Muses on Capitalism (Profit)

What is a profit?  

Definition:  A financial gain, esp. the difference between the amount earned and the amount spent in buying, operating, or producing something.

In other words, the consumer is getting ripped off.

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15 thoughts on “Muses on Capitalism (Profit)

  1. If you were at all familiar with the “marketing concept” and/or Austrian Economics you would not hold this belief (“In other words, the consumer is getting ripped off”). The “marketing concept” holds that an organization will only exist as far it continues to meet the needs and wants of a target market in an acceptable fashion.

    You are ignoring the possibility of a win-win exchange. I submit to you that both sides profit (inversely no one gets “ripped off”). I will use a metaphor of a consumer going to a grocery store to buy bread…
    The consumer will only buy the bread as long as the perceived benefit of the bread does not exceed the cost. Meaning if the cost of bread is $5, then the consumer must perceive more than $5 in potential gain from the bread. The same is true for the store. The store, being savvy, will not selling the bread at a loss. Thus, the bread, selling at $5, has a perceived benefit to the store. If the consumer buys the bread both sides will be happy. As long as markets are reasonable competitive, which they are this day and age, win-win exchanges will always occur given consumers have time to search and suppliers are making informed decisions.

    Of course, you can counter by saying, “the store should sell the bread at breakeven.” To this I say no is motivated to sell things at breakeven. The only thing this will accomplish is to abolish business as a whole.

    • Hello again aftertheperiod. I have some familiarity with marketing…I see it in action everyday on the television set. Marketing attempts to convince as many people as possible that they need and want a product and through branding, attempt to increase the “perceived” value of that product. I urge you to read my post “The Human World without Money, Debt, and Financial” institutions so I don’t repeat myself and we can discuss your argument under that post.

      But I will say this. Food, shelter, transportation…these are the basics…I am more concerned with the human being moving forward and progressing. I could be wrong, but I think money, capitalism…socialism…communism…whatever…is preventing this from happening…because all these systems rely on the concept of the buck. Many more problems to discuss but you can find those on this blog as well.

    • Your hackneyed “theory” here is the very definition and cause of inflation. It’s all subjective “perception”, in fact fantasy. Selling something at “breakeven” is basically representing it at its actual worth. Inflating something’s worth comes down to convincing someone to be subjectively “happy” with paying more for something than it is actually worth. Exchanging things at “breakeven” may indeed “abolish business as a whole”, but in the same stroke it would restore integrity and truth to the market. If everyone were exchanging things at “breakeven”, then no one would be getting ripped off would they? Right, but your “business world” is founded upon the antithesis of this–it’s lifeblood is the rip off. Wake up son, and quit playing the ankle-grabbing, skin-kneed altar boy in the Church of Capitalism, where the CEO is your priest, the dollar your Jesus, and the matrix of numbers your God.

      • dragonstrand let’s refrain from name calling. Prices are not inflated. Instead, they are value by the people purchasing them. As long as people have economic freedom they will not pay more for something than it is actually worth (in their own minds) because it is not rational.

        I would warn you about thinking to highly of “abolishing business as a whole.” If you are with Tincup’s concern for, “human beings moving forward and progressing” that seems like the opposite of progressing.

  2. The customer cannot be getting ripped off. The process of engaging in trade is about both sides maximizing their perceived net value. I was in the store today and saw “X-Men, First Class” on sale for $19. To me, it is worth $10-$12 dollars, so I didn’t buy it. If I was forced to buy it, then I would be getting ripped off. I didn’t get ripped off, they didn’t get my money.

      • Replied there. The issue remains, however, that you are minimizing the amount of choice the customer has.

      • I will check out your reply to that post. But, you are making an assumption that a system other than capitalism eliminates choices…that isn’t neccesarily true…in fact…there may be even more valuable choices to choose from.

  3. ATP: If you can’t stand the heat, then get out of the kitchen. I call a spade a spade–if you don’t like it, show me how you are a heart.

    I’m impressed by your ability to dodge or not even address the real point I have raised. It’s very “savvy” of you, like the store that won’t be selling the bread at a loss. Actually, it is more cunning than savvy.

    “Prices are not inflated. Instead, they are value (sic) by the people purchasing them. As long as people have economic freedom they will not pay more for something than it is actually worth (in their own minds) because it is not rational.”

    You are joking, right? I’m glad you have enough semblance of integrity to have included in parentheses “in their own minds”, because that is the real key, the blind spot to your myopic argument. Essentially, everything turns upon being able to convince people “in their own minds” that they are not paying more for something than it is actually worth. This is where “marketing” and “branding” comes into play, n’est ce pas? The only way to “turn a profit” is to engage and succeed in this deception.

    If I come to you with an apple, and you come to me with an orange, and we exchange the two and “break even”, then all is well. But if you come to me and through marketing and branding, succeed in deceiving me into believing “in my own mind” that your orange is worth two of my apples, then you have succeeded in “turning a profit”–and ripping me off. You savvy guy you! If you can convince enough people of this, then soon most of the people in the world are walking around with an orange and you are simply swimming in apples! You’ve hit the jackpot!!

    “Rationality” and “economic freedom” has nothing to do with it. You are playing upon people’s emotions, at bottom fucking with their minds, manipulating them so that you can “take them to the bank”. Before you know it, you are one of those people mockingly drinking champagne on the balcony overlooking the Occupy Wall Street Protest. I find it ironic that you are “warning” me. Take care of your own head–the Guillotine is getting hungry. Apparently one orange just isn’t enough anymore.

    I don’t “think highly of abolishing business as a whole”–it was your assertion, not mine, that this would happen if the above delineated deception were to be exposed and no longer engaged in. Perhaps it could be said that I am a proponent of an “old school” market in which an equal exchange occurs–what you call “breaking even”. I really don’t see that as putting anyone “out of business” . . . . except the crooks, the “rip off artists”. And the human being will “move forward and progress” just fine without them. In fact, one could make a sound argument that is precisely these parasitical buffoons who have hindered that forward progress.

    • There’s an issue with this. Let’s say everyone believes that an orange is worth two apples. Now, how do you get rid of your apples? If you love apples, and plan to eat them, that’s fine, but unless you can find someplace that will trade you tow oranges for each apple, you haven’t turned a profit, you’ve just made it harder to carry your wealth around.

      The other issue is others can also start growing oranges. If your marketing campaign is too successful, you risk others getting into the production of oranges and undercutting you.

      • Simple answer–since you are such a “savvy” one, you then turn around and convince others through the same methods that two apples are worth four pears. You keep your share of apples, and acquire an even greater share of pears. If others start growing oranges, you just make sure through your marketing that everyone believes that your “brand” of oranges is the superior one and the only one worth two apples. This mentality is an addiction–and like all addictions, it is always finding a way to get and justify its next fix. The whole Wall Street speculation phenomenon is just a more embellished form of this–endless deceptions of oneself and others for the sake of “gain”. What few ask is what is being lost as a result.

      • And what stops others from realizing what you’re doing, and employing their own marketing? All you’re doing assumes you have no competition using the same tactics, or that you are far superior in employing them. And, if you really can pull all this off, more power to you!

  4. It’s funny, I had already anticipated your response and written mine to it in advance. Does that make me a “prophet”? Here it is:

    Right–others start realizing: “Hey, I got ripped off!” And so they start practicing this prevarication and “get into the game” themselves. Before you know it, no one knows the real value of anything anymore because everyone is inflating and misrepresenting the value of things exchanged in order to make an imaginary gain, to come out “on top” and “win the game”. It basically comes down to building a castle in the sky out of lies. Sound familiar? But say, wouldn’t it have been better to just stay down to earth and represent everything as closely as is possible to its actual worth? Debasing and fictionalizing the market hurts everyone. Imaginary wealth means everything is worth less than it seems–and so everyone keeps trying through the same erronoeus means that are the cause of the problem in the first place to “increase” their fictional wealth, which further increases everyone’s poverty. The market does not have natural checks and balances to offset this downward spiral of inflation, as we are so often told by the Priests of Capitalism–if it did, why are we in the situation we are in now? Why don’t food prices ever go down instead of up?

    The only thing that surprised me about your reply was your conclusion: “And, if you really can pull all this off, more power to you!” I thought you would make an argument about the market having those alleged checks and balances. Instead, you take the typical Social Darwinian stance–if you can rip off your fellow man, your brothers and sisters, and become the King of the the Hill of Deceptions, then more power to you!” This essentially amounts to signing off on the corrupt if not heinous antics of the Wall Street speculators. How, pray tell, is this a Christian position and viewpoint on this matter? Do you imagine that Jesus is sitting up there on his throne in Heaven giving the nod to these people with a sly, crooked smile on his lips? The man who said that “it is easier for a camel to pass through the eye of a needle than it is for a rich man to enter the Kingdom of Heaven?”

    Give me one example of anything Jesus did to deceive his fellow brothers and sisters for the sake of personal gain or “profit”.

    • If we had a static amount of money, we would see food prices going down. One of the major causes of inflation is the simple increase in the number of dollars printed. If you increase the number of bills from one billion to two billion, then their value goes down. That’s why most inflation measures are made in “1995 dollars” or “1970 dollars”, etc. Similarly, I still remember spending $3000 to buy my 486 dx2 66 computer in 1993. It was a beast. Now it’s trash, and can’t begin to compare with my $600 laptop.

      You’re also assuming that a product has a “true value” that can be known. It doesn’t. For example, Tincup and I were discussing football. I don’t watch NFL games. Ever. They have negative value to me, because they preempt shows I want to watch. The have positive value to Tincup, who chooses to watch them. Similarly, my wife really likes Starbucks coffee, I don’t.

      Finally, I do not endorse deceiving people to generate profit. That’s why we have truth in advertising laws.

      • “And, if you really can pull all this off, more power to you!” That statement is a direct reply to the scenario of deception I had just described.

        You have avoided all of the major points I brought up. That’s fine–I expected as much. Regarding the peripheral issues: Printing more money is the common man’s explanation for inflation. We all know that story. Printing more money is certainly a part of the problem–but then, there are a hell of lot more people in the world than there were in 1970 or even 1990. Obviously I haven’t been discussing “money” anyway–I have been discussing honesty in the market and how it gets eroded. I don’t assume that a product has a “true value”, but that people could strive in exchange to as I said “represent as much as possible” something’s actual worth rather than inflating its worth for the sake of personal gain. I’m not talking here about what people “like” and “don’t like”. If you don’t like pears, apples and oranges, obviously you aren’t going to be involved in the process I am discussing. I’m talking about in that process simply working to make fair and balanced exchanges rather than trying to trick people into believing that something has more value than it reasonably has, which is the real starting point in the snowball effect of inflation.

        You should watch an NFL game some day. It is a great example of inflation in action. Talk about inflated values–to convince people that these boneheaded neanderthals banging their heads together and doing hubristic, primitive dances around a “magic ball” are worth billions of dollars a year while our elementary school teachers are not even worth fifty thousand dollars per annum is the perfect example of what I am talking about. This not a question of “what people like and don’t like”–it is a question of deceiving people into believing that such enormities of discrepancy are “right” and “true”. If you don’t think that such grotesque imbalances in the market as these don’t have a negative effect upon the soundness of the economy–among other things–then you just aren’t paying attention. “Truth in advertising laws” aren’t going to do shit about this kind of backwards prevarication.

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