4 ms·

All of the capital intensive businesses face this issue. Chemicals, Shipping, Semiconductors etc. You get market signals that the demand is there, you acquire

All of the capital intensive businesses face this issue. Chemicals, Shipping, Semiconductors etc. You get market signals that the demand is there, you acquire the necessary capital, you spend 5 years to build capacity, but guess what, 5 other market players did the same thing. So now you are doomed, because the market is flooded and you have low cash flow since you need to drop prices to compete for pennies. Now you cannot find capital, you don't invest, but guess what, neither your competitors did. So now the demand is higher than the supply. Your price per unit sold skyrocketed, but you don't have enough capacity! Rinse and repeat. Capitalists claim that this is optimal.

tgma 6mo ago
> Capitalists claim that this is optimal. Because that does not happen exactly as you say for all players. The demand signals will be processed and long-term risk is balanced against short-term gain in a distributed fashion, so not everyone will do the same.
- t-3 6mo ago
  Sufficient diversity of response will only appear when there are enough competitors. When there are only a few, it doesn't necessarily work out.
wordpad 6mo ago
>Capitalists claim that this is optimal. It's more optimal than planned economies until we have AI planned economies with realtime feedback, I guess. Consumers get cheap goods during oversupply and most inefficient companies get elliminated during bust while consolidation leads to economies of scale.
- whatever1 6mo ago
  No this is literally a sign of an unstable system with too high of a gain K. There is an alternative where legislation dampens this behavior but the short term profits will be lower. Hence the hawks don’t like it.
  - Panzer04 6mo ago
    This is a wild take.
    - BenFranklin100 6mo ago
      Sophomoric take more precisely.
  - wordpad 6mo ago
    >legislation dampens this behavior Potentially. Well meaning and thought out legislation still distorts the markets, possibly making things objectively worse.
- AngryData 6mo ago
  Why is the opposite of capitalist markets automatically assumed to be a command economy? Co-op style businesses aren't really capitalist orientated but are also not reliant on government action.
kev009 6mo ago
Is the DRAM industry really capitalist? Focusing on just the Korean parties, it functions like a command economy. I would say the same about most high end semi-conductor manufacturing, TSMC, Intel, ASML are being commanded and driven by nation-state level decision making. Right now the command is to focus on high wattage centralized AI systems at the expense of everything else.
- Ardon 6mo ago
  No one at high levels is capitalist, in ideology or action. An ideological capitalist would be in favor of competition, but these people disdain it and collude regularly. The only 'capitalist' actions they take are by accident, the real goal is as much power/money as possible as fast as possible. We don't even expect companies to plan long-term anymore, it's just moving wealth as fast as possible. That isn't really a change, very few people could ever have been said to be ideological capitalists. (capitalist is not a word with a hard definition, but I'm considering it a different thing than the more modern pure libertarian zero-regulation ideology)
  - Nesco 6mo ago
    Liberalism (in the traditional economic sens) likes competition. Capitalism is a mode of production, and capitalists notoriously don’t like competition when they are the incumbents
  - drdec 6mo ago
    I think the common use of the term capitalist is as a participant in capitalism. This is distinct from someone who is a proponent of capitalism as a system, which appears to be the way you are using capitalist. For which I don't blame you.
lsiq 6mo ago
The book Capital Returns: Investing Through the Capital Cycle details this phenomenon, including historical cases. If anything, it shows it's possible for you to arbitrage this and in doing so help "smooth out the cycle."
jandrewrogers 6mo ago
Forecasting demand 5 years into the future is intrinsically highly unreliable. It doesn’t matter if it is capitalism or a command economy. The bet is always going to be risky and someone will have to pay for that risk. At least with capitalism you have many different people with different perspectives on the risk making independent bets. That mitigates the more extreme negative outcomes.
- DwnVoteHoneyPot 6mo ago
  To add to that, investors who do make the bet get punished for over-building, which is better than tax payers paying for it. And before someone says it, big corps do get bailed out by gov't, but that's definitely goes against capitalist ideas.
- PunchyHamster 6mo ago
  Also it is government job to regulate. Monopolies should be busted, and behaviour like that should be culled. But US govt is full on AI to mask them cratering their own economy.
matheusmoreira 6mo ago
It's not optimal, it's pathological. Definitely better than starving under communist dictatorships though.
PunchyHamster 6mo ago
The sheer fucking blazing ignorance of this comment > Capitalists claim that this is optimal. Compared to starving under communism coz someone at top got the number wrong, yes. And it only really happens when there are massive, unpredictable market movements and governments not doing their job. Govt should look at the whole thing and just say "no", blame them. No market system self regulates well enough, and it's government job to file down the edge cases like this. But the revolution happened in country which has two utterly incompetent parties, both in pockets of billionaires, fighting for power, and the clowns from one that won last battle use AI to smokescreen the economic growth their actions cratered
TacticalCoder 6mo ago
> Capitalists claim that this is optimal That's not what capitalists claim. Capitalists claim communism is responsible for tens, if not hundreds, of millions of death due to famine. And overall miserable ways of life, as if humans were termites deprived of any individualism and any freedom. Capitalists claim that France importing 500 000 people from the third world each year, out of which only 10% are ever going to work (and these are official numbers) and yet offering them all a safety net is unsustainable. And that that socialism is only going to lead to one thing: running out of taxpayers' money. Capitalists don't claim they have the best system: what they claim is that they haven't seen a less worse one.
sophrosyne42 6mo ago
I don't know who these "capitalists" are, but generally speaking business regularizes as entrepreneurs learn to read new signals after unexpected market shifts. It is unlike a socialist system in that there are signals to read in the first place. What, do socialists claim that failure is optimal when you can't even tell if you've failed?

tgma 6mo ago

> Capitalists claim that this is optimal. Because that does not happen exactly as you say for all players. The demand signals will be processed and long-term risk is balanced against short-term gain in a distributed fashion, so not everyone will do the same.

t-3 6mo ago
Sufficient diversity of response will only appear when there are enough competitors. When there are only a few, it doesn't necessarily work out.

wordpad 6mo ago

>Capitalists claim that this is optimal. It's more optimal than planned economies until we have AI planned economies with realtime feedback, I guess. Consumers get cheap goods during oversupply and most inefficient companies get elliminated during bust while consolidation leads to economies of scale.

whatever1 6mo ago
No this is literally a sign of an unstable system with too high of a gain K. There is an alternative where legislation dampens this behavior but the short term profits will be lower. Hence the hawks don’t like it.
- Panzer04 6mo ago
  This is a wild take.
  - BenFranklin100 6mo ago
    Sophomoric take more precisely.
- wordpad 6mo ago
  >legislation dampens this behavior Potentially. Well meaning and thought out legislation still distorts the markets, possibly making things objectively worse.
AngryData 6mo ago
Why is the opposite of capitalist markets automatically assumed to be a command economy? Co-op style businesses aren't really capitalist orientated but are also not reliant on government action.

kev009 6mo ago

Is the DRAM industry really capitalist? Focusing on just the Korean parties, it functions like a command economy. I would say the same about most high end semi-conductor manufacturing, TSMC, Intel, ASML are being commanded and driven by nation-state level decision making. Right now the command is to focus on high wattage centralized AI systems at the expense of everything else.

Ardon 6mo ago
No one at high levels is capitalist, in ideology or action. An ideological capitalist would be in favor of competition, but these people disdain it and collude regularly. The only 'capitalist' actions they take are by accident, the real goal is as much power/money as possible as fast as possible. We don't even expect companies to plan long-term anymore, it's just moving wealth as fast as possible. That isn't really a change, very few people could ever have been said to be ideological capitalists. (capitalist is not a word with a hard definition, but I'm considering it a different thing than the more modern pure libertarian zero-regulation ideology)
- Nesco 6mo ago
  Liberalism (in the traditional economic sens) likes competition. Capitalism is a mode of production, and capitalists notoriously don’t like competition when they are the incumbents
- drdec 6mo ago
  I think the common use of the term capitalist is as a participant in capitalism. This is distinct from someone who is a proponent of capitalism as a system, which appears to be the way you are using capitalist. For which I don't blame you.

lsiq 6mo ago

The book Capital Returns: Investing Through the Capital Cycle details this phenomenon, including historical cases. If anything, it shows it's possible for you to arbitrage this and in doing so help "smooth out the cycle."

jandrewrogers 6mo ago

Forecasting demand 5 years into the future is intrinsically highly unreliable. It doesn’t matter if it is capitalism or a command economy. The bet is always going to be risky and someone will have to pay for that risk. At least with capitalism you have many different people with different perspectives on the risk making independent bets. That mitigates the more extreme negative outcomes.

DwnVoteHoneyPot 6mo ago
To add to that, investors who do make the bet get punished for over-building, which is better than tax payers paying for it. And before someone says it, big corps do get bailed out by gov't, but that's definitely goes against capitalist ideas.
PunchyHamster 6mo ago
Also it is government job to regulate. Monopolies should be busted, and behaviour like that should be culled. But US govt is full on AI to mask them cratering their own economy.

matheusmoreira 6mo ago

It's not optimal, it's pathological. Definitely better than starving under communist dictatorships though.

PunchyHamster 6mo ago

The sheer fucking blazing ignorance of this comment > Capitalists claim that this is optimal. Compared to starving under communism coz someone at top got the number wrong, yes. And it only really happens when there are massive, unpredictable market movements and governments not doing their job. Govt should look at the whole thing and just say "no", blame them. No market system self regulates well enough, and it's government job to file down the edge cases like this. But the revolution happened in country which has two utterly incompetent parties, both in pockets of billionaires, fighting for power, and the clowns from one that won last battle use AI to smokescreen the economic growth their actions cratered

TacticalCoder 6mo ago

> Capitalists claim that this is optimal That's not what capitalists claim. Capitalists claim communism is responsible for tens, if not hundreds, of millions of death due to famine. And overall miserable ways of life, as if humans were termites deprived of any individualism and any freedom. Capitalists claim that France importing 500 000 people from the third world each year, out of which only 10% are ever going to work (and these are official numbers) and yet offering them all a safety net is unsustainable. And that that socialism is only going to lead to one thing: running out of taxpayers' money. Capitalists don't claim they have the best system: what they claim is that they haven't seen a less worse one.

sophrosyne42 6mo ago

I don't know who these "capitalists" are, but generally speaking business regularizes as entrepreneurs learn to read new signals after unexpected market shifts. It is unlike a socialist system in that there are signals to read in the first place. What, do socialists claim that failure is optimal when you can't even tell if you've failed?