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Just don't understand how one could be convinced these days of the fundamental conceit that even a properly profitable company is necessarily going to provide g

Just don't understand how one could be convinced these days of the fundamental conceit that even a properly profitable company is necessarily going to provide good things for people downstream, or for society in general. What is the argument for that in general again? Because to me, if your not Twitter, your Wal Mart or Raytheon or BoA. If your not shittifying a platform you are pushing out small businesses from every town, price gouging government contracts for missiles, fooling elderly people with complicated financial instruments. I just can't really put together any argument at all, if am being honest, to justify the idea that companies with a self interest in profit will reliably help people or the world. It just does not at all feel rational, its like everyone in the world is dreaming.

ssklash 3y ago
A guy named Karl came to the exact same conclusions, in 1867.
SantalBlush 3y ago
>What is the argument for that in general again? Free-market types used to have some assumptions about how free markets are expected to work, then they would derive the result that a free market yields a net benefit to society from those assumptions. Now it is glaringly obvious that a free market can cause a net loss to society, but they still need to believe free markets are good. So they ignore the evidence, and instead of deriving the result from assumptions, they treat it as an axiom instead.
- Jgrubb 3y ago
  Or, blame meddlesome government regulation as the problem, blocking a free market and instead having winners and losers chosen by the state. It’s an effective argument because it’s got some truth to it.
- zeroonetwothree 3y ago
  Isn’t the whole argument in this thread that the government meddled in the economy by printing tons of money that then was used for questionable investments? How is that “free market”? IME 80% of criticisms of “free market” is actually a criticism of government policy (and then the same critics think that more of those policies are called for!)
  - SantalBlush 3y ago
    Government regulation and the Fed will continue to exist in some form, at least to some small degree, so you will always be able to claim markets weren't "free" enough to properly implement a free market system. But if that's true, then it's moot; if a free-market system requires absolute purity from government to perform as intended, then it's worthless, because that will never happen. In other words, its proponents admit it's a fantasy that will only exist in their heads. As such, I have no reason to care about it or about how great some people think it is. Fortunately, most economists already agree that market failures exist, and that free-market economics is bunk.
andrekandre 3y ago
> Just don't understand how one could be convinced these days of the fundamental conceit that even a properly profitable company is necessarily going to provide good things for people downstream, or for society in general. if one has worked in a number of business it should become fairly obvious that good products and good revenue are orthogonal phenomena (sometimes they align of course) > What is the argument for that in general again? i think the general conceit is that bad or good product, someone is paying and they are getting some kind of value so who is anyone to say its good or bad for society? > the idea that companies with a self interest in profit will reliably help people or the world wasn't this idea put forth strongly by milton freidman and the chicago school - "greed is good" [1] - because more economic activity rises all...? i have to admit intuitively it sounds good even if its probably b.s [2] > It just does not at all feel rational, its like everyone in the world is dreaming. well, at least some economists anyways.... [1] https://www.youtube.com/watch?v=RWsx1X8PV_A https://www.youtube.com/watch?v=RWsx1X8PV_A [2] https://www.nytimes.com/2020/09/13/business/dealbook/milton-friedman-essay-anniversary.html https://www.nytimes.com/2020/09/13/business/dealbook/milton-...
- kaashif 3y ago
  Let's remember that Adam Smith was against the idea of the joint stock company, a company where the shareholders and managers are different people. He thought that smaller, owner operated businesses would outcompete joint stock companies, primarily because the incentives between owners and managers were aligned. Managers managing other people's money will make worse decisions over the long term than managers managing their own money. That was his theory back in 1776, things didn't turn out that way obviously.
  - andrekandre 3y ago
    > That was his theory back in 1776, things didn't turn out that way obviously well, i guess its because join-stock companies were able to raise more capital faster?
freedomben 3y ago
Books have been written on the subject, so an HN comment isn't going to do it. But if you consider that anyone making a mutually consentual transaction is doing it because they value the traded good more than what they're trading, it's not hard to see how a free market can provide good things for people and society in general as resources flow to where they are most valued. Of course there's nuance here (such as assuming purely rational actors, addressing realites around information asymmetry, and that macroeconomics is different than micro) but that's part of the low-level foundation. I'm not a big fan of capitalism as it can be an utterly cruel mistress, but given the unfortunate realities of human nature I can't think of a system that is on the whole better. As long as there is scarcity, there will be something used as a basis for rationing (who gets what, and why). If it's not who is willing to pay the most, then it's who has the most powerful friends or the biggest army, or something else. There are problems with under-checked capitalism, and there are problems with over-checked capitalism. We'll never get it just right because humans aren't smart enough to, but perhaps we'll achieve post-scarcity at some point. One can hope.
sbarre 3y ago
I mean, you say "companies" but really you mean "people" because people run companies. You can't, or shouldn't, abstract away the people ultimately making decisions if you're trying to reason about this stuff. And people can make decisions, even the ones who run companies, to balance profits with contributing to a greater good. But they choose not to. So the people who are running these companies are choosing to prioritize profits at all costs. Some of this is because the people who operate the financial markets tell them they will be punished if they don't, but obviously there's also some agency on the part of the company leadership as well.
- ryandrake 3y ago
  We need a renaissance where voters wake up and remember that companies exist at the behest of the people. A business has no god-given or natural right to exist. They apply to their state with incorporation documents, and the state (in other words, the people) decides whether or not they should exist by granting them a business charter / license. Companies are allowed to exist because they provide some common good, in exchange for us allowing them to profit and have limited liability. I think companies have forgotten this bargain, and feel they simply have the right to exist and that their only duty is to provide profit to shareholders. The people should hold companies to a high standard, and demand that they also serve the public good in addition to serving their shareholders. And we should revoke companies' existence when they fail to uphold their side of the bargain. When was the last time that happened to a major company--that their business charter was revoked by the government for wrongdoing? We've gotten so used to simping for companies and not holding them accountable that they now strongly believe their only obligation is to their shareholders and financial markets.
sharperguy 3y ago
I don't think I can do justice to the entire topic on here so I will just point to this small part of your reply: > pushing out small businesses from every town Those small businesses are also run on a for profit basis and are market driven. If there is something causing them to fail despite providing a better quality of service then perhaps we are still looking at market distortions rather than a fundamental failing of capitalism.

ssklash 3y ago

A guy named Karl came to the exact same conclusions, in 1867.

SantalBlush 3y ago

>What is the argument for that in general again? Free-market types used to have some assumptions about how free markets are expected to work, then they would derive the result that a free market yields a net benefit to society from those assumptions. Now it is glaringly obvious that a free market can cause a net loss to society, but they still need to believe free markets are good. So they ignore the evidence, and instead of deriving the result from assumptions, they treat it as an axiom instead.

Jgrubb 3y ago
Or, blame meddlesome government regulation as the problem, blocking a free market and instead having winners and losers chosen by the state. It’s an effective argument because it’s got some truth to it.
zeroonetwothree 3y ago
Isn’t the whole argument in this thread that the government meddled in the economy by printing tons of money that then was used for questionable investments? How is that “free market”? IME 80% of criticisms of “free market” is actually a criticism of government policy (and then the same critics think that more of those policies are called for!)
- SantalBlush 3y ago
  Government regulation and the Fed will continue to exist in some form, at least to some small degree, so you will always be able to claim markets weren't "free" enough to properly implement a free market system. But if that's true, then it's moot; if a free-market system requires absolute purity from government to perform as intended, then it's worthless, because that will never happen. In other words, its proponents admit it's a fantasy that will only exist in their heads. As such, I have no reason to care about it or about how great some people think it is. Fortunately, most economists already agree that market failures exist, and that free-market economics is bunk.

andrekandre 3y ago

> Just don't understand how one could be convinced these days of the fundamental conceit that even a properly profitable company is necessarily going to provide good things for people downstream, or for society in general. if one has worked in a number of business it should become fairly obvious that good products and good revenue are orthogonal phenomena (sometimes they align of course) > What is the argument for that in general again? i think the general conceit is that bad or good product, someone is paying and they are getting some kind of value so who is anyone to say its good or bad for society? > the idea that companies with a self interest in profit will reliably help people or the world wasn't this idea put forth strongly by milton freidman and the chicago school - "greed is good" [1] - because more economic activity rises all...? i have to admit intuitively it sounds good even if its probably b.s [2] > It just does not at all feel rational, its like everyone in the world is dreaming. well, at least some economists anyways.... [1] https://www.youtube.com/watch?v=RWsx1X8PV_A https://www.youtube.com/watch?v=RWsx1X8PV_A [2] https://www.nytimes.com/2020/09/13/business/dealbook/milton-friedman-essay-anniversary.html https://www.nytimes.com/2020/09/13/business/dealbook/milton-...

kaashif 3y ago
Let's remember that Adam Smith was against the idea of the joint stock company, a company where the shareholders and managers are different people. He thought that smaller, owner operated businesses would outcompete joint stock companies, primarily because the incentives between owners and managers were aligned. Managers managing other people's money will make worse decisions over the long term than managers managing their own money. That was his theory back in 1776, things didn't turn out that way obviously.
- andrekandre 3y ago
  > That was his theory back in 1776, things didn't turn out that way obviously well, i guess its because join-stock companies were able to raise more capital faster?

freedomben 3y ago

Books have been written on the subject, so an HN comment isn't going to do it. But if you consider that anyone making a mutually consentual transaction is doing it because they value the traded good more than what they're trading, it's not hard to see how a free market can provide good things for people and society in general as resources flow to where they are most valued. Of course there's nuance here (such as assuming purely rational actors, addressing realites around information asymmetry, and that macroeconomics is different than micro) but that's part of the low-level foundation. I'm not a big fan of capitalism as it can be an utterly cruel mistress, but given the unfortunate realities of human nature I can't think of a system that is on the whole better. As long as there is scarcity, there will be something used as a basis for rationing (who gets what, and why). If it's not who is willing to pay the most, then it's who has the most powerful friends or the biggest army, or something else. There are problems with under-checked capitalism, and there are problems with over-checked capitalism. We'll never get it just right because humans aren't smart enough to, but perhaps we'll achieve post-scarcity at some point. One can hope.

sbarre 3y ago

I mean, you say "companies" but really you mean "people" because people run companies. You can't, or shouldn't, abstract away the people ultimately making decisions if you're trying to reason about this stuff. And people can make decisions, even the ones who run companies, to balance profits with contributing to a greater good. But they choose not to. So the people who are running these companies are choosing to prioritize profits at all costs. Some of this is because the people who operate the financial markets tell them they will be punished if they don't, but obviously there's also some agency on the part of the company leadership as well.

ryandrake 3y ago
We need a renaissance where voters wake up and remember that companies exist at the behest of the people. A business has no god-given or natural right to exist. They apply to their state with incorporation documents, and the state (in other words, the people) decides whether or not they should exist by granting them a business charter / license. Companies are allowed to exist because they provide some common good, in exchange for us allowing them to profit and have limited liability. I think companies have forgotten this bargain, and feel they simply have the right to exist and that their only duty is to provide profit to shareholders. The people should hold companies to a high standard, and demand that they also serve the public good in addition to serving their shareholders. And we should revoke companies' existence when they fail to uphold their side of the bargain. When was the last time that happened to a major company--that their business charter was revoked by the government for wrongdoing? We've gotten so used to simping for companies and not holding them accountable that they now strongly believe their only obligation is to their shareholders and financial markets.

sharperguy 3y ago

I don't think I can do justice to the entire topic on here so I will just point to this small part of your reply: > pushing out small businesses from every town Those small businesses are also run on a for profit basis and are market driven. If there is something causing them to fail despite providing a better quality of service then perhaps we are still looking at market distortions rather than a fundamental failing of capitalism.