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I get that this is the normal ideological description of firms post-70s neoliberal whatever, but if that’s true, like why not just say firms suck, we need commu

I get that this is the normal ideological description of firms post-70s neoliberal whatever, but if that’s true, like why not just say firms suck, we need communism? Like your description makes Pikkety look like an optimist. “The purpose of a firm is to help rich people get money faster than other rich people” logically implies that eventually a small group of rich people will have all the wealth. That’s feudalism. If that’s the goal, let’s start a revolution instead.

earthboundkid 7y ago
Put it this way, if the standard theory of why capitalism beat Soviet communism is that competition created better products etc. none of that requires that the goal of firms is to create better than market average returns to shareholders rather than the goal of firms being a) earn sufficient profit to continue to exist b) benefit consumers c) benefit employees d) benefit shareholders. Yes shareholder would prefer to invest in companies that prioritize them over all else, but why should we the public not say “that’s not an acceptable charter. We don’t want feudalism to happen again, so we are not allowing firms to prioritize shareholders over consumers.”
- jtolmar 7y ago
  If the only defense of capitalism is competition, why not market socialism? As in, markets, competition, and entrepreneurship still exist, but all firms must be worker-owned.
  - anticensor 7y ago
    It is too fragile.
    - earthboundkid 7y ago
      Did I miss when Denmark elected Trump because the people completely distrust the elites and wanted someone to burn it all down?
  - fastball 7y ago
    Because then you would be forcing everyone to be an equity partner, even if they would rather take a higher salary than share in the risk. Doesn't sound like freedom to me.
    - earthboundkid 7y ago
      The "freedom" to monopolize capital is not a meaningful freedom, any more than the freedom to starve in a ditch is a real freedom.
    - lliamander 7y ago
      I imagine independent contracting would be a way to avoid that.
  - lliamander 7y ago
    Quibble: I don't really see worker-owned firms as a form of socialism, which I understand as the government ownership of the means of production. Worker-owned firms I associate more with distributism. Worker-owned firms are a great idea, but if that's the only ownership model then you lose some ability to diversify your investments. Everyone's 401k goes poof. Thinking through this, what are the alternatives? Simple cash reserves are out (because most societies can't seem to shake the tendency towards inflation). Bank savings accounts are a good idea, although impractical in our current society because interest rates are so low.
Ultimatt 7y ago
share holders longer term don't have to be rich
- earthboundkid 7y ago
  I agree, but the theory "firms exist to maximize shareholder value" ensures that they will be. Put it this way: gravity turns space dust into supernovas. Dust is just ever so slightly attracted to other dust, so it accumulates and accumulates, and eventually it becomes so massive that it forms a star. The theory that firms should beat the market makes money gravitational. A shareholder who beats the market will get more money than other shareholders. Now they have more money that they can use to invest in other market beating schemes, etc. If whether a firm beats the market is random, then some investors will win and some will lose but it all balances out. But if beating the market is not random (and how could it be totally random?) then those with the most money can invest in the best firms faster and more easily than smaller investors and crowd them out. Remember that companies only have a finite number of shares, so not everyone can invest in a winner. If there's even a slight bias towards having more money making it easier to beat the market, then eventually you will get a supernova. We all understand this on some level. Why is insider trading illegal? Because it makes it trivial to beat the market!

earthboundkid 7y ago

Put it this way, if the standard theory of why capitalism beat Soviet communism is that competition created better products etc. none of that requires that the goal of firms is to create better than market average returns to shareholders rather than the goal of firms being a) earn sufficient profit to continue to exist b) benefit consumers c) benefit employees d) benefit shareholders. Yes shareholder would prefer to invest in companies that prioritize them over all else, but why should we the public not say “that’s not an acceptable charter. We don’t want feudalism to happen again, so we are not allowing firms to prioritize shareholders over consumers.”

jtolmar 7y ago
If the only defense of capitalism is competition, why not market socialism? As in, markets, competition, and entrepreneurship still exist, but all firms must be worker-owned.
- anticensor 7y ago
  It is too fragile.
  - earthboundkid 7y ago
    Did I miss when Denmark elected Trump because the people completely distrust the elites and wanted someone to burn it all down?
- fastball 7y ago
  Because then you would be forcing everyone to be an equity partner, even if they would rather take a higher salary than share in the risk. Doesn't sound like freedom to me.
  - earthboundkid 7y ago
    The "freedom" to monopolize capital is not a meaningful freedom, any more than the freedom to starve in a ditch is a real freedom.
  - lliamander 7y ago
    I imagine independent contracting would be a way to avoid that.
- lliamander 7y ago
  Quibble: I don't really see worker-owned firms as a form of socialism, which I understand as the government ownership of the means of production. Worker-owned firms I associate more with distributism. Worker-owned firms are a great idea, but if that's the only ownership model then you lose some ability to diversify your investments. Everyone's 401k goes poof. Thinking through this, what are the alternatives? Simple cash reserves are out (because most societies can't seem to shake the tendency towards inflation). Bank savings accounts are a good idea, although impractical in our current society because interest rates are so low.

Ultimatt 7y ago

share holders longer term don't have to be rich

earthboundkid 7y ago
I agree, but the theory "firms exist to maximize shareholder value" ensures that they will be. Put it this way: gravity turns space dust into supernovas. Dust is just ever so slightly attracted to other dust, so it accumulates and accumulates, and eventually it becomes so massive that it forms a star. The theory that firms should beat the market makes money gravitational. A shareholder who beats the market will get more money than other shareholders. Now they have more money that they can use to invest in other market beating schemes, etc. If whether a firm beats the market is random, then some investors will win and some will lose but it all balances out. But if beating the market is not random (and how could it be totally random?) then those with the most money can invest in the best firms faster and more easily than smaller investors and crowd them out. Remember that companies only have a finite number of shares, so not everyone can invest in a winner. If there's even a slight bias towards having more money making it easier to beat the market, then eventually you will get a supernova. We all understand this on some level. Why is insider trading illegal? Because it makes it trivial to beat the market!