The situation isn’t so that we first had a theory of capitalism and then went to implement it. Instead we started doing stuff and found that it had ideological baggage. Capitalism is the only option because it’s the only fleshed out option because we suck at (rigousrously) imagining alternative economic possibilities.
I have found the theorethical foundations to be pretty weak (as far as theorethical sense of elegancy goes) but here the proof is in the pudding. The theorethical constucts links to real world behaviours are a lot more stronger than the internal logic.
I have in my mind toyed with some alternative ideas but I am hesitant to actually talk about them. The act of publicly imagining on the possibility that gods are not real is really close to open revolt against theocrasy. Also history points out how dangerous halfthought alternatives are. A lot of the communist states did not do anything concrete that would be communist economy. Instead “for the people” became an excuse to have centralised elitist solutions. Therefore I think it’s not enough to take steps into a new direction but actually able to run something different.
There are base level contradictions that are really unconfortable to have but most people somehow incorporate them into their thinking. If trade is exchange of like-for-like how can you make money off trading? If trading isn’t like-for-like what are the conditions for it being acceptable? If you buy a luxury item at a high price or you buy the same luxury item at a lower price in which case are you more wealthy? If you buy the high price item your nominal value is more and you are richer. If you have a company that produces its services for a low price or high price which leaves the society more empowered? The high priced one has more room to propagate it’s methods of production. However the lower priced one leaves its customers more richer. On one hand competition and driving prices down is looked as good effecf yet we speak highly of companies that make a big bottom line. That is competition is a mechanic of profit prevention in that the most modest profit claim wins. On one hand a customer buying for a higher price than neccesary is seen as stupid but the one that enables the biggest group of morons is seen as the smartest. Greating the latest frivoulous need makes you the “forward moving force of the economy” but people not affording healthcare defines healthcare not to be in the interest of the public.
If trade is exchange of like-for-like how can you make money off trading? If trading isn’t like-for-like what are the conditions for it being acceptable?
The problem is that “like” isn’t a well-defined concept the way you use it. Trade works because the value of goods is a two place function, i.e., if Alice gives Bob a coffee for $2, that’s because Bob values the coffee more than he values the $2, while Alice values it less.
Well then trade is not exchange of equals, which I guess is a decent position. But then it’s hard to make that two placed “values” to play nice with value when the owner is not spesified. That is if Bob values it at $2 because he knows that Charlie values it at $3 so he can sell it to Charlie to gain $1 why is it okay for Bob to end up with that $1 instead of Alice selling it directly to Charlie so that Alice ends up with the $1? I could kinda understand if a goods “one place value” would be the value that the person that would give up most to have it would exchange it for. The situation is even more bizarre if Bob would prefer to have the $2 instead of the coffee if Charlie didn’t exist.
The only way it makes sense if Alice is unable to trade with Charlie. But this is counter to assuming that trade is free. Bob has motive to keep Alice from trading with Charlie. Bob also gains without giving. If Alice buys apples for $3 and Charlie sells them for $2 I get that Alice and Charlie get to switch to a higher desirability product but Bob scores a apple or a coffee without giving up anything. If Alice and Charlie work to produce their respective cheap products Bob enjoys the fruits of labour without having to work. Economic productivity would actually be increased if Bob didn’t exist.
An interpretation, trade might be win-win for the pairwise participants but it makes everybody else lose in the same go. Bob ends up overall winner because he participates in all the trade while Alice and Charlie acts as outsiders 1 time and insiders 1 time. It can also be argued that it hurts outsiders more than it helsp the insiders. Otherwise Alice should break even.
This statement doesn’t even make sense. Trade occurs because people have different utility functions over property. If I’m a coffee house with lots of coffee, my marginal utility of one more cup of coffee is less than $2. If you’re a thirsty consumer with lots of money and no coffee, then the marginal value of a cup of coffee is greater than $2. Trade occurs because you value the cup of coffee more than your $2, and I value your $2 more than that one cup of coffee. Your valuation of the coffee equals or exceeds my valuation of the coffee.
The rest of your example is basically about information flow and market inefficiencies, and seems rather tangential.
If there were even more thirstier money holder I would not get the cup at $2. The coffee shops valuation of the coffee is entirely dependent on the sell value of the good and not because the owner wants to drink the coffee.
The tangent is about how only inefficient economies have traders (people that make money by not creating property but receiving and releasing property). If the coffee house employs workers or buys coffee beans there is an element of functioning as a trader. That is the coffee house asks more from the customer than it thinks the components of the coffee are worth.
There is additionally the issue that the exchangers don’t need to benefit in similar scales. The coffee can be near parity for the thirsty customer while the trade value for the coffee house can be substantial. Because the coffee house and the customer partly use money to buy goods from shared pools of products by buying the customer hurts his buying power.
Only if you consider the absence of costless, automatic, instant teleportation of goods from where they are made to where they are wanted an inefficiency. If that is inefficiency, there is no such thing as an efficient economy.
You might as well go further and consider the absence of instant creation of goods from thin air an inefficiency. Indeed, is there anything one spends effort on, that the existence of that effort could not be judged an inefficiency?
That is the coffee house asks more from the customer than it thinks the components of the coffee are worth.
There is no such thing as what the components of the coffee “are worth”. The growers grow coffee, the distributors transport it, the baristas turn it into cups of coffee, and the owner of the coffee house provides the premises and equipment. The customer pays all of them for providing a cup of coffee at the place and time he wants it. The “intrinsic worth” of coffee plays no part in any of this.
I don’t need to refer to intrinsic worth but the amount they are giving up in order to aquire the components of the coffee. Employees are paid salaries and coffee beans are bought.
There are markets where those assumtions are quite valid such as stock markets. I see I have hit some kind of nerve and seem to be playing a connotation bingo. If Bob were hired as a trucker that would be fine but the “economic niche” can be disproportionally large compared to any real input a trader gives. It gets especiallly blatant when a trader buys and sells the exact same good to generate a money advantage from its price fluctations. It smells more like abuse of the abstractions deployed to handle the economy than them being used to actually contribute to solve a real problem.
As said above, no economies are perfectly efficient, and traders make their money improving that efficiency. This is not a new revelation: we have over a millennium of history of people hating traders, moneylenders, etc. for “getting rich doing nothing” while they provide valuable efficiency improvements.
It gets especiallly blatant when a trader buys and sells the exact same good to generate a money advantage from its price fluctations.
Price fluctuations indicate real problems to be solved. That is what traders and middlemen do: resolve those problems. Prices fluctuate because the need for things varies over time and space and between individuals. “Buy low, sell high” means “buy something when there is so much that people want to get rid of it and sell when there is so little that people want more.” The profit in between is (1) recognizing that difference over time and (2) being willing to buy something you don’t want, hold it when you could be using that money for something else, and then sell it to people who want it more. If there were not value in that, you would just hold your surplus until you needed it. You can capture all the benefits that traders provide by just never trading (note: this is a bad idea).
The same applies with trading goods over space (excess in one area, dearth in another) or between individuals (finding the people who want to buy what you want to sell). The economy is not perfectly efficient, so the trader makes money by smoothing those inefficiencies and incurring the transaction costs of moving things across time and space, along with the risk of ″being wrong″ and losing the investment.
I would like to understand what is the efficency they provide, if they in fact do. I guess it is that Bob effectively makes Charlie appear in Alices world. Hopefully one would go from isolated individuals to individuals connected via traders to individuals connected directly to each other. Still it is in the traders interest to not tip off the existence of Charlie to Alice.
I do have a qualm about there being no upper limit how valuable this “organization” work is.
I’m presuming you do not sell things, much or often? Because finding buyers is a big transaction cost, especially if you are mass producing something. The expertise needed to make 1000kg of soap is not the same expertise needed to find 1000 people who each need 1kg of soap and sell it to them.
Can I presume you do buy things? A grocery store is one of those traders. Alice produces bananas, you are Charlie, and Bob the grocer buys bananas from Alice and sells them to you. But wait, that is Alice1. Alice2 grows peaches, Alice3 grows wheat, Alice4 grows… It would be very inefficient for you to visit every Alice to do your grocery shopping, especially when they are spread around the country and the world, and you can imagine the cramp it would put in Alice’s production to try to be available to sell to you whenever you needed in whatever quantity you needed. That is what Bob does: he talks to all of those Alices, brings all of those products together, and makes them available to you in arbitrary quantities and convenient hours. Bob is a trader.
Individuals connected directly to each other is nice for some things but misses out on a lot, such as economies of scale. Alice specializes in producing things, and Bob specializes in collecting things from producers and getting them to consumers. This is like how the water company brings water to your house; you are partly paying for the water, but mostly you are paying for the availability of water. If you want to get rid of the water trader, get a bucket and go to the stream.
Polanyi argues that many traditional, NON-ideological, but more like evolved local custom types of restrictions (i.e. Burkean conservative restrictions) on the operation of the free market were removed by government action to pave the way for the market, in an ideological hope that it will enrich society (it did, but anyway).
(Take it with a grain of salt, though, Polanyi had strong socialist sentiments, even marrying in the communist movement.
Not to be confused with his bro, Michael Polanyi, who generally had libertarian leanings.)
Well, I guess I sort of agree with the things you said, though I’m not sure how else I could express my feelings on your comment.
But I think that the Collaborative Commons does provide an alternate to capitalism in the form of a social economy rather than a market economy. And the rise of things like social entrepreneurship seem to back that up.
Digging up a little deeper on the issue I think I have already figured out a lot of the details that the Collaborative Commons direction seems to be heading into.
I have been trying to label my thinking as “contributionism”.
Traditionally you have, fixed costs + unit costs = costs paid by consumers + leftovers claimable by the corporation (= profit). Usually the fixed costs are what they are and the amount that is produced is varied. Additionally we offer the product at some price. This gives it the form of, cost_f + Xcost_u=c_cost_uX+profit. Homo economicus selects the product with cheapest price so there is pressure to set c_cost_u as low as possible but we want to have profit as high as possible. Dividing by X we get cost_f/X=c_cost_u+profit/X. If the company is really efficent they can set their profit slightly less of the 0 profit c_cost_u price of the next best competetitor (in reality they won’t accept a 0 profit but then you use a figure of the lowest profit they accept instead of not bothering to make the product). Traditional analysis rather wants to see it in terms of marignal cost where you don’t see the profit so much as ebing part of every product but instead you first make the product some amount to offset the fixed costs and then you are free to make addiotional units purely to make excess money. However this method is pretty tricky if you don’t know how many units will be sold if the value of X is unknown. In practice you have to aim for a price / scale point. If you get the price low you eat into your money per itemt ath you won’t make your invesment back. If you set it too high people either don’t afford it or it gets outcompeted by cheaper products. So there is sweepspot range where the “price is right” that it accumulates more money than it loses to competition / being expensive. If you hit anywhere in there you get a profit and if you hit a better spot you get more money. However while you can make an educated guess it ends up being a guess neve the less. I am using suggestive phrasing that it need not be so.
We can do the optimatization differently. We know the fixed costs are going to be cost_f and we would like to make 1000 from the operation so profit=1000. cost_f + Xcost_u=c_cost_uX+profit → X(cost_u)-X(c_cost_u)=profit-cost_f → X*(cost_u-c_cost_u)=profit-cost_f → cost_u-c_cost_u=(profit-cost_f)/X → c_cost_u=((profit-cost_f)/X)-cost_u. Now we have only one unknown on the left and one unknown on the right. This is also the price point of making exactly the profit that we want. Instead of fixing the ask price we have fixed the profit. Now we start offering these and when new customers arrive we retroactively change the price of already sold products (It always goes down so they probably don’t mind). Now we are perfectly competetive while getting the profit that we want regardless of volume. It’s impossible for us to price wrong.
This kind of alternate scheme makes more sense for which cost_u is low. However there are plenty of areas where cost_u is effectively zero. Once a game has been programmed installing it on 1 billion computers has virtually 0 cost. Also once a songs has been composed downlaoding it to an addiotional ipod is practically free. I call this ability “copyability”. They tend to be characterised as those with low cost_u but high cost_f but in general there is a degree into it. For example if you make chairs you still need additional wood so additional chairs is not free. but then you don’t need to redesign the chair. If you make designer chair a bigger portion of your product is actually inthe design rather then in the raw materials. Also if you make 1 medicine pill it isn’t completely free to make another but the essential effort was to get it tested as safe so the second costs about 1/100000000th what the first costed. In fact it doesn’t really make sense to apply the concept of marginal cost here. You are never really limited by raw material cost when making medicines.
However this has all sort of edgy theorethical heterodoxy going for it. For example you no longer become a billionare if you make a product that has sell volume way more than you thought was economical for. Bug or feature? You have to say good buy to winning the marketing super lottery. But in exchange the legitimacy of hit products is better and the price representing the effort to get the thing done is better. You also have a big disperancy with ability to pay and actual amount paid. Even if you already paid 100$ for a product you migth end up getting 30$ later back. If we use the old rules of evaluation of everything being worth what the consumer is willing to pay for it you got 100$ of value for 70$ paid. Also hit products have lower price than those that barely make economic sense. Usually when you want good shoes you pay more to get more. However similar products one being selected as being the one worth using and getting it goes down in price making it a good rule of thumb of getting the cheapest applicaple product to get the best quality.
There is also the property that all customers pay the same price. No more getting stuff cheap from the sale bin. There is no price guessing so there is no arbitrary drops. Instead of being smacked with a first user “fine” of being a first adopter when your product “normalises” you actually have paid just as much as those that dollar bin buy their stuff. You just got your earlier by having the chance that it will stay a niche product forever (and never hits the masses). But if you were ok witht he price point of the product when you got it there isn’t any gambling from your point going on. In fact we can precollect commitments on how many people would buy it from the dollar bins to jump straight to mass sales without going throught first adopter phase. That is what would have been a tragic overpricing can be can be salvaged to a working price point as people don’t have an incentive to underreport what they woudl be willing to pay for a product. That is if you overreporting doesn’t cost nearly as much where each cent that you overreport is a loss for you in the traditional haggling scheme. In fact we might first have a idea of thing that might be worth doign and then have the financial commitments from end users before production even begins. That is we have an alternative economical activity motivator framework. You can have a project setup and financed for the sake of having it done. For example how many “I will chip in 30$ to have man go to Mars” we need to get our rockets together? 50%6 billion30$ = 90 billion budjet. Will that get us there? Does it make economical sense? Notice how we can have commitment levels under and over 30$. Notice how we don’t need to make anyone a multimillionare to get it organised. That is the budjet can compromise just many regular level people working on it with down to earth “just let me support myself” money demands. How we currently do speculation is that we let a enterprise take a loan and then either let it bankcrypt spectacularly or hit upon on a permit to print money. Notice how both of these options are a drain on society.
The thing is that the alternatives never really want to get spesific. Yeah it would be nice that those who do work would have the right to organise work how they see it would work best since those probably know best. But if you don’t provide any microdetails on how it is supposed to work it becomes an empty slogan. That is a suit with deskjob holding and maanging the ownership is pretty far from the ideal but if we dont’ have a concrete way fo imagining what to have in its stead it doesn’t help to tear anything up and leave just a vacuum. If employers with no desk jobs would select among themselfs one that did start a desk job identical to the current suit would that be significant enough? That is the curretn system is good in that sense that there is clear appointed persons that are financially responcible. Althoguth we could argue that in a system where goverment goes on to cover up the losses when it comes time to live with the responcibility it creates a position of power without any accountability. But it kinda means that if we no longer have “big players” that assume enourmous repsonciblities in hoeps of getting ennourmeous greeds filled we need to have a method how we make the group of people that shoulder the responcibility larger. We could argue that in the current state the responcibility of the consumer is artifically limited. That is if you buy a product that is produced by firm that goes bankcrupt you have gained a product as if it made financial sense when it in fact didn’t. That is when you are at the super market the products that will flop are pretty comparable in price to the products that won’t. The process of eliminating the investor greed motive migth mean that the economical reality is more directly exposed to the customer. Curretnly we have set prices that have an element of false promise. You can buy a product as if it made financial sense even if it ends up not doing so. There migth be a need to have a speculative elemtn on the prices. Would it be okay if to have a little higher nominal prices on shelfs but then have the ones that make economical sense go down? Would it be okay that if you could not just arrive into a “set table” of having already produced products waiting on the shelf ready to buy you would actually have to keep money preattached to upkeep the selection? Could it be okay if you needed to select which kinds of products you will buy 3 months in advance instead of 1 day in advance? Would you rather pay 100$ now for sneakers or make the decision to attach 70$ to it now and know that it makes economical sense 3 weeks later (or know that it won’t and rereceive that 70$)?
The situation isn’t so that we first had a theory of capitalism and then went to implement it. Instead we started doing stuff and found that it had ideological baggage. Capitalism is the only option because it’s the only fleshed out option because we suck at (rigousrously) imagining alternative economic possibilities.
I have found the theorethical foundations to be pretty weak (as far as theorethical sense of elegancy goes) but here the proof is in the pudding. The theorethical constucts links to real world behaviours are a lot more stronger than the internal logic.
I have in my mind toyed with some alternative ideas but I am hesitant to actually talk about them. The act of publicly imagining on the possibility that gods are not real is really close to open revolt against theocrasy. Also history points out how dangerous halfthought alternatives are. A lot of the communist states did not do anything concrete that would be communist economy. Instead “for the people” became an excuse to have centralised elitist solutions. Therefore I think it’s not enough to take steps into a new direction but actually able to run something different.
There are base level contradictions that are really unconfortable to have but most people somehow incorporate them into their thinking. If trade is exchange of like-for-like how can you make money off trading? If trading isn’t like-for-like what are the conditions for it being acceptable? If you buy a luxury item at a high price or you buy the same luxury item at a lower price in which case are you more wealthy? If you buy the high price item your nominal value is more and you are richer. If you have a company that produces its services for a low price or high price which leaves the society more empowered? The high priced one has more room to propagate it’s methods of production. However the lower priced one leaves its customers more richer. On one hand competition and driving prices down is looked as good effecf yet we speak highly of companies that make a big bottom line. That is competition is a mechanic of profit prevention in that the most modest profit claim wins. On one hand a customer buying for a higher price than neccesary is seen as stupid but the one that enables the biggest group of morons is seen as the smartest. Greating the latest frivoulous need makes you the “forward moving force of the economy” but people not affording healthcare defines healthcare not to be in the interest of the public.
The problem is that “like” isn’t a well-defined concept the way you use it. Trade works because the value of goods is a two place function, i.e., if Alice gives Bob a coffee for $2, that’s because Bob values the coffee more than he values the $2, while Alice values it less.
Well then trade is not exchange of equals, which I guess is a decent position. But then it’s hard to make that two placed “values” to play nice with value when the owner is not spesified. That is if Bob values it at $2 because he knows that Charlie values it at $3 so he can sell it to Charlie to gain $1 why is it okay for Bob to end up with that $1 instead of Alice selling it directly to Charlie so that Alice ends up with the $1? I could kinda understand if a goods “one place value” would be the value that the person that would give up most to have it would exchange it for. The situation is even more bizarre if Bob would prefer to have the $2 instead of the coffee if Charlie didn’t exist.
The only way it makes sense if Alice is unable to trade with Charlie. But this is counter to assuming that trade is free. Bob has motive to keep Alice from trading with Charlie. Bob also gains without giving. If Alice buys apples for $3 and Charlie sells them for $2 I get that Alice and Charlie get to switch to a higher desirability product but Bob scores a apple or a coffee without giving up anything. If Alice and Charlie work to produce their respective cheap products Bob enjoys the fruits of labour without having to work. Economic productivity would actually be increased if Bob didn’t exist.
An interpretation, trade might be win-win for the pairwise participants but it makes everybody else lose in the same go. Bob ends up overall winner because he participates in all the trade while Alice and Charlie acts as outsiders 1 time and insiders 1 time. It can also be argued that it hurts outsiders more than it helsp the insiders. Otherwise Alice should break even.
This statement doesn’t even make sense. Trade occurs because people have different utility functions over property. If I’m a coffee house with lots of coffee, my marginal utility of one more cup of coffee is less than $2. If you’re a thirsty consumer with lots of money and no coffee, then the marginal value of a cup of coffee is greater than $2. Trade occurs because you value the cup of coffee more than your $2, and I value your $2 more than that one cup of coffee. Your valuation of the coffee equals or exceeds my valuation of the coffee.
The rest of your example is basically about information flow and market inefficiencies, and seems rather tangential.
If there were even more thirstier money holder I would not get the cup at $2. The coffee shops valuation of the coffee is entirely dependent on the sell value of the good and not because the owner wants to drink the coffee.
The tangent is about how only inefficient economies have traders (people that make money by not creating property but receiving and releasing property). If the coffee house employs workers or buys coffee beans there is an element of functioning as a trader. That is the coffee house asks more from the customer than it thinks the components of the coffee are worth.
There is additionally the issue that the exchangers don’t need to benefit in similar scales. The coffee can be near parity for the thirsty customer while the trade value for the coffee house can be substantial. Because the coffee house and the customer partly use money to buy goods from shared pools of products by buying the customer hurts his buying power.
Only if you consider the absence of costless, automatic, instant teleportation of goods from where they are made to where they are wanted an inefficiency. If that is inefficiency, there is no such thing as an efficient economy.
You might as well go further and consider the absence of instant creation of goods from thin air an inefficiency. Indeed, is there anything one spends effort on, that the existence of that effort could not be judged an inefficiency?
There is no such thing as what the components of the coffee “are worth”. The growers grow coffee, the distributors transport it, the baristas turn it into cups of coffee, and the owner of the coffee house provides the premises and equipment. The customer pays all of them for providing a cup of coffee at the place and time he wants it. The “intrinsic worth” of coffee plays no part in any of this.
I don’t need to refer to intrinsic worth but the amount they are giving up in order to aquire the components of the coffee. Employees are paid salaries and coffee beans are bought.
There are markets where those assumtions are quite valid such as stock markets. I see I have hit some kind of nerve and seem to be playing a connotation bingo. If Bob were hired as a trucker that would be fine but the “economic niche” can be disproportionally large compared to any real input a trader gives. It gets especiallly blatant when a trader buys and sells the exact same good to generate a money advantage from its price fluctations. It smells more like abuse of the abstractions deployed to handle the economy than them being used to actually contribute to solve a real problem.
As said above, no economies are perfectly efficient, and traders make their money improving that efficiency. This is not a new revelation: we have over a millennium of history of people hating traders, moneylenders, etc. for “getting rich doing nothing” while they provide valuable efficiency improvements.
Price fluctuations indicate real problems to be solved. That is what traders and middlemen do: resolve those problems. Prices fluctuate because the need for things varies over time and space and between individuals. “Buy low, sell high” means “buy something when there is so much that people want to get rid of it and sell when there is so little that people want more.” The profit in between is (1) recognizing that difference over time and (2) being willing to buy something you don’t want, hold it when you could be using that money for something else, and then sell it to people who want it more. If there were not value in that, you would just hold your surplus until you needed it. You can capture all the benefits that traders provide by just never trading (note: this is a bad idea).
The same applies with trading goods over space (excess in one area, dearth in another) or between individuals (finding the people who want to buy what you want to sell). The economy is not perfectly efficient, so the trader makes money by smoothing those inefficiencies and incurring the transaction costs of moving things across time and space, along with the risk of ″being wrong″ and losing the investment.
I would like to understand what is the efficency they provide, if they in fact do. I guess it is that Bob effectively makes Charlie appear in Alices world. Hopefully one would go from isolated individuals to individuals connected via traders to individuals connected directly to each other. Still it is in the traders interest to not tip off the existence of Charlie to Alice.
I do have a qualm about there being no upper limit how valuable this “organization” work is.
I’m presuming you do not sell things, much or often? Because finding buyers is a big transaction cost, especially if you are mass producing something. The expertise needed to make 1000kg of soap is not the same expertise needed to find 1000 people who each need 1kg of soap and sell it to them.
Can I presume you do buy things? A grocery store is one of those traders. Alice produces bananas, you are Charlie, and Bob the grocer buys bananas from Alice and sells them to you. But wait, that is Alice1. Alice2 grows peaches, Alice3 grows wheat, Alice4 grows… It would be very inefficient for you to visit every Alice to do your grocery shopping, especially when they are spread around the country and the world, and you can imagine the cramp it would put in Alice’s production to try to be available to sell to you whenever you needed in whatever quantity you needed. That is what Bob does: he talks to all of those Alices, brings all of those products together, and makes them available to you in arbitrary quantities and convenient hours. Bob is a trader.
Individuals connected directly to each other is nice for some things but misses out on a lot, such as economies of scale. Alice specializes in producing things, and Bob specializes in collecting things from producers and getting them to consumers. This is like how the water company brings water to your house; you are partly paying for the water, but mostly you are paying for the availability of water. If you want to get rid of the water trader, get a bucket and go to the stream.
No, partially it was actually done that way. https://en.wikipedia.org/wiki/The_Great_Transformation_(book)
Polanyi argues that many traditional, NON-ideological, but more like evolved local custom types of restrictions (i.e. Burkean conservative restrictions) on the operation of the free market were removed by government action to pave the way for the market, in an ideological hope that it will enrich society (it did, but anyway).
(Take it with a grain of salt, though, Polanyi had strong socialist sentiments, even marrying in the communist movement. Not to be confused with his bro, Michael Polanyi, who generally had libertarian leanings.)
Well, I guess I sort of agree with the things you said, though I’m not sure how else I could express my feelings on your comment.
But I think that the Collaborative Commons does provide an alternate to capitalism in the form of a social economy rather than a market economy. And the rise of things like social entrepreneurship seem to back that up.
Digging up a little deeper on the issue I think I have already figured out a lot of the details that the Collaborative Commons direction seems to be heading into.
I have been trying to label my thinking as “contributionism”.
Traditionally you have, fixed costs + unit costs = costs paid by consumers + leftovers claimable by the corporation (= profit). Usually the fixed costs are what they are and the amount that is produced is varied. Additionally we offer the product at some price. This gives it the form of, cost_f + Xcost_u=c_cost_uX+profit. Homo economicus selects the product with cheapest price so there is pressure to set c_cost_u as low as possible but we want to have profit as high as possible. Dividing by X we get cost_f/X=c_cost_u+profit/X. If the company is really efficent they can set their profit slightly less of the 0 profit c_cost_u price of the next best competetitor (in reality they won’t accept a 0 profit but then you use a figure of the lowest profit they accept instead of not bothering to make the product). Traditional analysis rather wants to see it in terms of marignal cost where you don’t see the profit so much as ebing part of every product but instead you first make the product some amount to offset the fixed costs and then you are free to make addiotional units purely to make excess money. However this method is pretty tricky if you don’t know how many units will be sold if the value of X is unknown. In practice you have to aim for a price / scale point. If you get the price low you eat into your money per itemt ath you won’t make your invesment back. If you set it too high people either don’t afford it or it gets outcompeted by cheaper products. So there is sweepspot range where the “price is right” that it accumulates more money than it loses to competition / being expensive. If you hit anywhere in there you get a profit and if you hit a better spot you get more money. However while you can make an educated guess it ends up being a guess neve the less. I am using suggestive phrasing that it need not be so.
We can do the optimatization differently. We know the fixed costs are going to be cost_f and we would like to make 1000 from the operation so profit=1000. cost_f + Xcost_u=c_cost_uX+profit → X(cost_u)-X(c_cost_u)=profit-cost_f → X*(cost_u-c_cost_u)=profit-cost_f → cost_u-c_cost_u=(profit-cost_f)/X → c_cost_u=((profit-cost_f)/X)-cost_u. Now we have only one unknown on the left and one unknown on the right. This is also the price point of making exactly the profit that we want. Instead of fixing the ask price we have fixed the profit. Now we start offering these and when new customers arrive we retroactively change the price of already sold products (It always goes down so they probably don’t mind). Now we are perfectly competetive while getting the profit that we want regardless of volume. It’s impossible for us to price wrong.
This kind of alternate scheme makes more sense for which cost_u is low. However there are plenty of areas where cost_u is effectively zero. Once a game has been programmed installing it on 1 billion computers has virtually 0 cost. Also once a songs has been composed downlaoding it to an addiotional ipod is practically free. I call this ability “copyability”. They tend to be characterised as those with low cost_u but high cost_f but in general there is a degree into it. For example if you make chairs you still need additional wood so additional chairs is not free. but then you don’t need to redesign the chair. If you make designer chair a bigger portion of your product is actually inthe design rather then in the raw materials. Also if you make 1 medicine pill it isn’t completely free to make another but the essential effort was to get it tested as safe so the second costs about 1/100000000th what the first costed. In fact it doesn’t really make sense to apply the concept of marginal cost here. You are never really limited by raw material cost when making medicines.
However this has all sort of edgy theorethical heterodoxy going for it. For example you no longer become a billionare if you make a product that has sell volume way more than you thought was economical for. Bug or feature? You have to say good buy to winning the marketing super lottery. But in exchange the legitimacy of hit products is better and the price representing the effort to get the thing done is better. You also have a big disperancy with ability to pay and actual amount paid. Even if you already paid 100$ for a product you migth end up getting 30$ later back. If we use the old rules of evaluation of everything being worth what the consumer is willing to pay for it you got 100$ of value for 70$ paid. Also hit products have lower price than those that barely make economic sense. Usually when you want good shoes you pay more to get more. However similar products one being selected as being the one worth using and getting it goes down in price making it a good rule of thumb of getting the cheapest applicaple product to get the best quality.
There is also the property that all customers pay the same price. No more getting stuff cheap from the sale bin. There is no price guessing so there is no arbitrary drops. Instead of being smacked with a first user “fine” of being a first adopter when your product “normalises” you actually have paid just as much as those that dollar bin buy their stuff. You just got your earlier by having the chance that it will stay a niche product forever (and never hits the masses). But if you were ok witht he price point of the product when you got it there isn’t any gambling from your point going on. In fact we can precollect commitments on how many people would buy it from the dollar bins to jump straight to mass sales without going throught first adopter phase. That is what would have been a tragic overpricing can be can be salvaged to a working price point as people don’t have an incentive to underreport what they woudl be willing to pay for a product. That is if you overreporting doesn’t cost nearly as much where each cent that you overreport is a loss for you in the traditional haggling scheme. In fact we might first have a idea of thing that might be worth doign and then have the financial commitments from end users before production even begins. That is we have an alternative economical activity motivator framework. You can have a project setup and financed for the sake of having it done. For example how many “I will chip in 30$ to have man go to Mars” we need to get our rockets together? 50%6 billion30$ = 90 billion budjet. Will that get us there? Does it make economical sense? Notice how we can have commitment levels under and over 30$. Notice how we don’t need to make anyone a multimillionare to get it organised. That is the budjet can compromise just many regular level people working on it with down to earth “just let me support myself” money demands. How we currently do speculation is that we let a enterprise take a loan and then either let it bankcrypt spectacularly or hit upon on a permit to print money. Notice how both of these options are a drain on society.
The thing is that the alternatives never really want to get spesific. Yeah it would be nice that those who do work would have the right to organise work how they see it would work best since those probably know best. But if you don’t provide any microdetails on how it is supposed to work it becomes an empty slogan. That is a suit with deskjob holding and maanging the ownership is pretty far from the ideal but if we dont’ have a concrete way fo imagining what to have in its stead it doesn’t help to tear anything up and leave just a vacuum. If employers with no desk jobs would select among themselfs one that did start a desk job identical to the current suit would that be significant enough? That is the curretn system is good in that sense that there is clear appointed persons that are financially responcible. Althoguth we could argue that in a system where goverment goes on to cover up the losses when it comes time to live with the responcibility it creates a position of power without any accountability. But it kinda means that if we no longer have “big players” that assume enourmous repsonciblities in hoeps of getting ennourmeous greeds filled we need to have a method how we make the group of people that shoulder the responcibility larger. We could argue that in the current state the responcibility of the consumer is artifically limited. That is if you buy a product that is produced by firm that goes bankcrupt you have gained a product as if it made financial sense when it in fact didn’t. That is when you are at the super market the products that will flop are pretty comparable in price to the products that won’t. The process of eliminating the investor greed motive migth mean that the economical reality is more directly exposed to the customer. Curretnly we have set prices that have an element of false promise. You can buy a product as if it made financial sense even if it ends up not doing so. There migth be a need to have a speculative elemtn on the prices. Would it be okay if to have a little higher nominal prices on shelfs but then have the ones that make economical sense go down? Would it be okay that if you could not just arrive into a “set table” of having already produced products waiting on the shelf ready to buy you would actually have to keep money preattached to upkeep the selection? Could it be okay if you needed to select which kinds of products you will buy 3 months in advance instead of 1 day in advance? Would you rather pay 100$ now for sneakers or make the decision to attach 70$ to it now and know that it makes economical sense 3 weeks later (or know that it won’t and rereceive that 70$)?