4 ms·

Capitalism "creates" efficiency by driving under-performers to change or driving them out of the market. Efficiency means not doing unnecessary things, not emp

by csours 5y ago

Capitalism "creates" efficiency by driving under-performers to change or driving them out of the market. Efficiency means not doing unnecessary things, not employing unnecessary people. They may have been doing something useful, or just something that someone thought was important. The important point is the question of what exactly you are being efficient at doing. As you drive towards a particular Pareto optimization, economic forces have changed what you need to optimize for, perhaps driven by your own optimization. The limiting factors have changed. If the moat of required competencies and capital allocation is large enough, you can hide a lot of inefficiencies (aka your boss's friends) for quite a long time. --- Edit: people can comment about crony capitalism etc if they like, my comment is not meant to be comprehensive, merely observational.

kiba 5y ago
Capitalism isn't why SpaceX beats competitors. Rather, money's not the motivator that drive Elon Musk and his company. Defense contractors are a form of capitalism too. The market can impose some discipline, but it's up to the humans in the driver seat.
- Cthulhu_ 5y ago
  > Defense contractors are a form of capitalism too. But different; the US is the best funded / most expensive military in the world by a big margin, and the defense contractors know it and develop weapons and price them accordingly. It's why they use fancy weapon systems instead of tried, tested and cheap Kalashnikovs. SpaceX is the Kalashnikov of rockets, if you think about it.
- csours 5y ago
  I agree. Capitalism itself doesn't do anything; people working in a context tend to value what that context values. Capitalism drives efficient use of capital. Another context for SpaceX is the Moonshot - the big transformational project. In a Moonshot, everyone has to do more work than their job requires. This is called glue work and normally you should limit what glue work you do because you may not be rewarded for it. People working at SpaceX seem to believe in the mission and that is a reward in itself, which leads people to be motivated to bridge all those little gaps that form between job roles. I'd love to hear what other contexts people use to think about this.
  - whatshisface 5y ago
    It's really the manager's job to look at a productive employee and say "great job with all of that glue work you're doing," and their bosses job to support their support, and so on up to where the org tree merges the two sides being glued and you get one person who's personally happy about it. Of course that doesn't happen, but that's due to bad management rewarding lower management for putting departmental metrics ahead of company-wide results, not due to there not being a "moonshot" in progress. If the CEO is patting the head of development on the back for results he got by stonewalling sales, and the head of sales for stonewalling development, that's the source of the problem even if the company sells used carpets.
- s1artibartfast 5y ago
  Slightly different take. The advantage is consistency of goals and simplicity of governance. Private public partnerships are weighed down by a vast number of stakeholders. You can't follow the engineering as easily if your programs are bound to customer review meetings to renegotiate requirements and budget gating every 2-4 years. This adds incredible friction to development.
imglorp 5y ago
Yes, but I think there are some corollaries. First, sometimes marketing beats all the other concerns. And second, sometimes business deals beat marketing.
- e4e78a06 5y ago
  That's just because capitalism as taught in college micro/macro classes assumes a perfect market with no differentiation and lowest price always wins. But in reality it costs money to disseminate information (marketing) and deals are not struck in a perfect market. And differentiation is not only common but desired by sellers. I'd also add that government tends to magnify these distortions since it gates access to a lot of demand behind a bidding process that's heavily politicized and reliant on lobbying. So the market as thought of in economics doesn't really exist anymore.

by csours 5y ago

kiba 5y ago

Capitalism isn't why SpaceX beats competitors. Rather, money's not the motivator that drive Elon Musk and his company. Defense contractors are a form of capitalism too. The market can impose some discipline, but it's up to the humans in the driver seat.

Cthulhu_ 5y ago
> Defense contractors are a form of capitalism too. But different; the US is the best funded / most expensive military in the world by a big margin, and the defense contractors know it and develop weapons and price them accordingly. It's why they use fancy weapon systems instead of tried, tested and cheap Kalashnikovs. SpaceX is the Kalashnikov of rockets, if you think about it.
csours 5y ago
I agree. Capitalism itself doesn't do anything; people working in a context tend to value what that context values. Capitalism drives efficient use of capital. Another context for SpaceX is the Moonshot - the big transformational project. In a Moonshot, everyone has to do more work than their job requires. This is called glue work and normally you should limit what glue work you do because you may not be rewarded for it. People working at SpaceX seem to believe in the mission and that is a reward in itself, which leads people to be motivated to bridge all those little gaps that form between job roles. I'd love to hear what other contexts people use to think about this.
- whatshisface 5y ago
  It's really the manager's job to look at a productive employee and say "great job with all of that glue work you're doing," and their bosses job to support their support, and so on up to where the org tree merges the two sides being glued and you get one person who's personally happy about it. Of course that doesn't happen, but that's due to bad management rewarding lower management for putting departmental metrics ahead of company-wide results, not due to there not being a "moonshot" in progress. If the CEO is patting the head of development on the back for results he got by stonewalling sales, and the head of sales for stonewalling development, that's the source of the problem even if the company sells used carpets.
s1artibartfast 5y ago
Slightly different take. The advantage is consistency of goals and simplicity of governance. Private public partnerships are weighed down by a vast number of stakeholders. You can't follow the engineering as easily if your programs are bound to customer review meetings to renegotiate requirements and budget gating every 2-4 years. This adds incredible friction to development.

imglorp 5y ago

Yes, but I think there are some corollaries. First, sometimes marketing beats all the other concerns. And second, sometimes business deals beat marketing.

e4e78a06 5y ago
That's just because capitalism as taught in college micro/macro classes assumes a perfect market with no differentiation and lowest price always wins. But in reality it costs money to disseminate information (marketing) and deals are not struck in a perfect market. And differentiation is not only common but desired by sellers. I'd also add that government tends to magnify these distortions since it gates access to a lot of demand behind a bidding process that's heavily politicized and reliant on lobbying. So the market as thought of in economics doesn't really exist anymore.