can’t get rid of “big government” because the economic base, capitalism, inherently creates an enormous social divide, enormous polarization in the economy. This enormous wealth inequality naturally translates to power inequality, which then allows the capitalists to capture the state for their interests.
-Once the capitalists capture the state, there is no reason for them not to implement “big government” but for their own benefit, i.e. corporate bailouts and subsidies and such. Libertarian policies, hence, in practice, always lead to “big government”. Never in human history have they actually achieved their goals, because their goals are fundamentally impossible and self-contradictory.
-Another separate point is that these people also have a tendency to water down what “capitalism” means. Capitalism is about capital, that’s why it’s called capitalism. This refers to a specific kind of society dominated by capital, i.e. production for profit. Libertarians like water down “capitalism” to refer specifically just to trade or markets, but capitalism is not tradeism or marketism. It’s capitalism. Pre-capitalist economies have had trade and markets and so have socialist economies.
Thanks for providing such detailed responses. I think my biggest problem with marxist ideologies is that I don’t know an example of them working outside of theory. It seems to me like greed is a natural part of human nature and capitalism generally feeds into that nature as terrible as that is. Its not sustainable in the long term, but that also tends to be when revolutions happen to redistribute the wealth
I think competition — actual competition, not “5 megacorps own everything” competition — can be useful in some cases, but keep in mind that competition does not necessarily incentivize good products. With food, for example, competition incentivizes addictive, unhealthy shit. With social media, same thing. With labor, it incentivizes exploitation, because whichever company squeezes the most work out of people for the lowest pay outcompetes everyone else. You can ameliorate these shitty incentive structures by putting workers and communities in charge of production, rather than owners and shareholders who want to maximize profit at the expense of any other metric.
Sure I’ll bite, competition is incredibly hard to attain so hard in fact that it doesn’t exist in the real world.
For one I’ll say that when we talk about competition should have the following elements:
No competitor has a large market share (A large marketshare would help them influence prices which they can use to drive out other competitors taking their market share)
Almost no barrier to enter and exit the competition
Consumers have perfect information
Now ignoring that ‘competitors’ will activly try to destroy perfect competitions to go for higher profits why do even consumers not want competition? Economies of Scale
In order to have perfect competition you need an ‘excess’ of competitors. So think 100 furniture factories when 10 could do that work, every factory needs to figure out their own logistics, sale and management, this means that the state of competition is less efficient than a state that is closer to a monopoly/duopoly/oligopoly with several larger companies, even if those companies suck.
This is also of course ignoring natural monopolies aka utilities.
Wait why not?
I’m not the other poster, but there’s at least 3 reasons.
Competition doesn’t just happen for consumer goods, it happens for every single commodity traded on the market. Labor is a commodity. Because of the immense supply of labor, and the capitalist class’ deliberate decision to maintain an unemployed section of the population which deflates wages by adding more desperate people willing to work for less. Generally, you can think of a market as a battle between 2 armies who also have internal battles. If the attacking army is better at organizing itself and doesn’t get mired in the internal conflict, while the defending army is divided and has constant mutinies, the attacking army is bound to have a better chance in the battle. The capitalist class is smaller and has a much easier time coordinating, most workers don’t have large enough unions to contend with that.
Competition only goes on for so long, and eventually the whole point of a competition is that someone wins. If you have several companies competing to set the price of a commodity in a market, odds are one of them has enough capital to starve out the other ones. That happens in the real world all the time. What’s worse, the more times you capture parts of the market, the easier it is to capture more. That’s one of the fundamental tendencies in capitalism, the centralization of capital under fewer and fewer hands. Of course, once this process has run its course the result is monopoly, but even if the companies step short of monopolizing the market entirely to avoid anti trust regulations they are still likely to draw agreements between themselves to keep prices at a certain level to maintain profits. Recall the armies analogy above.
Even if nobody won in a competition and there was some permanent state of lowering the price of goods, while this is “good” for consumers, it’s still bad for the workers producing the goods, which most consumers are. Capitalists have no problem investing more fixed costs in the process of production if it leads to larger profits in the short term, but the issue comes down to the way profit is made in the first place. In a capitalist system, a cycle of production takes place when a capitalist exchanges money for commodities, pays a wage to workers who improve the commodities through their labor, then sells the commodities for more money than they spent during the cycle. The difference in the selling price and the fixed cost (capital) plus the variable cost (wages) is profit. Since the fixed cost is paid for at the same rate everywhere, i.e. no one should be buying the same commodities for significantly different prices at least locally, the only place where the difference could come from is the wages being smaller than the value added to the commodities through labor. Therefore, profit comes as a result of using labor that the capitalist bought at a discount. That discount we call exploitation. Now consider what happens if more capital is invested: the fixed costs grow in relation to the variable costs, but profit only grows if more labor is exploited. That means that the only way to keep commodities cheaper and cheaper still, while generating more profit relative to investment, is to ramp up exploitation. Practically we see this in reality in the way the production of some goods take place once competition runs its course; factories close down and capital moves abroad to where there are fewer regulations, sweatshops replace the factories and production can keep taking place because exploitation was increased.
Thanks for the detailed comments. Is this the kind of thing you talk about at hexbear? I’d call myself a skeptic but I love the topic
Yeah we talk about it all the time! And it’s ok to be skeptical. All this stuff is just a model to see the world through and no model is perfect. Sometimes models are very good at making predictions though, and it’s worth trying to understand the logic behind something different so you spot concepts and functions that you hadn’t considered.
here is more:
and:
-This hits at one of the core flaws of libertarianism. They tend to hold as a core axiom that competitive markets and free markets are one in the same, i.e. that the “natural state” of the markets are highly competitive, and if there is a lack of competition, it must be an “unnatural state”, i.e. there is some sort of top-down interference, government policies, which restrict competition.
-Libertarians thus see cronyism as happening from the top-down, where governments interfere with the markets, create monopolies, and all for the purpose of enriching themselves. Hence, they conclude the problem is government, that you have to get rid of government and then the problems will be solved.
-This is the direct opposite view of Marxists. Marxists instead argue that markets inherently lead to a gradual increase in monopolization over time, what Marx referred to as the “laws of the concentration and centralization of capitals”, and that market economies have a natural tendency to move more and more away from competition over time.
-More than this, Marxists also see political power as not ultimately originating from the superstructure of society (the politics), but instead from the base of society (the economics). Any government policy requires enforcement, but any enforcement inherently presupposes an economic system which can produce tools of enforcement and allocate them appropriately to the enforcers. Politics is inherently derivative of economics. -The reason the political system favors the wealthy is not because of some laws implemented by some evil cabal that if they were just abolished, then capitalism would “work”. No, the reason the political system favors the wealthy is because the wealthy are the ones who control society’s wealth, and so of course the political system will favor them.
-No law you write on a piece of paper will make a billionaire like Jeff Bezos have equal political influence as a minimum wage worker barely making ends meet. Production is the most fundamental basis of human society and those who control production control society’s wealth and will inevitably have more influence. Even if you write laws saying bribery is illegal then they can just bribe those who enforce it.
-Hence, Marxists do not see cronyism as a result of top-down processes implemented by a corrupt superstructure, by some evil cabal within the government that corrupted “true capitalism” and turned it into cronyism. -Rather, Marxists see cronyism as originating from a bottom-up process, that stems from the economic base in and of itself. Markets inevitably lead over time to greater and greater monopolization, creating a larger and larger gap between the working masses and the capitalists, and even if there is a “rising tide” and workers’ wages rise as well, the profits of capital increase disproportionality faster, and capital continues to centralize rapidly, leading to an increasing social chasm between the rich and the poor.
-This is why libertarianism/conservatism has never worked in history and will never work. They can’t get rid of “big government” because the economic base, capitalism, inherently creates an enormous social divide, enormous polarization in the economy. This enormous wealth inequality naturally translates to power inequality, which then allows the capitalists to capture the state for their interests.
-Once the capitalists capture the state, there is no reason for them not to implement “big government” but for their own benefit, i.e. corporate bailouts and subsidies and such. Libertarian policies, hence, in practice, always lead to “big government”. Never in human history have they actually achieved their goals, because their goals are fundamentally impossible and self-contradictory.
-Another separate point is that these people also have a tendency to water down what “capitalism” means. Capitalism is about capital, that’s why it’s called capitalism. This refers to a specific kind of society dominated by capital, i.e. production for profit. Libertarians like water down “capitalism” to refer specifically just to trade or markets, but capitalism is not tradeism or marketism. It’s capitalism. Pre-capitalist economies have had trade and markets and so have socialist economies.
Thanks for providing such detailed responses. I think my biggest problem with marxist ideologies is that I don’t know an example of them working outside of theory. It seems to me like greed is a natural part of human nature and capitalism generally feeds into that nature as terrible as that is. Its not sustainable in the long term, but that also tends to be when revolutions happen to redistribute the wealth
I think competition — actual competition, not “5 megacorps own everything” competition — can be useful in some cases, but keep in mind that competition does not necessarily incentivize good products. With food, for example, competition incentivizes addictive, unhealthy shit. With social media, same thing. With labor, it incentivizes exploitation, because whichever company squeezes the most work out of people for the lowest pay outcompetes everyone else. You can ameliorate these shitty incentive structures by putting workers and communities in charge of production, rather than owners and shareholders who want to maximize profit at the expense of any other metric.
Sure I’ll bite, competition is incredibly hard to attain so hard in fact that it doesn’t exist in the real world.
For one I’ll say that when we talk about competition should have the following elements:
No competitor has a large market share (A large marketshare would help them influence prices which they can use to drive out other competitors taking their market share) Almost no barrier to enter and exit the competition Consumers have perfect information
Now ignoring that ‘competitors’ will activly try to destroy perfect competitions to go for higher profits why do even consumers not want competition? Economies of Scale
In order to have perfect competition you need an ‘excess’ of competitors. So think 100 furniture factories when 10 could do that work, every factory needs to figure out their own logistics, sale and management, this means that the state of competition is less efficient than a state that is closer to a monopoly/duopoly/oligopoly with several larger companies, even if those companies suck.
This is also of course ignoring natural monopolies aka utilities.
Thank you I’ve gotten so many quality responses to this question and alot to think about.