It's ok to be angry about capitalism

[TheMysteriousGX]

I mean, because it's a private company, concentrating power doesn't actually prevent it from being snapped up by foreign entities. It's got stock

Anyway, a funny: the infamous popcorn button

 

[Ag3ma]

I mean, because it's a private company, concentrating power doesn't actually prevent it from being snapped up by foreign entities. It's got stock

No indeed. But it's harder to buy out, and gives it more leverage to grow and make its own international acquisitions.

There's an advantage to having companies headquartered in your state. It's where most of the profits tend to flow to so good for GNP, and they also tend to maintain a lot of other core operations where the HQ is, so it may help the wider industry, national cultural output and "soft power". Studies also suggest that when multinationals shrink, they also tend to prune their operations outside their HQ country first and most.

 

[Satinavian]

Why not?

A monopoly is one entity controlling one good.

A planned economy is one entity controlling all goods and all supply chains and trying to keep them all running.

From an efficiency standpoint, it is better if Amazon buys up the entire supply chain and administers the whole thing as part of a single bureaucratic structure than leaving it to the "free market". That is why they do it.

This is generally not more efficient which is why most companies don't do. However it does produce a certain amount of security/stability for a price. Which is why some companies do.

But the main benefit of owing the whole supply chain is that suppliers can't prioritise other, better opportunities. In a planned economy all those competing opportunities are controlled by the same entity and it will always eat supply deficit.

Even assuming this is true, which I think is incredibly debatable. That wasn't the example, and there are good reasons why it wasn't the example. There are very clear and obvious reasons why most most member republics of the USSR suffered during the Soviet period, because they were being deliberately exploited by the more wealthy republics (Russia and to a lesser extent Ukraine).

I have lived in it.
And no, exploitation by Russia was not the problem. The problem was that the plans simply didn't work. They were not just far too infrequent to react to any events, they less and less matched reality because failures were not planned for. And there were hardly ever readjustments. And lying became endemic which led to worse. And stuff that really didn't work just continued because no one stopped it.

Did you know that there was a plant making copper wires that bought copper on the world market and sold the wires there and ended up selling the wires for less than the copper material worth ? Simply because it just had its production target and fullfilled them year after year because no one ever adjusted them ? This is the stuff that happened.

The point is that free markets are not magic. Stuff in a free market doesn't just happen and sort itself out magically with no human involvement. Everything still has to be planned and organized. Russia's "free market" economy is an excellent example of how the supposedly inherent problems of centrally planned economies can just as easily persist or even worsen in free market economies, because at the end of the day they still rely on the exact same degree of human involvement and the exact same capacity for human error and abuse.

I don't care how often you call it magic. It works better.

Okay, but you see the double standard, right?

Nope. Don't see it.

I don't care whether communism can measure up to its inventors dreams either. The question is if it is an improvement considering all we know now. And i don't think we can realize a communism that works better than e.g. a social market economy as proposed by most social democrats. Or even what we have now.


We might eventually get to a place where communism is an option. I am primarily betting on AI improvements here. But we are not there yet.

 

[ralfy]

The main problem with competitive capitalism is that it leads to overproduction and overconsumption, and that's not sustainable given a biosphere with physical limitations.

 

[Absent]

The main problem with competitive capitalism is that it leads to overproduction and overconsumption, and that's not sustainable given a biosphere with physical limitations.

Yes. It may be worth pointing out, though, that :

1) There are also secondary problems with competitive capitalism. (Like, practical slavery : wealth differentials meaning that, for all intents and purposes, people have life and death power upon others). Just saying, while we're here.

2) The amusing thing is that communism also have them. Gigantism and overproductivity (in intent, even when failed due to various collapses) in total disregard for the ecosystem or any sort of health safety. And also the life-and-death power thing.

Having humans together on a same planet was globally a bad idea.

 

[Eacaraxe]

This is generally not more efficient which is why most companies don't do. However it does produce a certain amount of security/stability for a price. Which is why some companies do.

But the main benefit of owing the whole supply chain is that suppliers can't prioritise other, better opportunities. In a planned economy all those competing opportunities are controlled by the same entity and it will always eat supply deficit.

Well, it's a good thing we don't have a test case for whether this argument actually holds water, otherwise you'd look like a right ass debating the point.

So, Sears used to be Amazon, a century before Amazon. Except, Sears at its heyday was what Bezos wishes Amazon were today. Extremely integrated vertically and horizontally, every operational aspect planned with in-house branding and support services, up to and including real estate and prefab housing kits (yes, that part of RDR2 was based on real history); hell, Sears & Roebuck owned and operated its own bank and credit (not many people remember Discover was originally a Sears holding).

It started divesting holdings in the '90s, and under Edward Lampert de-integrated itself vertically and horizontally, forcing its separate divisions to compete, negotiate, and contract with each other independently on the notion internal competition would lead to greater innovation, efficiency, lower costs, and higher profit margins. In other words, Sears operated as an internal free market opposed to a planned economy -- what you're arguing is less efficient and more costly, which is why companies don't do it.

If you're correct, Sears should be the more successful corporation, compared to Amazon. Let's compare their market caps, shall we?





Well, shit.

Hell, we can add a third example into the mix, now that I think of it. Walmart has one of those oh-so-inefficient vertical and horizontal integration strategies too, with a totally cost-ineffective resource logistics management system, that no corporation in its right mind would ever want, right?



Behold, the failures of market planning as compared to the superiority of the free market!

 

[Seanchaidh]

If you're correct, Sears should be the more successful corporation, compared to Amazon. Let's compare their market caps, shall we?

Clearly Sears just needed, in contrast to every other example of a capitalist firm, break itself apart even further. They didn't harness enough of the superior allocative efficiency of the Free™ Market.

 

[Satinavian]

So, Sears used to be Amazon, a century before Amazon. Except, Sears at its heyday was what Bezos wishes Amazon were today. Extremely integrated vertically and horizontally, every operational aspect planned with in-house branding and support services, up to and including real estate and prefab housing kits (yes, that part of RDR2 was based on real history); hell, Sears & Roebuck owned and operated its own bank and credit (not many people remember Discover was originally a Sears holding).

Do the market cap spikes in your examples even correlate with the changed strategies ? Looking at your picture Sears (of which i never heard) had its heyday around 2006 but you claim the divestment strategy started in the 90s. Wouldn't that mean it worked ? Amazon has a huge peak in 2020/22 and is starting to go down now. Is this related to any chance in integration strategy or manybe completely due to other effects like the epidemic ? And Walmart... did Walmart actually change anything relevant to this in the last two decades ?
Also wouldn't Market Cap be a pretty bad measure for the success of "splitting up" unless you add all the various successors ?

But all that is not that important. If we start picking companies, we can do this for years. Integrating vertally and horizontally tends to succeed and fail all the time. There are more than enough examples that broke under their own weight when expanding into new buissness areas or takeovers didn't pan out.

The problem is more with using companies as examples in the first place. I said that the main difficulty for planned economies is complexity. And no not even Amazon is as complex as a whole economy nor are its elements that interdependent. A single company is just not a proper comparison to what a country with a planned economy would look like.
Also If your whole economy is planned, you can't expand by taking over other companies (that already work and seem to be a good contribution). You have to build everything from scratch. You also can't divest of things (that are less profitable/lack synergy/where creative disagreements exist), you can only close down. Which you generally won't do because you then have to find new jobs (if you controll the whole economy, you are the only employer) and import the widgets in question.


Better examples than companies for what planned economies would look like would probably be corporate towns. Now those generally are never that huge to begin with nor that independent from basic outside goods or services as a nation would be, but its the closest to "one entity controlls the whole economy" you can get aside from, well, actually looking at real world examples of planned economies in the former Eastern block.

 

[Seanchaidh]

There are more than enough examples that broke under their own weight when expanding into new buissness areas or takeovers didn't pan out.

Are there actually such examples? Or is what is being described in the vague way of "broke under their own weight" actually another, more specific problem in each case?

 

[TheMysteriousGX]

Man...

https://www.thegamer.com/monster-energy-goes-after-glowstick-entertainment-for-using-the-word-monster/

 

[Satinavian]

Are there actually such examples?

Daimler Cryster. Microsoft Nokia. GM and its long and sorry failed merger history. Karstadt Quelle Kaufhof (also outdated buiness model). Zeiss Kombinat.

It is so easy, i don't even need a lot of time to come up with some.

 

[Seanchaidh]

Daimler Cryster. Microsoft Nokia. GM and its long and sorry failed merger history. Karstadt Quelle Kaufhof (also outdated buiness model). Zeiss Kombinat.

It is no easy, i don't even need a lot of time to come up with some.

Or is what is being described in the vague way of "broke under their own weight" actually another, more specific problem in each case?

 

[crimson5pheonix]

Do the market cap spikes in your examples even correlate with the changed strategies ? Looking at your picture Sears (of which i never heard) had its heyday around 2006 but you claim the divestment strategy started in the 90s.

Well that is a technical error on Eacaraxe's part.

snip

Shame!

Anyway that's actually the market cap of Kmart, which bought Sears in 2003 after Kmart had come out of bankruptcy. A bankrupt company was able to buy Sears after the 90's.

As for never hearing of Sears, fair. But Sears really was that big. At one point they sold everything. If you got a home appliance of any kind, you bought it from Sears and they probably made it too. The house you put the appliances in? Sears. Furniture? Sears. Car parts? Sears. Guns? Sears. Apply for a credit card? Sears. As for how Sears did in the 90's, prior to their mad cutting, they had a yearly revenue of $59 billion. The bankrupt Kmart bought the whole company, assets and all, for $11 billion. It's hard to find what it's market cap was in the 90's, I get the feeling it was more than $11 billion though.

 

[Satinavian]

@ Seanchaidh

Rise and fall of companies is nearly always multicausal. Or would you argue that Amazon got big specifically because integrating horizontally and vertically, not because it was the first to exploit a new market nieche, got a quasi monopoly there and leveraged it (and abuses its workers) ?

I am not going to endlessly research and discuss specific company histories in detail to win an argument on the internet, sorry. Especially if it is just a sidetrack and i have explained clearly enough why companies are not example in the first place. But mergers/expansions do fail often enough. And companies splitting do lead to better futures for the parts often enough as well.

 

[Baffle]

I always assumed Sears (my familiarity only through reading Stephen King) was basically an American John Lewis.

 

[Silvanus]

I always assumed Sears (my familiarity only through reading Stephen King) was basically an American John Lewis.

I think I first heard of Sears because its where Brenda and Eddie get their paintings from in Billy Joel's Scenes from an Italian Restaurant.

 

[Ag3ma]

I always assumed Sears (my familiarity only through reading Stephen King) was basically an American John Lewis.

In quality at least, I think it would probably be more accurate to describe it as the American Debenhams. Although contemporary British department stores tended to be clothes and home only, where Sears sold a great deal more.

But companies that fail to adapt and move with the times die. Debenhams, of course, has also gone.

 

[Baffle]

In quality at least, I think it would probably be more accurate to describe it as the American Debenhams. Although contemporary British department stores tended to be clothes and home only, where Sears sold a great deal more.

But companies that fail to adapt and move with the times die. Debenhams, of course, has also gone.

My brand awareness isn't sufficiently good to know whether Debenhams is better or worse than John Lewis.

I bought a coat in Debenhams once, a big sort of wool one. It's quite smart, though I suspect out of fashion now (it's fine, so am I). It was in the sales, down from like 200 to 100, then I got it to the checkout and they charged me £50 or something. Didn't say a word. Exceptionally good value.

 

[Ag3ma]

My brand awareness isn't sufficiently good to know whether Debenhams is better or worse than John Lewis.

Debenhams was very mid-range - same sort of territory as Next. M&S and John Lewis are upper-middle. I would define high end as places like Selfridges and House of Fraser, then beyond that into the luxury stores like Harrod's and Liberty's. At the lower end, places like BHS (defunct) and TK Maxx.

I liked Debenhams, you could pick up decent stuff at a reasonable price. Didn't have the dull / middle age / preppy vibes much of M&S and JL's stuff did, and avoided the low build quality in a lot of the cheaper. I ended up hating everything I ever bought from Next so stopped a long time ago (unless it's something that can't got wrong, like a belt).

I prefer physical sales, so you can properly see the clothes and try them on. I find online buying frustrating. My wife has switched to it - she buys lots of stuff in different sizes, and ends up sending about 90% back, but it seems like a lot of faff to me.

 

[Baffle]

Debenhams was very mid-range - same sort of territory as Next. M&S and John Lewis are upper-middle. I would define high end as places like Selfridges and House of Fraser, then beyond that into the luxury stores like Harrod's and Liberty's. At the lower end, places like BHS (defunct) and TK Maxx.

I liked Debenhams, you could pick up decent stuff at a reasonable price. Didn't have the dull / middle age / preppy vibes much of M&S and JL's stuff did, and avoided the low build quality in a lot of the cheaper. I ended up hating everything I ever bought from Next so stopped a long time ago (unless it's something that can't got wrong, like a belt).

I prefer physical sales, so you can properly see the clothes and try them on. I find online buying frustrating. My wife has switched to it - she buys lots of stuff in different sizes, and ends up sending about 90% back, but it seems like a lot of faff to me.

Ugh, I tried to buy a suit in M&S the other day; like a who's who of being 400 years old and incredibly slow walkers, and their suit range is shit. I bought one from Next in the end (there were too many people in Moss Bros and not enough pounds in my wallet). I splurged (financially) on a waistcoat too.

I'm the same on clothes; very long-limbed so I really have to try it on (Superdry hoodies fit me well because they have longer sleeves) and the aforementioned suit shopping was a trial. If I ordered clothes online I just know I'd end up with a huge pile of clothes I couldn't be bothered to return but also wouldn't wear.