On Sunday, December 29, 2002 at 13:19:06 (-0800) Eugene Coyle writes:
>Agreed, they want profit -- but they talk "competition."
Bill Lear writes: > Yes indeed, and they (corporations) are very good (read, they have lots of money to pay for exquisitely detailed propaganda services) at pretending that what they crave is competition. <
There are interlocking and mutually reinforcing reasons why they want competition:
1) as a social ideology, competition implies limited power for the capitalists (i.e., they have to serve consumers).
2) small businesses often are in conflict with big ones and thus favor anti-trust, though this has faded in recent decades. Nowadays, international competition is seen as replacing anti-trust and the political power of the small businesses has faded.
3) some businesses want to enter existing industries that are monopolized or oligopolized as a result of government regulations. Similarly, many see profits to be made through deregulation and lobby to make the form of that "dereg" such that it's more likely to make profits for them (as Enron made money off of California's "dereg").
Bill continues: >What left wingers should want, in contrast --- aside from abolishing wage slavery of course --- is competition as Adam Smith envisioned it, which would lead to a society of rough equals toiling mightily to make life better for everyone. Competition has all sorts of nasty features and effects, but atomized capital is better than its concentrated, noxious forms. <
Competition encourages wage cutting and the like. My impression is that the US generally saw a rise in competition going from the 1970s to the 1990s. It's a period associated with cost-cutting and downsizing, increased insecurity for workers and union-busting. Competition also leads to adverse selection. One argument is that oligopolists are politically powerful and can convince the gov't that they're "too big to fail" (as with Chrysler in the 1970s). But small businesses can unite, especially against unions, minimum wage laws, the welfare state, etc.
>Large-scale enterprise should be owned by the public. Corner bakeries can be owned by mom and pop.<
when can we start?
>BTW, I have been thinking about profit and its relationship to
interest. Being ignorant of much of economic history, I imagine that
the relationship is something noticed before. Be that as it may, as I
see it, profit is nothing but perpetual interest. As far as I see it,
you are entitled to a standard rate of interest on your money that you
give out for productive purposes, since you do incur risk --- money is
essentially security. But once your initial investment is paid back,
and once you have gotten a socially accepted rate of interest in
addition, any further return in the form of profit (aside, of course,
from wages paid to you as a worker) should not go to you, but to the
business, and each employee who contributed to it should have a say in
how it is used. Did Marx write about the relationship of profit to
interest in those terms? Did anyone else?<
Marx didn't write about it in those terms. All of surplus-value (interest+profit+rent) is due to surplus-labor done by workers (exploitation). This surplus-value is distributed among various types of capitalists: moneylenders get interest, landowners (and by extension, anyone owning a naturally-scarce input) get land-rent, while those who own industrial capital get profits. Some of the latter get above-average profit rates ("superprofits") while others get below-average profits, while there is no guarantee ahead of time that any individual capitalist will get a positive profit. Those getting above-average profits need to worry about entry from other sectors, while those getting below-average profits are typically trying to leave their sectors. The process is dynamic, with various forces driving the society-wide average profit rate down. That doesn't mean that it actually falls, since it encourages capitalists to engage in innovation, wage cuts, etc. to get profit rates up again.
I hope this helps.
Jim
