Hacker News Reader

Comment by crote | Hacker News Reader

This is why the West is getting its ass kicked in non-legacy industries.

Our MBAs have internalized the idea that you "win at capitalism" by buying out your competitors, making products shitty and expensive, and making shareholders filthy rich. Their MBAs believe that it means selling the best product possible at razor-thin margins, killing your competitors by being the better choice.

Everyone is always complaining about Chinese companies "stealing IP", "getting state subsidies", and "dumping products". No, they are just being better at capitalism! We bootstrapped their industry with outsourcing, and then killed our own subsidy system by retooling it to give free money to large shareholders. No wonder our companies aren't able to compete - we reward incompetence...

View on HN

Somehow MBAs, our champions of capitalism, completely forgot that capitalism only really works for society when free market competition takes place.

This is what's attractive about the "Mittlestand" - having a wide variety of companies competing in the same market so they push each other to improve services.

21st century consolidation is a direct opposite of that.

But consolidation is the inherent end game of capitalism.

It's almost as if it was full of contradictions that will always result in crises and a bad way to organize a society...

Some of these contradictions can be fixed well enough by government intervention to make capitalism the best known system. It used to work pretty well for several decades.

Several decades being 1.8 decades since the last major crisis?

I mean something like 1930-1975 in the US and 1950-1990 in Germany.

Those decades of working capitalism in Germany were subsidized by cheap Gastarbeiter labor from Southern and Eastern Europe, and cheap Eastern Bloc manufactured goods on unfavorable terms.

In the US, they were subsidized by overthrowing democracies across Latin America to keep the extraction flowing - key words being United Fruit Company, Guatemala, Chile, Operation Condor.

The prosperity in Frankfurt and Detroit was always paid for elsewhere. The economic miracle was a miracle of exploitative extraction, a miracle only for the already privileged.

Oh, please, stop this guilt cult nonsense. Economic progress (much of which is technological progress) is a positive-sum game for the most part, it doesn't require exploitation of this or that foreign ethnicity, and that was never a critical part of it after the East India Company or something. That exploitation has also been more important to make the rich richer than to make the poor richer, which is what "capitalism was working" is about.

Countries have stopped relying on imports for national security reasons often enough in history and they did fine after a few years of adjustment. I mean, apart from the consequences of war.

Tell that to Salvador Allende or Jacobo Árbenz.

I am not denying that the West did bad things, merely that these were necessary conditions for Western prosperity.

It's worth repeating, since so many people have different ideas about what capitalism is, but it's only having the means of production (factories, tools, employees, etc.) in private hand (as opposed to being owned by the government - a monopoly) with the purpose of making a profit (so you do not have to live paycheck to paycheck).

None of that has consolidation (might as well call it monopoly) at the end game. But then again, we can't really have free market capitalism while also having state granted monopolies (IP laws). When you have a monopoly you can set the price, but in a free market supply and demand sets the price.

If the means of production are in private hand and private individuals acquire profit, they will inevitably use said profits to acquire more means of production, which will beget more profits, more means of production, etc etc.

They will use those riches to buy out competitors, to bribe (or "lobby" in polite parlance) legislators to tilt the rules in their favor, until they have reached near-monopoly.

The free market always means monopolization, this is precisely the core contradiction of capitalism.

The perfect free market with fair competition only exists in ideological fantasy.

To say what we have now isn't capitalism is nothing but a no true Scotsman fallacy. This is actually existing capitalism.

That's where legislation is supposed to step in to prevent monopolization, which currently is not happening sufficiently.

The alternative is the government owning everything from the start, which is worse.

> The alternative is the government owning everything from the start, which is worse.

Why? That's just an assertion with no backing. If the government is democratically elected, how is democratic control over resources worse than a few oligarchs acting autocratically?

> which currently is not happening sufficiently.

This is not by accident. This is due to the mechanisms described above, a direct result of capitalism. A few have been able to amass enough resources to use them to influence lawmakers and tilt the board in their favor. It's not an accident. It's what actually existing capitalism does.

Because the government then by default has a monopoly on everything. The worst of the worst. It doesn't matter who the people with the monopoly are, it matters that there is a monopoly. It's like saying that a just king is better than separation of powers. Maybe, but in which way do you ensure the king stays just?

How is it that the means of production being privately owned for profit has the consequence of legislation failing to prevent monopolies? The government managed to break up the monopoly that Standard Oil had become back in 1911 just fine with capitalism existing, did it not?

> It's almost as if it was full of contradictions that will always result in crises and a bad way to organize a society...

We yet haven't found a better way

Come on, it's not just MBAs. I remember when patio11 (nothing against him personally, it's just the best example I can remember) became a star here on HN by saying that the solution to every problem as a consultant was to hike your rates. The idea of just asking as much money as you can get away with, which was seen as reprehensible by most of the population (my guesstimate, I don't have hard data) until more or less the eighties, Reagan and Thatcher era, has now permeated Western society at most levels, not just MBAs.

PS Chinese companies were (and probably still are, when they can) stealing IP, just like the USA did when it had more IP to steal from Europe than to protect from others. Western companies were very happy to let that happen when in exchange they could make more profits in the short term by using cheap Chinese labor and infrastructure.

You don't have to steal everything, you can just pay retired experts to produce roughly the same high tech thingies

Reply on news.ycombinator.com