Relationship of Marxism to Progressive Policies and the Virtues or Risks Thereof

[Darat]

My mistake. The 20th Century has plenty of examples of socialist economies far outpacing the capitalist west. Indeed, East Germany had to build a wall to keep those unproductive capitalists out of their socialist paradise.

Isn’t Portland in the USA?

 

[Trausti]

And dominant companies sometimes buyout competitors to maintain monopolies. I worked for such a company. We were bought out and I was fired. The customers were instantly limited.

Sure, an 800-pound gorilla will do whatever it wants. But in capitalism, competitors can challenge the gorilla's dominance until it's pushed off its perch. See IBM.

 

[Trausti]

Isn’t Portland in the USA?

And? If someone wanted to enter the elevator business in Portland, they are allowed to do so. Whether it would be a wise business venture is a different question.

 

[acbytesla]

Sure, an 800-pound gorilla will do whatever it wants. But in capitalism, competitors can challenge the gorilla's dominance until it's pushed off its perch. See IBM.

Sometimes. Most of the time almost never. They can challenge the gorilla but they usually are crushed by the gorilla, or bought out by the gorilla, or gorillas, as is the case in the soft drink industry by Coke and Pepsi.

Using tech companies as an example is not a good example. Sometimes the gorilla is beyond stupid and fails on every level. IBM, XEROX, KODAK failed to recognize the future. I mostly sold IT equipment since the mid 1980 to 2015. I know exactly why IBM lost. It had nothing to do with an upstart David challenging their dominance and taking them down.

IBM dismissed the personal computer on every level, then decided to cash in on it. And oh by the way, they destroyed their competitors. But they didn't care enough to actually build one themselves. They used all the hardware from others, tried to buy the CPM O/S but the owner of the software was out flying and ended up buying DOS from Gates and Allen, who didn't even own it. And instead of fully buying it from them, they allowed Gates and Allen to sell the OS to whoever they wanted. Which at the time was useless because there were no other PCs, The only thing IBM created was the BIOS chip. And that was reverse engineered by COMPAQ and then others. Microsoft sold their licenses to all those other companies except IBM

XEROX basically gave everything to Apple. And Kodak dismissed digital cameras until it was too late.

Even gorillas will die if they are stupid.

BTW, I'm not knocking capitalism, I'm knocking unfettered capitalism.

 

[The Great Zaganza]

Profit Margins are a direct measure of how easy it is to break into a market: no one can charge what they want when anyone could do what they can.
The fact that the same companies keep on making record profits year after year (so not just windfall profits) is proof that they have managed to make it impossible for any would-be competitor to even get a foot in the door. Where there are big profits there is no Market, just some type of monopoly.

In a perfectly efficient Market, profit margins are zero.

 

[acbytesla]

Profit Margins are a direct measure of how easy it is to break into a market: no one can charge what they want when anyone could do what they can.
The fact that the same companies keep on making record profits year after year (so not just windfall profits) is proof that they have managed to make it impossible for any would-be competitor to even get a foot in the door. Where there are big profits there is no Market, just some type of monopoly.

In a perfectly efficient Market, profit margins are zero.

Not at all. Zero profit margins means there is no market.

 

[The Great Zaganza]

wrong.
You are mixing up income and profit.
In an efficient market, total competition means that you can't charge more than what it costs you to make the product after expenses and wages.

The weirdness of Capitalism is that it demands a ROI on top of that, something that should not even be possible with proper competition.

 

[Ivor the Engineer]

Your link does not contradict what I said in my previous post. You deposit money in a commercial bank. They lend it out by creating a deposit in the borrowers account. They can then lend that money out. They are creating money supply which stimulates the economy. Just holding money in an account does something unlike hoarding cash. Since the FDIC was created in the USA, keeping money in a deposit account is just as safe as hoarding cash... theoretically safer actually since it cannot be destroyed. I assume the UK has similar.

It does absolutely 100% contradict what you said:

The vast majority of money held by the public takes the form of bank deposits. But where the stock of bank deposits comes from is often misunderstood. One common misconception is that banks act simply as intermediaries, lending out the deposits that savers place with them. In this view deposits are typically ‘created’ by the saving decisions of households, and banks then ‘lend out’ those existing deposits to borrowers, for example to companies looking to finance investment or individuals wanting to purchase houses.

In fact, when households choose to save more money in bank accounts, those deposits come simply at the expense of deposits that would have otherwise gone to companies in payment for goods and services. Saving does not by itself increase the deposits or ‘funds available’ for banks to lend. Indeed, viewing banks simply as intermediaries ignores the fact that, in reality in the modern economy, commercial banks are the creators of deposit money. This article explains how, rather than banks lending out deposits that are placed with them, the act of lending creates deposits — the reverse of the sequence typically described in textbooks.

 

[Ivor the Engineer]

wrong.
You are mixing up income and profit.
In an efficient market, total competition means that you can't charge more than what it costs you to make the product after expenses and wages.

The weirdness of Capitalism is that it demands a ROI on top of that, something that should not even be possible with proper competition.

I.e., the stable equilibrium that neoclassical economists believe in is in fact unstable. This is why they rarely if ever see economic crisis coming.

Neoclassical economists (and libertarians) think the economic system is akin to a regular pendulum, where forces restore it to hanging downwards after a disturbance. In reality the economic system is more similar to an inverted pendulum, which also has an equilibrium, but the slightest disturbance will knock it off and it requires constant effort to keep it around (but never at) that equilibrium.

 

[Darat]

wrong.
You are mixing up income and profit.
In an efficient market, total competition means that you can't charge more than what it costs you to make the product after expenses and wages.

The weirdness of Capitalism is that it demands a ROI on top of that, something that should not even be possible with proper competition.

Yeah but if you consider cows to be perfect spheres....

 

[Ivor the Engineer]

Yeah but if you consider cows to be perfect spheres....

That's insulting to physicists. Mainstream (neoclassical) economics is an ideology and cult pretending to be a science because it uses mathematics. For example, they have even disproven their own core beliefs and still teach them to students and hide the reality that they are false.

Sonnenschein–Mantel–Debreu theorem - Wikipedia

en.wikipedia.org

The Sonnenschein–Mantel–Debreu theorem is an important result in general equilibrium economics, proved by Gérard Debreu, Rolf Mantel [es], and Hugo F. Sonnenschein in the 1970s.[1][2][3][4] It states that the excess demand curve for an exchange economy populated with utility-maximizing rational agents can take the shape of any function that is continuous, has homogeneity degree zero, and is in accordance with Walras's law.[5] This implies that the excess demand function does not take a well-behaved form even if each agent has a well-behaved utility function. Market processes will not necessarily reach a unique and stable equilibrium point.

 

[Darat]

That's insulting to physicists. Mainstream (neoclassical) economics is an ideology and cult pretending to be a science because it uses mathematics. For example, they have even disproven their own core beliefs and still teach them to students and hide the reality that they are false.

Sonnenschein–Mantel–Debreu theorem - Wikipedia

en.wikipedia.org

My post from earlier to provide the context for my comment.

Economics is a subset of social science that tries to look 'arder than social science in general by throwing maths around and pretending it's making realistic models when all it is doing is the old physics jokes about "if we assume cows are perfect spheres"; it is still a soft science. Any hard science of economics is going to come from AIs which can cope with massive data in ways humans can't, I dread to think what that will result in.

 

[Ivor the Engineer]

My post from earlier to provide the context for my comment.

I disagreed with that too, but didn't comment. Physics has managed to progress quite a way without AI and economics could too. What holds back mainstream economics is that it bases its models on falsehoods and over-simplistic static analysis. Most economists never progress far enough in their education to even know that they have been lied to over and over again. Even those economists that do PhDs have the proof of the falseness of the assumptions required for their models to be even somewhat representative of reality presented in such an obtuse way that even they don't realise the implications.

Mainstream economists simply ignore any criticism, or acknowledge it and then carry on as if it doesn't change anything.

 

[lobosrul5]

It does absolutely 100% contradict what you said:

The article is correcting the misconception that commercial banks are just intermediaries between the central bank and borrowers, this is correct. ITs the commercial banks that add to money supply.... thats what you bolded. Earlier you were claiming it shows I was wrong that if you deposit money the bank will lend it out. Thats literally how they create new money. If I have $10,000 in a CD at Bank of America. They lend that out by creating a deposit account for the borrower. While there is $10,000 in the borrowers account they can also lend that money out. They cannot create a deposit in the borrowers account without first having someone with savings at the bank.

ETA: let me ask you this. If commercial banks can just make money appear out of thin air for loans with no deposits being held there, why then do they pay any interest on deposit accounts and CD's?

 

[lobosrul5]

Profit Margins are a direct measure of how easy it is to break into a market: no one can charge what they want when anyone could do what they can.
The fact that the same companies keep on making record profits year after year (so not just windfall profits) is proof that they have managed to make it impossible for any would-be competitor to even get a foot in the door. Where there are big profits there is no Market, just some type of monopoly.

In a perfectly efficient Market, profit margins are zero.

You're missing something. Capital is not infinite. Theoretically it will always go to where it can get the highest ROI. Someone could enter the market and industry for which I work with probably, oh about $50,000,000 in startup capital. But why would they do that if that capital can be better used somewhere else? Why doesn't my employer sell all their assets off and become an AI startup or similar. Its because they already have the personnel, expertise, and equipment in place to keep on doing what they are doing. The business is worth much more than the sum of its parts.

 

[Darat]

The word "theoretical" often has to do an immense amount of lifting in economics...

 

[catsmate]

My mistake. The 20th Century has plenty of examples of socialist economies far outpacing the capitalist west. Indeed, East Germany had to build a wall to keep those unproductive capitalists out of their socialist paradise.

Silly strawmannery.
Your nonsensical claims about no barriers to market entry have already been addressed.
Perhaps you could educate yourself about basic economics? There are numerous online courses.

 

[catsmate]

I.e., the stable equilibrium that neoclassical economists believe in is in fact unstable. This is why they rarely if ever see economic crisis coming.

Neoclassical economists (and libertarians) think the economic system is akin to a regular pendulum, where forces restore it to hanging downwards after a disturbance. In reality the economic system is more similar to an inverted pendulum, which also has an equilibrium, but the slightest disturbance will knock it off and it requires constant effort to keep it around (but never at) that equilibrium.

They really should read their Adam Smith, he certainly didn't believe such nonsense.

 

[Ivor the Engineer]

The article is correcting the misconception that commercial banks are just intermediaries between the central bank and borrowers, this is correct. ITs the commercial banks that add to money supply.... thats what you bolded. Earlier you were claiming it shows I was wrong that if you deposit money the bank will lend it out. Thats literally how they create new money. If I have $10,000 in a CD at Bank of America. They lend that out by creating a deposit account for the borrower. While there is $10,000 in the borrowers account they can also lend that money out. They cannot create a deposit in the borrowers account without first having someone with savings at the bank.
ETA: let me ask you this. If commercial banks can just make money appear out of thin air for loans with no deposits being held there, why then do they pay any interest on deposit accounts and CD's?

So long as a commercial bank can cover its expected flows of money (as determined by the regulator) it can literally create money out of thin air. This is how most of the money and deposits in existence have been created: commercial banks create a loan account and put the same amount in a customer's deposit account. They sum to zero. Repaying the loan destroys the money that was created.

 

[Darat]

They really should read their Adam Smith, he certainly didn't believe such nonsense.

Some of the most ardent Adamists I've read over the years obviously never read what he actually wrote. Very much like many ardent Marxists.