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This completely misses the point of capitalism and successful business. The whole purpose of a business is to create (and keep) a customer. The two ways it

• dragonwriter 6y ago
  > The whole purpose of a business is to create (and keep) a customer No, the whole point of a capitalist business is to produce returns for the business’s owners. Acquiring and retaining customers is valuable insofar as there is more value to be profitably extracted from the customer; it is instrumental, not an independent goal. > The two ways it does that are innovation and marketing. Well, no, monopolization is itself neither innovation nor marketing (though either or both may be involved in getting to the position where it is possible), but it is definitely a way or acquire and retain customers. > Yes, there can be cases where customers are cheated, but they won't be customers for long. That depends what you mean by cheated. If you mean losing net utility through trade, that's true in a simplistic rational-choice analysis, but given the known deviations from rationality in real-world decisionmaking, not always in practice. If you mean “receive less net value than they would in a competitive marketplace through monopoly rents, but still net positive value”, then it's not even true from a simplistic rational-choice analysis. > It's not about "extracting maximum value and giving as little back in return". Yes, it absolutely is. > That's an extremely simplistic argument that bares no relationship to how companies are actually managed, or how products/services are designed and built. It really isn't. The entire concept of establishing a “moat” is a euphemism for (legal) monopolization so as to enable extraction of monopoly rents, and avoid the reduction of price to marginal cost economics says is the fate of freely competitive markets. Extracting maximum value at minimum cost (maximizing return on investment) is what business is about. Everything else is about techniques to achieve that goal. You've apparently been distracted by the techniques to acheive the goal and missed the actual goal. > "Profit maximization" is nonsense, it's like saying a sports team does "scoring maximization". Sports teams usually strategically aim for win maximization, which isn't the same thing as score maximization, but, no, the error that exists with describing sports team as doing score maximization instead does not exist when describing business as being about profit maximization. > Finally, what is a 'practical monopoly' One whose existence is evidenced empirically through behavior in 5he market and absence of competitive substitution rather than by arbitrary, non-empirically grounded description of market categories.
  • parasubvert 6y ago
    > No, the whole point of a capitalist business is to produce returns for the business’s owners. Acquiring and retaining customers is valuable insofar as there is more value to be profitably extracted from the customer; it is instrumental, not an independent goal. This is completely wrong. You can’t have returns without customers. > Extracting maximum value at minimum cost (maximizing return on investment) is what business is about. Everything else is about techniques to achieve that goal. You've apparently been distracted by the techniques to acheive the goal and missed the actual goal. Creating customers is not a “technique”. It is the essential act. You can have a business that’s not profitable. You can have a business that doesn’t attract much investment. You can have a business that doesn’t maximize profit. But you can’t have a business if you have no customers. You’re so distracted by profit and investment that you’ve convinced yourself it’s possible to have a successful or profitable business with no customers. > “practical monopoly” is One whose existence is evidenced empirically through behavior in 5he market and absence of competitive substitution rather than by arbitrary, non-empirically grounded description of market categories. In other words, “I know it when I see it”.