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[flagged]

mbostleman 5y ago
What you're describing here is not capitalism but rather a single unwanted scenario that can come from it, specifically when there are too few producers in a category or, in your example, when there is only one.
- pygy_ 5y ago
  Market consolidation seems to be the mechanical conclusion of the current rules of the capitalist system, thanks to compounding effects.
- bavell 5y ago
  Yes, it also ignores that price is only one of many factors in the market - doesn't matter to some consumers how cheap your widget is if my widget has new tech/features not found in your widget and consumers need those features. So company A in the example could drop prices and still not be able to compete with the superior product from company B. Happens all the time in the real world.
asow92 5y ago
And what is your solution? You can say something is flawed, but compared to what, and how would you improve it?
- depaya 5y ago
  It's ok to express frustration with something without having a solution to it.
  - asow92 5y ago
    How about you? What's your solution?
  - VoodooJuJu 5y ago
    I guess it's "okay" (what isn't "okay" in this context?). But it's certainly not useful. So you've restated the problem - great. This is a good way to lead into a solution, which is the the more useful thing to discuss. So let's hear the solution.
    - depaya 5y ago
      I don't have a solution. I don't have much knowledge of such extremely complex systems and I have no hope of coming up with a solution myself. I can see that my car is sputtering black smoke when I drive it and correctly identify that it's a problem, but I bring it to an expert for a suggestion to fix it since I don't have much knowledge in this topic either.
      - asow92 5y ago
        Fine, don't contribute to the discussion in a constructive way, but our peer are in the thread above is: https://news.ycombinator.com/item?id=29876728 https://news.ycombinator.com/item?id=29876728
  - zepto 5y ago
    Frustration with something is not the same as being ‘against’ that thing. If you are against it and you don’t have a solution then you are simply destructive.
- usrbinbash 5y ago
  The solution already exists and is used, to varying degrees, by many western industrializted countries, especially in Europe. 1. Regulated Capitalism 2. State Funded Infrastructure. ad 1) Capitalism isn't a bad system per-se, but needs to be kept in check. States need to ensure that un-competitive behavior is kept in check, that too-large monopolies are reigned in, that consumers are protected, that fair taxes are paid and that private wealth has no undue influence on politics. ad 2) Structural systems required for a society to function properly have to be, at least partially, state funded, state controlled, or even state owned, thus ensuring the availability and baseline quality of structural services to as many citizens as possible, with regard for revenue generation being a secondary concern.
  - hnuser847 5y ago
    > 1. Regulated Capitalism This is why we have cronyism in the first place. Who do you think is writing the regulations? Who's funding the think tanks and the "grassroots" organizations? Who's paying for the campaigns?
    - simonh 5y ago
      Here in the UK we have pretty strict campaign finance limits and lobbying is also heavily regulated. In most European democracies the comment was referring to this is really not a serious problem. It's always a problem to _some_ extent, but the US is an extreme outlier on this one.
  - asow92 5y ago
    These sound like reasonable improvements, and maybe not without their own potential vectors for cronyism. I am genuinely interested to read more.
    - usrbinbash 5y ago
      Of course they create vectors for cronyism, massively. All these improvements require constant vigil by regulatory bodies, the justice system and the public itself. They also rely heavily on the public being educated enough, interested enough and participatory enough to reflect bad behavior in their voting decisions. None of this however is an argument for less regulation. It is an argument for education and political participation.
dbsmith83 5y ago
It's more complex and doesn't always go like that. If X' is a superior product objectively, then company B can find investors willing to back them and take on company A. Company A could itself be an investor in company B
- Zenst 5y ago
  Yes way more complex as a recent article outlined regarding a very relevant story. "$35BN Match Group file multiple lawsuits against muzmatch following repeated failed acquisition offers" - https://news.ycombinator.com/item?id=29860034 https://news.ycombinator.com/item?id=29860034
  - deleted 5y ago
    [deleted]
  - dbsmith83 5y ago
    shrug I'm sure you can find much more examples of companies not behaving this way. This kind of behavior can be lessened with laws and penalties against frivolous lawsuits. It's hardly an indictment against the system itself.
    - jevoten 5y ago
      On the other hand there are countless examples of similar strong-arming tactics that never see daylight. For example, negotiations with supermarket chains to get a spot on the shelf (and which spot), what the chain's cut will be, or which tools a car repair shop is allowed to use to be "licensed" to work on some brand (hint: it's the brand's own overpriced line of tools). "Lets provide the better product/service at a lower price" is, by far, not the most common business tactic.
      - dbsmith83 5y ago
        Indeed, over-regulation is cronyism
    - 5y ago
thereddaikon 5y ago
[flagged]
- stremrn8 5y ago
  [dead]
- topaz0 5y ago
  The incentives of capitalism lead to this, even if Adam Smith didn't discuss it.
- brightstep 5y ago
  Weird, never heard of a strawman that actually keeps happening in real life, over and over. People may be disgusted by the incentives of capitalism, but their disgust hasn't changed it very much.
danuker 5y ago
Each time the incumbent A snuffs out such a competitor, they have to give away a lot of cash. While financing this might become profitable after the competitor goes bankrupt and A raises prices again, there is a continuous stream of competitors trying to profit, which might erode A's capital to a point where it's not worth dumping. There is also the risk of a bankrupt competitor open-sourcing their product out of either spite or benevolence, significantly and permanently demonetizing the product in question, damaging A (the dumper's) finances. And yet another risk is the competitor not going bankrupt, but merely scaling down while A is done with its dumping. https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
vannevar 5y ago
Yes, the fundamental problem is that there is a strong feedback loop between capital and income, so that the more capital is accumulated, the more it produces income. In practical terms, it means that the rich can not only buy rewards for the work they've put in, they can also buy opportunities for additional income---opportunities that poorer people could've won with hard work but now are no longer available. This feedback loop is exacerbated by a lot of factors, including things like cronyism and winner-take-all digital markets, but the fundamental problem is intrinsic to capitalism.
- simonh 5y ago
  >the fundamental problem is that there is a strong feedback loop between capital and income... As long as that capital is devoted to productive activities, such as investment in a company that employs people, or equipment that had to be manufactured and is used productively, I've no problem with that. None of those economic functions could have been substituted by labour, it took capital to do it, and in fact those activities promote and reward labour. So we need to incentivise productive uses of capital, and tax unproductive uses. What's important is that capital is mostly used to benefit society, and capitalism has proved incredibly good at doing that efficiently.
  - vannevar 5y ago
    >So we need to incentivise productive uses of capital, and tax unproductive uses. I would agree that this would probably improve the situation, yes, as long as the concentration of wealth isn't leveraged to drive wages down. >What's important is that capital is mostly used to benefit society, and capitalism has proved incredibly good at doing that efficiently. However productive the economy becomes, if its fruits are not shared more widely than they are today, it won't benefit society as a whole in the long run. In the last 40 years overall productivity has boomed, but the wealthy have grabbed a wildly disproportionate share of the resulting economic growth simply because their disproportionate share of capital gives them the leverage to do so.
dimitrios1 5y ago
Any system is not devoid of a system of morals and ethics. The issue we have today is one where the elite are completely devoid of any morals, or they have convinced themselves that they are acting morally in some fashion. This is the issue with any system, whether it be capitalism, socialism, fascism, or communism. A select group of individuals eventually rise to the top, and they work to manipulate the system to their advantage -- just look at the conspiracies that were occurring immediately after Hitler and Stalin's deaths. Watch closely when Kim Jong inevitably passes, and there is a power void in North Korea. History repeats itself time and time again. We, in general, are a morally bankrupt people, and everyone has been conditioned to act in one own's best interest. "I'm gonna get mine" because everyone believes the system is corrupt and that's how you have to behave to survive, but what people don't understand is it is the people that are corrupt, and this behavior simply perpetuates the corruption. Too many people think it's a system issue. This place too much faith in structures created by man. This is an issue of hearts and minds. Always has been.
- LeifCarrotson 5y ago
  Morals and ethics are great but insufficient. In a system with an absence of consequences for unethical and immoral behavior - in fact, with the presence of incentives for those behaviors - even if 99% of the participants are sufficiently morally motivated to reject the siren song of wealth and power (which is a stretch) there will always be a few narcissistic, greedy, power-hungry sociopaths with an excess of inherited wealth that will trample all over your utopia. It's useful to suggest that everyone behave morally, if more did so the world would be a better place. But it's unwise to build a system where that suggestion is the only check on bad behavior.
hnuser847 5y ago
> Company A, having been dominant on the market for a long time, can simply tap into their savings and lower its prices, to the point where X is more attractive to consumers than X'. B, new to the market and wo. such substantial savings, cannot compete and goes bankrupt. If it was this simple, why have so many gigantic corporations gone out of business over the years? Sears was once the world's largest retailer and built the world's tallest building to use as its headquarters. Now it's a penny stock. Why didn't they just lower their prices to push out competitors? Remember every town in America had a Blockbuster and AOL was synonymous with the internet? What happened to those companies?
- frgtpsswrdlame 5y ago
  But if Sears or others are replaced with other monopolies then the point stands. For example if you imagine a market where every 20 years the old monopoly firm gets beat out by a competitive new entrant which very quickly establishes it's own monopoly, becomes sclerotic over 20 years and then itself loses, it doesn't really matter to consumers that there is turnover, they are almost always existing in a monopolized market.
- notahacker 5y ago
  Just because an approach doesn't always work doesn't mean that it is often tried and often successful. Even feudalism had numerous examples of once-powerful barons being deposed, but that didn't mean inherited privilege and killing off weaker competitors weren't characteristics of the system.
- usrbinbash 5y ago
  https://www.indigo9digital.com/blog/failureofsears https://www.indigo9digital.com/blog/failureofsears http://www.internethistorypodcast.com/2014/07/what-ever-happened-to-aol/ http://www.internethistorypodcast.com/2014/07/what-ever-happ...
sleepysysadmin 5y ago
>The maxime of capitalism is to maximize ones own profit. Not sure I necessarily agree with this. I can understand how 1 might come to see it this way. Capitalism is about measuring ones contribution to society. >What happens in practice is an accumulation of wealth == power in the hands of a small elite, which then no longer need to compete, cronyism or not, because they have the resources to defeat every competitor, even if the competing product is superior. In our current system which is a regulated capitalist system this happens. It would be a strawman to assert this against capitalism and exclude any impact that government regulation may provide. I'm pretty most people could see government monopolies as abusing capitalism. >Company A, having been dominant on the market for a long time, can simply tap into their savings and lower its prices, to the point where X is more attractive to consumers than X'. B, new to the market and wo. such substantial savings, cannot compete and goes bankrupt. Lets evaluate. Tesla: Market Cap of ~1,030 Billion $ off of ~$30 billion revenue. Ford: Market Cap of ~100 billion $ off of $150 billion revenue. GM: Market cap of ~100 billion $ off of $150 billion revenue. Stellantis: Market cap of ~64 billon $ off of $100 billion revenue. Very clearly shows why Ford and GM are rushing to get EVs out to market. Stellantis who had good plans has basically not arrived to market with anything. This is one of the highest regulated industries and capitalism is working great here. >Okay, but the consumers still get X' when A buys the patents from the now bankrupt B, right? Maybe. Patents != capitalism. A true free market would not have any patents. If you build something new and unique, everyone would be able to come in and copy it. We could debate the merits of the patent system and perhaps from society's point of view it's a good thing. However, it the current subject, this isnt capitalism you're arguing against. >They have eliminated their competition anyway, so why bother, when they can just continue printing money by making X, right? Remember, the maxime is maximize-your-profit not deliver-the-best-product. I think this is a good spot to come back around. Capitalism is not competition. Yes it engenders competition but that's the wrong way to look at it. This is something business owners need to learn. Capitalism is about solving problems and contributing to society. Capitalism measures this in one of the most effective ways.
serverholic 5y ago
You're missing a crucial element here. The government actually helps keep companies like Company A in power.

[flagged]

What you're describing here is not capitalism but rather a single unwanted scenario that can come from it, specifically when there are too few producers in a category or, in your example, when there is only one.

pygy_ 5y ago
Market consolidation seems to be the mechanical conclusion of the current rules of the capitalist system, thanks to compounding effects.
bavell 5y ago
Yes, it also ignores that price is only one of many factors in the market - doesn't matter to some consumers how cheap your widget is if my widget has new tech/features not found in your widget and consumers need those features. So company A in the example could drop prices and still not be able to compete with the superior product from company B. Happens all the time in the real world.

asow92 5y ago

And what is your solution? You can say something is flawed, but compared to what, and how would you improve it?

depaya 5y ago
It's ok to express frustration with something without having a solution to it.
- asow92 5y ago
  How about you? What's your solution?
- VoodooJuJu 5y ago
  I guess it's "okay" (what isn't "okay" in this context?). But it's certainly not useful. So you've restated the problem - great. This is a good way to lead into a solution, which is the the more useful thing to discuss. So let's hear the solution.
  - depaya 5y ago
    I don't have a solution. I don't have much knowledge of such extremely complex systems and I have no hope of coming up with a solution myself. I can see that my car is sputtering black smoke when I drive it and correctly identify that it's a problem, but I bring it to an expert for a suggestion to fix it since I don't have much knowledge in this topic either.
    - asow92 5y ago
      Fine, don't contribute to the discussion in a constructive way, but our peer are in the thread above is: https://news.ycombinator.com/item?id=29876728 https://news.ycombinator.com/item?id=29876728
- zepto 5y ago
  Frustration with something is not the same as being ‘against’ that thing. If you are against it and you don’t have a solution then you are simply destructive.
usrbinbash 5y ago
The solution already exists and is used, to varying degrees, by many western industrializted countries, especially in Europe. 1. Regulated Capitalism 2. State Funded Infrastructure. ad 1) Capitalism isn't a bad system per-se, but needs to be kept in check. States need to ensure that un-competitive behavior is kept in check, that too-large monopolies are reigned in, that consumers are protected, that fair taxes are paid and that private wealth has no undue influence on politics. ad 2) Structural systems required for a society to function properly have to be, at least partially, state funded, state controlled, or even state owned, thus ensuring the availability and baseline quality of structural services to as many citizens as possible, with regard for revenue generation being a secondary concern.
- hnuser847 5y ago
  > 1. Regulated Capitalism This is why we have cronyism in the first place. Who do you think is writing the regulations? Who's funding the think tanks and the "grassroots" organizations? Who's paying for the campaigns?
  - simonh 5y ago
    Here in the UK we have pretty strict campaign finance limits and lobbying is also heavily regulated. In most European democracies the comment was referring to this is really not a serious problem. It's always a problem to _some_ extent, but the US is an extreme outlier on this one.
- asow92 5y ago
  These sound like reasonable improvements, and maybe not without their own potential vectors for cronyism. I am genuinely interested to read more.
  - usrbinbash 5y ago
    Of course they create vectors for cronyism, massively. All these improvements require constant vigil by regulatory bodies, the justice system and the public itself. They also rely heavily on the public being educated enough, interested enough and participatory enough to reflect bad behavior in their voting decisions. None of this however is an argument for less regulation. It is an argument for education and political participation.

dbsmith83 5y ago

It's more complex and doesn't always go like that. If X' is a superior product objectively, then company B can find investors willing to back them and take on company A. Company A could itself be an investor in company B

Zenst 5y ago
Yes way more complex as a recent article outlined regarding a very relevant story. "$35BN Match Group file multiple lawsuits against muzmatch following repeated failed acquisition offers" - https://news.ycombinator.com/item?id=29860034 https://news.ycombinator.com/item?id=29860034
- deleted 5y ago
  [deleted]
- dbsmith83 5y ago
  shrug I'm sure you can find much more examples of companies not behaving this way. This kind of behavior can be lessened with laws and penalties against frivolous lawsuits. It's hardly an indictment against the system itself.
  - jevoten 5y ago
    On the other hand there are countless examples of similar strong-arming tactics that never see daylight. For example, negotiations with supermarket chains to get a spot on the shelf (and which spot), what the chain's cut will be, or which tools a car repair shop is allowed to use to be "licensed" to work on some brand (hint: it's the brand's own overpriced line of tools). "Lets provide the better product/service at a lower price" is, by far, not the most common business tactic.
    - dbsmith83 5y ago
      Indeed, over-regulation is cronyism
  - 5y ago

thereddaikon 5y ago

[flagged]

stremrn8 5y ago
[dead]
topaz0 5y ago
The incentives of capitalism lead to this, even if Adam Smith didn't discuss it.
brightstep 5y ago
Weird, never heard of a strawman that actually keeps happening in real life, over and over. People may be disgusted by the incentives of capitalism, but their disgust hasn't changed it very much.

danuker 5y ago

Each time the incumbent A snuffs out such a competitor, they have to give away a lot of cash. While financing this might become profitable after the competitor goes bankrupt and A raises prices again, there is a continuous stream of competitors trying to profit, which might erode A's capital to a point where it's not worth dumping. There is also the risk of a bankrupt competitor open-sourcing their product out of either spite or benevolence, significantly and permanently demonetizing the product in question, damaging A (the dumper's) finances. And yet another risk is the competitor not going bankrupt, but merely scaling down while A is done with its dumping. https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy)

vannevar 5y ago

Yes, the fundamental problem is that there is a strong feedback loop between capital and income, so that the more capital is accumulated, the more it produces income. In practical terms, it means that the rich can not only buy rewards for the work they've put in, they can also buy opportunities for additional income---opportunities that poorer people could've won with hard work but now are no longer available. This feedback loop is exacerbated by a lot of factors, including things like cronyism and winner-take-all digital markets, but the fundamental problem is intrinsic to capitalism.

simonh 5y ago
>the fundamental problem is that there is a strong feedback loop between capital and income... As long as that capital is devoted to productive activities, such as investment in a company that employs people, or equipment that had to be manufactured and is used productively, I've no problem with that. None of those economic functions could have been substituted by labour, it took capital to do it, and in fact those activities promote and reward labour. So we need to incentivise productive uses of capital, and tax unproductive uses. What's important is that capital is mostly used to benefit society, and capitalism has proved incredibly good at doing that efficiently.
- vannevar 5y ago
  >So we need to incentivise productive uses of capital, and tax unproductive uses. I would agree that this would probably improve the situation, yes, as long as the concentration of wealth isn't leveraged to drive wages down. >What's important is that capital is mostly used to benefit society, and capitalism has proved incredibly good at doing that efficiently. However productive the economy becomes, if its fruits are not shared more widely than they are today, it won't benefit society as a whole in the long run. In the last 40 years overall productivity has boomed, but the wealthy have grabbed a wildly disproportionate share of the resulting economic growth simply because their disproportionate share of capital gives them the leverage to do so.

dimitrios1 5y ago

Any system is not devoid of a system of morals and ethics. The issue we have today is one where the elite are completely devoid of any morals, or they have convinced themselves that they are acting morally in some fashion. This is the issue with any system, whether it be capitalism, socialism, fascism, or communism. A select group of individuals eventually rise to the top, and they work to manipulate the system to their advantage -- just look at the conspiracies that were occurring immediately after Hitler and Stalin's deaths. Watch closely when Kim Jong inevitably passes, and there is a power void in North Korea. History repeats itself time and time again. We, in general, are a morally bankrupt people, and everyone has been conditioned to act in one own's best interest. "I'm gonna get mine" because everyone believes the system is corrupt and that's how you have to behave to survive, but what people don't understand is it is the people that are corrupt, and this behavior simply perpetuates the corruption. Too many people think it's a system issue. This place too much faith in structures created by man. This is an issue of hearts and minds. Always has been.

LeifCarrotson 5y ago
Morals and ethics are great but insufficient. In a system with an absence of consequences for unethical and immoral behavior - in fact, with the presence of incentives for those behaviors - even if 99% of the participants are sufficiently morally motivated to reject the siren song of wealth and power (which is a stretch) there will always be a few narcissistic, greedy, power-hungry sociopaths with an excess of inherited wealth that will trample all over your utopia. It's useful to suggest that everyone behave morally, if more did so the world would be a better place. But it's unwise to build a system where that suggestion is the only check on bad behavior.

hnuser847 5y ago

> Company A, having been dominant on the market for a long time, can simply tap into their savings and lower its prices, to the point where X is more attractive to consumers than X'. B, new to the market and wo. such substantial savings, cannot compete and goes bankrupt. If it was this simple, why have so many gigantic corporations gone out of business over the years? Sears was once the world's largest retailer and built the world's tallest building to use as its headquarters. Now it's a penny stock. Why didn't they just lower their prices to push out competitors? Remember every town in America had a Blockbuster and AOL was synonymous with the internet? What happened to those companies?

frgtpsswrdlame 5y ago
But if Sears or others are replaced with other monopolies then the point stands. For example if you imagine a market where every 20 years the old monopoly firm gets beat out by a competitive new entrant which very quickly establishes it's own monopoly, becomes sclerotic over 20 years and then itself loses, it doesn't really matter to consumers that there is turnover, they are almost always existing in a monopolized market.
notahacker 5y ago
Just because an approach doesn't always work doesn't mean that it is often tried and often successful. Even feudalism had numerous examples of once-powerful barons being deposed, but that didn't mean inherited privilege and killing off weaker competitors weren't characteristics of the system.
usrbinbash 5y ago
https://www.indigo9digital.com/blog/failureofsears https://www.indigo9digital.com/blog/failureofsears http://www.internethistorypodcast.com/2014/07/what-ever-happened-to-aol/ http://www.internethistorypodcast.com/2014/07/what-ever-happ...

sleepysysadmin 5y ago

>The maxime of capitalism is to maximize ones own profit. Not sure I necessarily agree with this. I can understand how 1 might come to see it this way. Capitalism is about measuring ones contribution to society. >What happens in practice is an accumulation of wealth == power in the hands of a small elite, which then no longer need to compete, cronyism or not, because they have the resources to defeat every competitor, even if the competing product is superior. In our current system which is a regulated capitalist system this happens. It would be a strawman to assert this against capitalism and exclude any impact that government regulation may provide. I'm pretty most people could see government monopolies as abusing capitalism. >Company A, having been dominant on the market for a long time, can simply tap into their savings and lower its prices, to the point where X is more attractive to consumers than X'. B, new to the market and wo. such substantial savings, cannot compete and goes bankrupt. Lets evaluate. Tesla: Market Cap of ~1,030 Billion $ off of ~$30 billion revenue. Ford: Market Cap of ~100 billion $ off of $150 billion revenue. GM: Market cap of ~100 billion $ off of $150 billion revenue. Stellantis: Market cap of ~64 billon $ off of $100 billion revenue. Very clearly shows why Ford and GM are rushing to get EVs out to market. Stellantis who had good plans has basically not arrived to market with anything. This is one of the highest regulated industries and capitalism is working great here. >Okay, but the consumers still get X' when A buys the patents from the now bankrupt B, right? Maybe. Patents != capitalism. A true free market would not have any patents. If you build something new and unique, everyone would be able to come in and copy it. We could debate the merits of the patent system and perhaps from society's point of view it's a good thing. However, it the current subject, this isnt capitalism you're arguing against. >They have eliminated their competition anyway, so why bother, when they can just continue printing money by making X, right? Remember, the maxime is maximize-your-profit not deliver-the-best-product. I think this is a good spot to come back around. Capitalism is not competition. Yes it engenders competition but that's the wrong way to look at it. This is something business owners need to learn. Capitalism is about solving problems and contributing to society. Capitalism measures this in one of the most effective ways.

serverholic 5y ago

You're missing a crucial element here. The government actually helps keep companies like Company A in power.