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Comment by Incipient | Hacker News Reader

I don't think the fundamental premise is much of an issue - it's what a (mostly) free market is meant to do. Someone sells a chair for $100, someone else believes they can sell it for $80, so they do. There are two main complicating factors (outside of brand reputation and possibly some others?)

1) quality - someone accepts the $80 chair which is a little bit more wonky

2) the $100 company spent a few years developing the technology to steam and bend timber to make the chair so they're marking up based on R&D and ip. The $80 chair company just copied the other tech

There is absolutely a lot of profiteering (charge what we can, not what we need to) happening, but honestly I believe that happens everywhere, including China (trivial case - wild price swings on aliexpress - they're maximising profits).

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In the digital world quality is a post purchase signal and the ability for consumers to communicate about quality has basically been destroyed by allowing paid counterparts by businesses to drown out the signal

> There is absolutely a lot of profiteering (charge what we can, not what we need to) happening

I think that profiteering is the default behavior for companies. Maybe not all companies behave this way, or maybe in the past it wasn't the default behavior, but I'm very confident it is now

The original Aalto stool, consisting of three pieces of bent wood and a circle, costs $479: https://www.finnishdesignshop.com/en-au/product/aalto-stool-...

The IKEA copy, identical except that the circle is more of a triangle, costs $19: https://www.ikea.com/us/en/p/kyrre-stool-birch-60416925/

Both companies are very profitable, but I'm sure IKEA shifts a lot more units. And the Aalto stool is solid wood and will last forever, while the IKEA copy is probably laminated cardboard or something.

Laminated wood veneer for legs, plywood for seat. Not as disposable as the eternal LACK, but also not bent wood.

This is a great demonstration in the value of approximation. The IKEA is close enough for most people's tastes at a much more attractive price point.

Agreed, it's that the free market _allows_ you to do. What's concerning is that we're used to the "semi-benevolent" image of the free market where a company succeeds and then returns value to stock holders, and the employees and the investors and the country all share of the riches. Of course the executives and main shareholders get outsized returns, inequality might raise, but many people see a bit, and capitalism works, kind of.

This new Chinese "involutioned" capitalism is much more scary and robotic. The companies never really make money, becoming just an operation that maintains itself on minimum wage workers, all to the service of reducing prices. Shareholders don't make money, employees are semi-poor, nobody sees any returns.

But the customers see cheaper prices! you say. Sure, yes, the products get cheaper, but now think of yourself as an employee not a customer. Imagine the involutioned companies triumph. Your previous company, where you had a good salary goes bust. You find a job in an involutioned company where everyone is almost poor and worked to death just to reduce prices. Your portfolio goes to shit because companies don't make money anymore.... Sure, everything's cheaper now but I'm not sure that makes it better.

But if everything is cheaper, isn't it exactly the same as if everybody is richer? Except that it could incentive people to put their money into rent seeking businesses and increase the real estate prices for example.

You forgot the last part about now no one having money anymore to buy the companies products, so you go into a deflationary spiral.

To solve that you'd want to increase wages by e.g. improving workers rights, giving them mandatory pensions etc. But that is scary: They might get too much power and revolt!

This works for China currently for a while, because they are exporting more and more. They have realized that they need to grow internal consumption, but are not managing to grow that sufficiently.

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