This makes sense, but then what determines the profits of the regulating capitals?
Maybe I’m asking the wrong question, but: assuming every firm faces similar costs (within a short, representative time window, meaning no one has just come up with some huge cost-saving mechanism that has yet to propagate), and assuming profit is therefore a question of raising prices more than lowering costs, is profit mainly limited by the wiggle room of imperfect competition (e.g., with perfect competition there would be 0 profit), or by consumer willingness to pay within that window, or does it depend on the industry—or is my framing wrong, and/or I’m asking the wrong question entirely? Am I looking in the right direction or missing the point?
Lower costs, undercutting, technical development, patent hoarding, scalability, and bought government patronage are how regulating capitals generate the “gravitational profits” other firms in their sector orbit, including other regulating capitals, because leading capitals also regulate each other, even across sectors
Creating not sustained perfect or even imperfect equilibrium, but instead turbulent equalization of prices, equalization is the reason you can ask the average Joe on the street what the price of milk is and they’ll give you a rough and accurate estimation of the price, even if milk prices turbulently rise and fall over the long years, even though milk prices are equalized across the country around an average: $3-5 in this case
And like perfect competition is fiction, there’s also no such thing as “imperfect competition” because that idea also arises right out of the liberal whine about workers, firms and governments “cheating” the market of it’s “rightful” returns. No, there’s only competition-as-war, that’s what defines capital accumulation; profits arise from those firms that can cut costs and undercut their competitors, raising prices is only a secondary bonus if you can get away with it before bumping into another regulator, what’s important is lowering costs which is why I placed it first amongst the list of profit generators and also why the wage vs profit contradiction is always the most important aspect of the system in general
From those two simple ideas (low costs and undercutting) arise everything we see under capitalism; the regulation of supply and demand by profitability, the everlasting desire to suppress wages that cut into profits, the drive toward technical developments to make production easier and cheaper, the cowardly need of all capitalists to run away from competition and toward rent-seeking behaviors etc.
Regulating capitals are large armies trying to keep at bay a 100 smaller armies from eating their lunch, and the 100 smaller armies are also competing amongst each other, one year a mid sized army may discover how to make a better cannon and they supplant a leading regulator and take its place, another year a small army figures out how to conscript more soldiers and they overwhelm a dozen other smaller competitors, putting themselves one step closer to becoming the regulator instead of the regulated
Profits comes from firms picking the right combinations at the right time from these options: Lower costs, technical development, undercutting, patent hoarding, scalability, and government patronage but lower costs is typically the primary, go-to solution
Are you familiar with Shaikh’s Capitalism: Competition, Conflict, and Crisis? I’ve been slowly going through the book for some time and these descriptions are also explained there. Its one of sources I pull from in my own understanding
Do you have any good recommendations for understanding the Viable Systems Model? Something more formal than the descriptions one can easily find on YouTube or wikipedia? I am acquainted with some modern complexity science, and have wanted to find where complexity science meets old school cybernetics.
Beer’s book Platform for Change is my go to resource, but if you want more technical stuff his book Diagnosing the System for Organizations is interesting, because you literally see him describing how the system forces the choices I illustrated in my previous comment that capitalists face every day
Yeah, I guess “perfect” and “imperfect” are probably not how I should talk about this lol
By “imperfect competition” I just meant that the lowest production cost doesn’t always win among similar products, due to factors like
transport costs — either moving product to consumer, or consumer to product — which can give companies a local pricing advantage over more distant competition
consumer inability to compare products in a consistent way — whether comparing use-values of products at a given price, or comparing prices at a given use-value
marketing, branding, packaging, and other appeals to consumer psychology
Profits comes from firms picking the right combinations at the right time from these options: Lower costs, technical development, undercutting, patent hoarding, scalability, and government patronage but lower costs is typically the primary, go-to solution
So everyone’s racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?
By “imperfect competition” I just meant that the lowest production cost doesn’t always win among similar products, due to factors like
True, it’s not always the path to success, but it typically is and that’s what matters on the macro scale across sectors and national economies
transport costs — either moving product to consumer, or consumer to product — which can give companies a local pricing advantage over more distant competition
That still falls under the overarching cost structure that firms need to lower
consumer inability to compare products in a consistent way — whether comparing use values of products at a given price, or comparing prices at a given use value
That forms part of the bedrock of the turbulent regulation of demand, that capitalists are constantly overshooting or undershooting as they try to continually adjust
marketing, branding, packaging, and other appeals to consumer psychology
Attempts at scalability that may or may not work, an attempt by firms to regulate demand as it’s regulating them, leads right back to the overshooting and undershooting problem which has enormous implications for future investments, or more importantly the potential lack thereof
So everyone’s racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?
Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments
By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that’s not the intent! I’m just laying out my current mental picture so people can see where it’s wrong and help me update it. I had some existing notions in my head, but they didn’t all seem to add up.
That still falls under the overarching cost structure that firms need to lower
of course, but it’ll always cost something, right? Which means that, if you have a region in which you’re the only supplier, and your competitors are outside that region, everyone in your region basically has to pay a transport tariff if they want to buy from your competitors. That “tariff” gives you more wiggle room to charge above cost.
I don’t know how important this is though. I assume it matters for unprocessed raw goods, like minerals or crops, where everyone’s product is basically identical, and production is often constrained to certain locations where mines or farms can be developed. I assume it also matters somewhat for brick and mortar stores — a consumer isn’t going to drive to the next town just to pay slightly less for bread. But I don’t know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?
Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments
By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that’s not the intent! I’m just laying out my current mental picture so people can see where it’s wrong and help me update it. I had some existing notions in my head, but they didn’t all seem to add up.
No worries, I didn’t take it that way, I’m more than happy to answer questions and help comrades flesh out their understanding
That “tariff” gives you more wiggle room to charge above cost.
That’s the thing, it’s not above cost, it is simply the cost, production and transport are under the same cost structure, got to pay to make it and pay to move it, wages, material and energy are the main costs. In competition-as-war an army with an advantageous position is fair policy
It’s not a guarantee of victory, but it’s certainly not a war crime, profitability is defined by what you can get away with
I assume it also matters somewhat for brick and mortar stores — a consumer isn’t going to drive to the next town just to pay slightly less for bread. But I don’t know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?
“location, location, location” is a saying in business for a reason, again it’s not a guarantee for success, firms that have overwhelming technical development, enormous scale or juicy patents can still overwhelm your location advantage and kick you out of the leading regulator game, but it depends on the sector and frankly energy costs in the wider economy
This makes sense, but then what determines the profits of the regulating capitals?
Maybe I’m asking the wrong question, but: assuming every firm faces similar costs (within a short, representative time window, meaning no one has just come up with some huge cost-saving mechanism that has yet to propagate), and assuming profit is therefore a question of raising prices more than lowering costs, is profit mainly limited by the wiggle room of imperfect competition (e.g., with perfect competition there would be 0 profit), or by consumer willingness to pay within that window, or does it depend on the industry—or is my framing wrong, and/or I’m asking the wrong question entirely? Am I looking in the right direction or missing the point?
Lower costs, undercutting, technical development, patent hoarding, scalability, and bought government patronage are how regulating capitals generate the “gravitational profits” other firms in their sector orbit, including other regulating capitals, because leading capitals also regulate each other, even across sectors
Creating not sustained perfect or even imperfect equilibrium, but instead turbulent equalization of prices, equalization is the reason you can ask the average Joe on the street what the price of milk is and they’ll give you a rough and accurate estimation of the price, even if milk prices turbulently rise and fall over the long years, even though milk prices are equalized across the country around an average: $3-5 in this case
And like perfect competition is fiction, there’s also no such thing as “imperfect competition” because that idea also arises right out of the liberal whine about workers, firms and governments “cheating” the market of it’s “rightful” returns. No, there’s only competition-as-war, that’s what defines capital accumulation; profits arise from those firms that can cut costs and undercut their competitors, raising prices is only a secondary bonus if you can get away with it before bumping into another regulator, what’s important is lowering costs which is why I placed it first amongst the list of profit generators and also why the wage vs profit contradiction is always the most important aspect of the system in general
From those two simple ideas (low costs and undercutting) arise everything we see under capitalism; the regulation of supply and demand by profitability, the everlasting desire to suppress wages that cut into profits, the drive toward technical developments to make production easier and cheaper, the cowardly need of all capitalists to run away from competition and toward rent-seeking behaviors etc.
Regulating capitals are large armies trying to keep at bay a 100 smaller armies from eating their lunch, and the 100 smaller armies are also competing amongst each other, one year a mid sized army may discover how to make a better cannon and they supplant a leading regulator and take its place, another year a small army figures out how to conscript more soldiers and they overwhelm a dozen other smaller competitors, putting themselves one step closer to becoming the regulator instead of the regulated
Profits comes from firms picking the right combinations at the right time from these options: Lower costs, technical development, undercutting, patent hoarding, scalability, and government patronage but lower costs is typically the primary, go-to solution
Are you familiar with Shaikh’s Capitalism: Competition, Conflict, and Crisis? I’ve been slowly going through the book for some time and these descriptions are also explained there. Its one of sources I pull from in my own understanding
I sure do, he’s one of my primary sources alongside Stafford Beer
Do you have any good recommendations for understanding the Viable Systems Model? Something more formal than the descriptions one can easily find on YouTube or wikipedia? I am acquainted with some modern complexity science, and have wanted to find where complexity science meets old school cybernetics.
Beer’s book Platform for Change is my go to resource, but if you want more technical stuff his book Diagnosing the System for Organizations is interesting, because you literally see him describing how the system forces the choices I illustrated in my previous comment that capitalists face every day
What stuff by Stafford Beer have you enjoyed the most?
Platform for Change and Diagnosing the System for Organizations are my main resources from Beer
Yeah, I guess “perfect” and “imperfect” are probably not how I should talk about this lol
By “imperfect competition” I just meant that the lowest production cost doesn’t always win among similar products, due to factors like
So everyone’s racing to automate, exploit, and cut corners ahead of the others. What happens when they run out of room? Do they just start buying each other?
True, it’s not always the path to success, but it typically is and that’s what matters on the macro scale across sectors and national economies
That still falls under the overarching cost structure that firms need to lower
That forms part of the bedrock of the turbulent regulation of demand, that capitalists are constantly overshooting or undershooting as they try to continually adjust
Attempts at scalability that may or may not work, an attempt by firms to regulate demand as it’s regulating them, leads right back to the overshooting and undershooting problem which has enormous implications for future investments, or more importantly the potential lack thereof
Capitalists stop investing, begin layoffs and a depression ensues, no room for profits and growth means no investments
By the way, I always worry that I seem argumentative when I ask a lot of questions, but to be clear, that’s not the intent! I’m just laying out my current mental picture so people can see where it’s wrong and help me update it. I had some existing notions in my head, but they didn’t all seem to add up.
of course, but it’ll always cost something, right? Which means that, if you have a region in which you’re the only supplier, and your competitors are outside that region, everyone in your region basically has to pay a transport tariff if they want to buy from your competitors. That “tariff” gives you more wiggle room to charge above cost.
I don’t know how important this is though. I assume it matters for unprocessed raw goods, like minerals or crops, where everyone’s product is basically identical, and production is often constrained to certain locations where mines or farms can be developed. I assume it also matters somewhat for brick and mortar stores — a consumer isn’t going to drive to the next town just to pay slightly less for bread. But I don’t know how big a chunk of profit can be blamed on this. Is it more of a footnote or is it a big deal?
Ahh okay that makes sense.
No worries, I didn’t take it that way, I’m more than happy to answer questions and help comrades flesh out their understanding
That’s the thing, it’s not above cost, it is simply the cost, production and transport are under the same cost structure, got to pay to make it and pay to move it, wages, material and energy are the main costs. In competition-as-war an army with an advantageous position is fair policy
It’s not a guarantee of victory, but it’s certainly not a war crime, profitability is defined by what you can get away with
“location, location, location” is a saying in business for a reason, again it’s not a guarantee for success, firms that have overwhelming technical development, enormous scale or juicy patents can still overwhelm your location advantage and kick you out of the leading regulator game, but it depends on the sector and frankly energy costs in the wider economy