Private corporations acting in quasi-government ways is risky at best and terrifying at worst. While some of the checks & balances in civil+legal society have been broken, many are still there and there are repercussions when they're broken.
A corporation doesn't have the same mechanisms - public rules (aka laws), processes, appeals, accountability, etc, etc - built in and there's limited recourse when their definition of "right" and others' conflicts.
Based on this new assumed role, it's begging for more government regulation. And unfortunately, it makes sense for governments to say "as you take a more active role in society, you need more public oversight."
We shouldn’t be demanding more from our corporations, we should be demanding less. Companies should produce goods and services at the highest quality for the lowest price, and let free citizens choose between them - and if the goods for sale are subpar - let the same free citizens start their own competitor.
History is a never ending see-saw, and we are now sawing back towards protectionism, big government, and less freedoms for the individual. At the very least it will once more teach painful lessons to a new generation that doesn’t remember the past.
Except that starting a competitor often requires far more capital than the incumbents needed to reach their position. I don't support protectionism, but "true free market" economics are an illusion used to prevent and tear down regulations.
"As a company, their total contracts are worth $12 billion including commercial satellite launches as well as NASA and U.S. government missions. Of that total, $5.5 billion is from government contracts from NASA and the Air Force."
Basically what could have been done (and was done, and reached the moon and built the space bus etc) on government money, is now paid to a private constructor to do (plus profits, minus the patents going to the state).
Blue Origin, a different space corporation, was not even in consideration, but if they had something competitive, NASA would have considered their bid as well. (Tbc, Blue Origin isn't shooting for that market at all, so this is in no way a dig at them.)
Well, that's how you do it: you mismanage a state organization to make development costlier, and then you give the project + profits to private industry pals...
That's how many-a-privitizations have started...
Well, isn't that self-evident? You can't beat Google or Amazon or Apple starting from the money Apple had at its times, or Amazon had when they started (adjust for inflation).
They have tons of billions of cash at hand to stomp on you, tons of special deals, economies of scale, can buy the best talent undercutting you, have friends in government and media, have huge network systems of third parties, and so on.
And yet Apple beat IBM, DEC, HP, etc. which nobody anticipated. The same things you're saying today were said about IBM, etc., in the 70's and 80's.
In a totally different market. IBM wasn't making Apple I and II equivalents before, or Mac OS equivalents afterwards, and Apple wasn't making mainframes and workstations, and targeting enterprise (in fact, in the 90-96 period that it did try that, it almost tanked).
And the IBM PCs ended dominating the world (market share wise), IBM just didn't have exclusivity on building compatible devices.
But even all of those are beside the point: we're talking about now, not the 80s. At the time the home PC market didn't exist, companies started from scratch. And even enterprise computing (except for the big systems catered by IBM, DEC and co) was the Wild West.
It's like entering the search engine space in 1998 (when there were around 10 competing engines) vs today.
Not really relevant as to whether a small company can beat an incumbent in their own game today. If Google fades eventually it wouldn't be because a new search company beat them at search, but because the industry changed and search is not longer as relevant, ad revenues are marginal, etc, for example.
Except I've heard that argument for my entire life (I'm old). And it never pans out. Then there's a new crop of companies with "this time it's different". You can go back through a couple centuries of US companies and you'll find endless examples.
That is where the harm comes in - as a consumer, I'd love a 50% better search (insofar as thats readily quantifiable), but the current architecture of the market ends up preventing this from happening!
Lots of money confers lots of power, sure, though this is not anything peculiar to corporations. Corporations are a strange kind of ownership -- since shareholders "own" the corporation but have almost no control of it or any direct access to its assets -- but what is the "strange and powerful" place that corporations are granted?
Sneaking up under the radar, making a lateral move, or finding a patron or sweetheart deal as an entry into a market is frequently required. Microsoft's break was its exclusive, per-CPU licensing deal with IBM, later extended to other OEMs, and followed by bundling (Office) and tying/dumping (Internet Explorer). Government contracts (national, state, or local) can be a path. Emerging during a period of general economic panic works for others -- both Google and Facebook effectively emerged during financial squeezes (and legal impairments) on incumbents or potential spoilers (2001, 2007-8).
Bernhard J. Stern's "Resistances to the Adoption of Technological Innovations" (1935) details numerous instances and methods of such dirty tricks, and is rapidly becoming among my favourite references to these:
Or, for that matter, Facebook's social networking monopoly, despite dumping billions into Google+.
Since the 1920s, it's been virtually impossible to start a new consumer automobile company in the US, with several notable flameouts (Tucker and DeLorean notably). Tesla is a remarkable exception, though they are innovating on energy storage and traction.
The aviation industry is similar.
Despite ongoing consolidation and failures in Big N consulting firms, new entrants have not emerged in the space. What are now the Big Four had been the Big Eight as late as the 1990s.
There are occasional cases of disruption. The emergence of discount retailers (Dayton, Kresge, and Wal-Mart, today Target, Kmart, and Walmart) all expanded greatly in the 1960s. I was stunned though to learn a few years ago that the Hudson's Bay Company still exists, and is the parent of Lord & Taylor and Saks Fifth Avenue, among others.
It's also notable that some of the biggest names in technology are comparatively old: Apple was founded in 1976, Intel in 1968, and IBM formed in 1911 by companies dating to the 1880s. AT&T has at least persisted as a brand, if not an entirely continuous corporate legal structure, since 1885. (The current company operating under the name is a separate legal entity, though also an RBOC spin-off of the original company.)
Changing regulatory environments is one. Tobacco, freon, lead paint, asbestos, and numerous other concerns are lo longer with us, or are vastly diminished.
Changing fundamental technologies. Vacuum tube to transistor, transistor to IC. This is a classic Christensian Innovator's Dilemma: do I cannibalise my own existing product base, or wait for someone else to come along and do it for me? To an extent, RCA lost out as television and radio became electronic and flat.
Labour outsourcing is another major driver, especially in labour-intensive activities. So long as the product can be moved, odds are good that the manufacture of it will be as well. Textiles, appliance manufacturing, auto manufacturing, electronics manufacturing (RCA again), and more.
Patent expiry. RCA was itself formed as or in conjunction with a government-mandated patent pooling, one of several such instances.
Reaching the end-run of some fundamental technological capability. Steelmaking, xerography, film-based imaging, instant film-based imaging, telegraphy, various other chemical-based processes, a whole slew of 1960s "-onics" and "-tron" firms, etc., have their day in the sun and then fade. Finding some service or capability and continuing to serve that by some ongoing set of means seems to be more durable.
Long and slow carve-outs from underneath. Television and Internet are finishing the eviceration of print news which began in the 1950s. Television and radio are themselves being undermined by packet-switched, on-demand, streaming, and App-based alternatives. Lower cost and greater flexibility or ease of use (even for a manifestly worse product or experience) very often (though not always) wins. Getting hung up on quality is generally a Bad Move.
Social, economic, political, and cultural changes can drive major shifts. Wars have been known to markedly delimit "before" and "after" phases, likewise economic turmoil. That the two not infrequently go hand in hand doesn't soften the impact but amplifies it.
By mention in Google's Ngram database, RCA hit its peak about 1982. That corresponds to a few of the trends I've described: the 1980s recession, the Reagan Revolution, the beginning of mass-consumer microchip-based electronics (if not computers), a switch from broadcast to cable as a predominant television transmission mode, and the growing dominance of Japan, with lower labour costs and higher quality reputations, especially from Sony, JVC, Panasonic, and other brands, which were competing on their own home turf and with the benefit of the Japanese focus on a active and deliberate government roles in economic and business policy and activity.
I didn't even realise that the company went defunct (acquired by GE) in 1986.
(Now to do some reading on the fall of RCA.)
It might seem inconceivable today that these giants could fall, but they absolutely can.
Even if these giants don't fall, they can't just act as they wish, just because they have a dominant market position.
They're kept in check by the fact that their products are easily replaced if they raise prices well beyond cost of replacement. As a result, they don't raise prices and the potential competition never emerges - which in terms of the social outcome is just about as good as active competition.
There's an exception to this which the article mentions: Companies that sell themselves as "too big to fail" or "socially important" to gullible or corrupt politicians. The market can't fix this, only politics can.
They weren't that "powerful" because the web wasn't used as much. It took a while for us to adopt the digital lifestyle. Ultimately, they're just platforms though. Of course they have a lot of inertia, but user habits can change. Younger users in particular aren't engaging with Facebook that much anymore:
> They felt less like companies and more just like websites, if you know what I mean.
Google certainly has moved beyond being a website by creating many products. However, I feel that a lot of these products are rather crappy and wouldn't be competitive if they weren't given away. How dominant of a player can you really be, if you must give your product away for free?
Most companies aren't in the business of giving away free stuff, so in that sense it is hard to compete. That's not necessarily a bad thing for the consumer though, they get all the free stuff after all.
For instance, Facebook is losing engagement to Snapchat, Snapchat is losing engagement to TikTok, and so on. As a result, there is constant pressure to evolve.
IBM may still be around, but it's a totally different company now. Nobody uses "IBM PCs" anymore. Remember, back in the day those were very expensive, relatively speaking. IBM was as big as it ever was, relatively speaking. Yet, cheap clones by smaller companies drove down profits to make IBM give up on the market.
Also, IBM may still be a big company, but you'd be hard pressed to find a segment where they are absolutely dominating, unlike back in the day. I never said small guys will bankrupt and annihilate the giants, I'm saying competitive pressure from below is there at all times, no matter how big you are.
And sure, competitive pressure is there, but it can be at such a low level as to be nominally meaningless. Whether or not IBM dominates any segment, they are still around, despite being in many products and use cases, not at all the best option. That says to me the idea that competition will results in the best products at the lowest price points (the great-great etc comment that started this) is simply not the case except in a sort of platonic idealization of capitalistic competition that only imperfectly, when at all, plays out in reality.
I'm not even saying we should ditch that model of capitalist competition, though I clearly think it should be subject to regulation & oversight that a pure free-market libertarian wouldn't like. I don't know that there's a better alternative than a hybrid competition-with-oversight model. I just think we should keep our eyes open. We shouldn't blindly act from a position of philosophical assumptions that such competition will solve all problems. Or when it might solve them, that it will do so in an acceptable time frame, e.g., more than a century of industrial pollution without a competitive solution until the (less than perfect, better than nothing) implementation of the EPA.
Heck the entire concept of path dependency in economics exists to help explain why inferior choices may persist despite the possibility of better alternatives in a way that defies the "competition will provide" mantra. 
I think you have trouble with the distinction between "the best" and "good". In market terms, "the best" is that which the market chooses. If the market decides that cheap junk shall succeed, so it will. Quality and cost are at odds, obviously. In some cases the market will even choose expensive junk, that's generally the success of effective marketing.
To understand why this mechanism is nevertheless desirable, we need to look at the alternative: A planned economy and design by committee. Those mechanisms tend to result in products that are neither good nor cheap. The real argument for capitalism isn't that market economies are great (though they are), but that none of the alternatives have ever worked out any better.
Perhaps a technological revolution can usher in a better system at some point, but whoever advocates for that had better done an elaborate computer simulation first.
> I'm not even saying we should ditch that model of capitalist competition, though I clearly think it should be subject to regulation & oversight that a pure free-market libertarian wouldn't like.
The first thing to note is that regulation rarely fulfills its purpose without unintended consequences that require further regulation later on. Furthermore, regulation usually benefits the big guys, who can afford to deal with it.
That's not to say you shouldn't have any regulation. Market externalities can not be dealt within from within a market framework alone. It is to say that regulation should be a last resort.
Anyway, your comments on the potential for a better system and market externalities show we're probably not too far away from each other on the general issue. Somehow we just ended up on opposite sides of this particular thread. There's not much of a better alternative on the table. I agree regulation shouldn't be the first course of action to any issue that might reasonably be solved by the market within a reasonable amount of time. What is "reasonable" being dependent on any particular issue's circumstances. (as examples, the market might be left to resolve issues of consumer inconvenience, but ones of public safety should get much closer scrutiny). The pendulum between the excesses of capitalism and those of regulation will swing back and forth, hopefully better approximating the ideal balance with each pass. And maybe at some point we'll be able to do better than this messy method.
I haven't made myself clear enough then: "The best" can still be awful, it's just better than whatever the next best alternative is, from a market perspective.
The market, at the end of the day, is people. If people reward short-lasting and cheap products over long-lasting and more expensive products, those are the "best products" in terms of adaptation to market demand.
They're never the best products in terms of resource usage or the environment or some other externality. That is unless that's what the market rewards, which it does to some degree, see "green advertising".
> The free market isn't especially efficient if massive resources are used to produce short-lived items when they might instead be used to produce more durable ones.
Nevertheless, market economies tend to be more efficient than non-market economies at allocating resources to where they are needed. This is because of local information advantage.
As I said, perhaps some future technology can be even more efficient at allocating resources than a market made out of people.
> But I'm arguing against the premise that started this thread. It was that a free market would result in the highest quality goods at the lowest price.
You didn't read that right. The OP started out by saying what companies should do: Produce the best products at the lowest prices. It's a prescription, not a prediction.
Of course what companies actually would like to do is sell the worst products at the highest prices. It's just that the market won't let them get away with it, unless they have really good sales and marketing, which is a big cost in and of itself.
In effect, the tendency with mass market products is to lower prices towards marginal cost and improve (or reduce) quality to acceptable levels, but not beyond. In the niches, for those people who really care and are ready to pay the price, there's still room for excellent products, maybe with a "lifetime warranty"
Complaining that it's too hard to enter is a defeatist mindset.
The reason we are moving back toward regulation is that we forgot how irresponsible and destructive corporations can be when they are underregulated. The notion that as long as people can express their preference by buying stuff no regulation is necessary is a libertarian fantasy, completely unsupported by the historical record. The reality is that as corporate power and reach increase, corporations cause more and more destruction when left to short-term profit motive as their only control system. Corporations are all publicly chartered, and their continued existence should always be conditional on a broader conception of the public good than can be captured in a balance sheet.
Voting with your feet always beats voting with your hands!
I don't have the power to easily move to other cities or states. It costs thousands of dollars and takes a ton of time and stress. It separates me from my family. And if I struggled to find a job might not be able to move at all.
No. If I don't like the "socialism" from one company, I'm free to defect and join another company to get the better "socialism" from some other company. If you nationalize it, I no longer have anywhere near the same degree of freedom to pick the "socialism" that works for me. The only option I have is fleeing to another country and starting anew.
Also, with a company, I'm specifically associating with others who are productively contributing to that socialism in a way that is comparable to my contributions. If you nationalize it, the freerider problem becomes far more of an issue. It's not like there aren't people who can get away with freeriding in a company, but it is a lot easier to avoid any kind of accountability to contribute if things are nationalized.
All "socialism" should start small and local among those that can hold one another accountable to the greater good and then if their flavor of socialism works and scales, it will. If you have to force it upon people from above, it's almost certainly the wrong solution.
Many (but certainly not all) externalities are process waste and an often an opportunity for margins improvement if you can figure out how to eliminate that waste.
Now, if you can take those externalities that are not process waste but are still bad for the environment and you can put a price on them that needs to be paid, competition is going to drive businesses to figure out how to reduce the externalities. This is the premise behind buying carbon credits/offsets.
The problem is that we don't yet have good ways to price in all externalities into the final cost of goods sold. That should be the problem we tackle.
Win - win.
Also, there's a significant tax advantage for shareholders (long-term capital gains) vs. income you receive as a worker.
This would probably lead to single large companies as very few could run themselves efficiently.
This is already the case with privately owned companies.
The huge problem is that this check isn't really working, because the FTC is asleep at the wheel. We have anti-monopoly laws on the books; they exist to ensure that consumers have adequate degrees of choice and companies have a check on blatantly abusive behavior. It's time to start enforcing them.
Break up giant corporations and prevent them from gaining a stranglehold on the market and much of the need for government regulation goes away.
And this is why you need antitrust laws. I need an option to use another provider if this one is treating me unfairly for dystopian or other reasons.
"The modern business corporation is not just an investment vehicle, but is also an integral part of civilization. We spend as much has half our waking hours working within these organizations, tend to find purpose in them and make many of our social relationships through them, so it is not incorrect to consider them social institutions, not unlike school or marriage. As such, corporations are best structured and operated with the wellbeing of all involved stakeholders.
One can think of a corporation as being built on three pillars: the investors, the employees and the customers, with employees as the conduit that connect investors and customers. Contrary to the theory of shareholder value maximization, sole focus on the investor does not, on the long run, lead to good outcomes for the investor."
This is something that the market can sort out, isn't it? Amazon is famous for being customer-focussed, not shareholder-driven, and they dominate the industries they compete in -- to the benefit of their shareholders. Nobody needs to pass a law telling companies not to focus on short-term shareholder gains if companies that do are naturally out-competed.
Nothing here is "contrary to the theory of shareholder maximization" in any way.
> As such, corporations are best structured and operated with the wellbeing of all involved stakeholders.
Grammar notwithstanding, the same goes for this statement. It is not clear that a focus on stakeholders benefits stakeholders. Maybe healthy, profitable and competitive companies better serve employees and consumers in the long run than companies that directly optimise for those people.
More and more they are “customer-focussed” in the sense that cheetahs are antelope-focused. The way Facebook and Google have turned out.
Actually I lied. I would rather see a network of cooperatively owned companies replace Amazon where all workers in that system have good jobs, no one is a billionaire, and money spent stays more local.
I know many millionaire employees of Amazon.
To me, any corporation considering stakeholders to be anything less than all living beings is a myopic & potentially dangerous organization. It also won't be prepared to take on extraterrestrial customers without making a major cultural shift, should aliens ever present the opportunity.
Corporations are poor regulators of the environment because they do not model the environment. These slow-moving AI aren't being designed with the environment as part of their model and we're seeing the impact of this all over the world.
Obviously it frustrated me quite a bit, but perhaps that allows them to dissociate themselves from the job and make it less of their identity.
For that reason, I don't think there needs to be an explicit statement of maximizing stakeholder well being.
I'm not surprised that many managers and business owners like this idea, as it gives them more flexibility, but that's not necessarily a good thing. It allows them to finance pet projects, grow bureaucracy and overall be immune from business concerns.
> Although a corporation is soulless entity
A corporation (like any large group of people) certainly has a "mind of its own" as an emergent property, so calling it "soulless" is kind of odd (unless you have a narrower definition of "soul" than I do).
At a traditional corporation however the emergent "mind of its own" is there but it is effectively only influenced by the minuscule group of people who control it. And in this sense it is soulless in the same way that an army is soulless.
Yes, there's the common scenario of social institutions that are owned (controlled, funded, etc) by the whole community they're serving. But there are cases also of important social institutions (for example, education) "owned" by particular subgroups of that community e.g. the various historical examples of key social functions being performed by churches, or funded by particular wealthy individuals for their community, or social institutions implemented by a foreign government/elite for the locals (both in the case of conquests and colonial empires) - in which case the ownership mattered quite a lot; because in this case the social institutions run for the local people weren't controlled by the locals and were significant instruments of political and social influence and control by the "owners" of these social institutions. Which has interesting parallels with the current megacorps controlling much of the information flow.
The links to the other pillars being the contract of purchase (customers) and the contract of employment (employees).
I guess social institutions have just one pillar (the customers).
Under this system would it still be possible to fire people without cause? Would there be some mechanism to share profits with the employees? Without those I think it would still be a situation where some of the stakeholders are more "first class" than others.
When has that changed? When was what you wrote, last time, not true, and why?
Even if this somehow cracks down harder on execs than the current system, it could also be seen as a separate track to justice for rich people.
Executives would still be subject to all the normal laws everyone else is but also had to comply with another system set up specifically to deal with those who wield disproportionate levels of power in society through their control of capital.
It's an interesting thought experiment if nothing else.
What I wonder about when people suggest these things is what happens if a CEO takes every procedure possible to ensure the company he or she runs is engaged in no illegal behavior, but illegal behavior still occurs?
I'm certainly not at liberty to do aught but what my manager commands, nor he but what his commands, and so on.
"Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions. It is only under the shelter of the civil magistrate that the owner of that valuable property, which is acquired by the labour of many years, or perhaps of many successive generations, can sleep a single night in security. He is at all times surrounded by unknown enemies, whom, though he never provoked, he can never appease, and from whose injustice he can be protected only by the powerful arm of the civil magistrate continually held up to chastise it. The acquisition of valuable and extensive property, therefore, necessarily requires the establishment of civil government. Where there is no property, or at least none that exceeds the value of two or three days labour, civil government is not so necessary.
Civil government supposes a certain subordination. But as the necessity of civil government gradually grows up with the acquisition of valuable property, so the principal causes which naturally introduce subordination gradually grow up with the growth of that valuable property. "
The !Kung live in a society without laws and without private property. The are incredibly poor, but don't know it, and so they are incredibly happy. Until one day a bottle falls from the sky...
- - - -
> A set of tools almost identical to that used by the modern San and dating to 42,000 BCE was discovered at Border Cave in KwaZulu-Natal in 2012.
A culture forty-thousand years old...
So to put it more clearly: Proudhon was clear that his opposition to property did not extend to exclusive possession of labor-made wealth. Proudhon was describing the fact that people do not start out on an equal footing and are subject to power imbalances throughout their lives.
Whether you accept the obvious fact that economic exploitation is a real thing (monopolies all the way to gunboat diplomacy) or just the historical fact that wealth is inherited, property is clearly not distributed in any ethically reasonable way. People are robbed of an equal footing from the start, which robs them of their ability to empower themselves, which robs them of liberty.
Proudhon was an anarchist and libertarian- both things I disagree with personally, but it's absolutely bizarre that his ideas are controversial in the modern day. They're concise, obvious, and fit in well with the common canon.
I'm not claiming all is discovered. We've reached the end of history. That's foolish. But for a fair amount of the economy competition/innovation is simply not possible.
Convincing a generation that liquid soap is better than a simple bar, despite being vastly more wasteful in both product and packaging. Same for laundry in working to replace a cardboard box full of powder with all sorts of tablets, sachets and gels in plastic boxes. Or new recipes that replace original ingredients with super cheap palm oil or HFCS - sold for the same price. It's endless, and brands have burnt 95% of their former goodwill by being too damn clever for their own good.
Unless consumers are, in aggregate, entirely idiotic, buying up dozens of small brands won't pay off as they hope. We've had decades of large companies buying up brand and niche leaders and completely ruining the product in just a year or two. Leaves them cynically trading on the name only and damn near profiteering. Surely people are wising up to this finally? Success of discounters like Aldi and Lidl against major brands says they are.
Right. But the products themselves are essentially the same. And as mentioned, there can be competitive pricing, but that has its limits.
So back to my originsl question: What percentage of the economy can be fully and truly competitive? Or, have we, for a fair amount of the economy "maxed out"?
You need to give us your definition of competitive. The grand parent already answered the examples you provided. The competing products being "essentially the same" does not detract from their competitiveness.
Washing machines, thanks to chasing low water and temperatures, have got markedly worse on the other hand. Nowadays overfilling a machine, even slightly, results in the wash deteriorating - machines didn't used to care in the slightest about that. Keep packing stuff in while it still fits and get perfect results. I have to wonder how many extra "eco" loads are run in order to wash the same household's weekly wash with a modern machine compared to an older, "wasteful" one. I wonder if per lb of washing if it is actually more wasteful. It lasts perhaps 10%-20% of the life of a machine made in the 70s or 80s. How does that impact per wash?
We've had a lot of fake brands and competition just to move balance in the markets from 50:50 to 51:49. More complexity, higher pricing, less competition and less for the consumer. Billions advertising these fake innovations to achieve, well, nothing but a hair's movement in favour of P&G or not. Back handed arrangements in the way supermarkets sell premium shelf spots, end of aisle displays and supplier priority again takes away from real competition and just leaves the appearance of it.
The simple soap, from the decades old small maker, becomes harder and harder to find despite working just as well, being popular, and generating perhaps 1% of the waste of a year's bottles of shower or hand gels. Eventually it disappears because of Tesco/Walmart and P&G/Unilver shelf selling arrangements not because it was wasn't selling, crap or superseded.
Car manufacture still has dozens (just) of manufacturers. There is still real competition and differentiation, despite no end of emissions and safety legislation.
Most categories today are like detergents, selling us fake innovation, differentiation and disruption and forcing us to more profitable but profligate and wasteful ways, not like cars where there actually still some real choices. Even down to the commodities like vegetables - we're sold a 1kg bag, rather than loose buying just the few we might need for a week, there's infinitely fewer varieties but so many more (fake) options. We're all markedly worse off as a result.
And yes. Tesla. But again, what % of the economy is that? I'm not saying there isn't change and innovation here and there. There is. But on the whole what percentage of the economy can be fully and truly competitive?
What's your point? "Remove all innovations and nothing has changed for the better" is just tautological.
I just watched a documentary on Henry Ford - in his time making cars was a “solved” problem - you’d have various highly trained and talented teams of craftsmen that would build a car using simple but versatile tools. It all worked rather well in europe and america, and is a model that has been around throughout most of human history - a “proven and reliable way” to do things.
And here comes Ford and invents mass production as we know it by applying principles already present in the military to the civilian sector. Not precisely new but applied and perfected in a different area. Changed the world.
Today I can see similar changes - people from the software world disrupting traditional industries by applying new methods learned in a different field. Sure a lot of the time they fail spectacularly and get the “I told you so” treatment, but there are some notable winners. Look at what Elon is doing for example.
So I’m rather hopeful to be honest - there is so much stress, unhappiness and efficiency problems present in the world, that I really doubt we’ll run out of things to do anytime soon.
What percentage of the economy can be truly competitive? And how much is closer to commodities wrapped in some semi-fancy marketing?
How many investors / VCs are willing to solve the problem of (say): How to make a better kitchen chair? And improve the manufacturing there of?
That said, my original question is:
But how much of the economy can be truly competitive?
No one knows what percent of the economy can be truly competitive, but it's probably something like half. I'm hard pressed to find a single area of the economy that doesn't have competitive private entities.
They "compete" but they are hardly competitive.
The current narratives for autos is self driving cars and more walkable/bikable urban design. For laundry detergent there's probably textile innovation that makes them require less/no washing. Etc.
What parts of the economy do you think can't innovate?
I guess it just seems to me that a lot of the "innovation" is really just sacrificing quality in the name of price.
But if I look through my outdoor gear and clothing, there have been huge strides in just the past few decades. Not all of the new stuff is great. And some definitely trades durability for light weight (or cost). But overall, what I can buy today is pretty great compared to what I had in Boy Scouts even if some of the older clothing fabrics (like boiled wool as you say) still work quite well.
You can always go pay for higher end clothing. Nothing stops you expect... price. Lol
I think my frustration is that I've found that the price to get clothing made out of higher end/traditional materials is often much dramatically higher than even the difference in material costs account for. For example, I would not only have to pay for the more expensive materials, I would also have to pay to get the clothing custom made. Even finding the materials can be difficult since textile manufacturers often call cheaper alternatives by the same name (e.g. "linen" that isn't made out of flax or "wool" that is really a wool blend).
Telsa would beg to differ. They popularized the idea that an electric vehicle was even possible, and now you can but not only a Tesla, but other EVs like the Hyundai Kona.
Then you've got things like self-driving, which automakers are scrambling to be the first to crack.
Or consider the various safety features. My car will yell at me if I get too close to the vehicle in front of me, or if I try to back out of a parking spot and the radar detects someone coming my way, or if what my hands are doing to the steering wheel makes the computer think I'm starting to doze off. All of these are relatively recent innovations.
The managers and the board, in this version of the corporation, are the only ones representing all of the constituencies, so they are the only ones qualified to evaluate their own performance. If an activist shareholder comes in and says “we should replace the board because performance is bad,” the board and the CEO can respond “no you are just saying that as a greedy shareholder and we shouldn’t listen to you.”
Another way to put it is that the corporation really does have to serve many different stakeholders, but in practice most disputes over corporate governance are not between shareholders and employees or shareholders and polluted watersheds, but between shareholders and managers. And these disputes tend to follow a stereotyped pattern in which disgruntled shareholders say “the stock price is low” and the managers say “ah but in the long term it will be high.” Because—on the agency-cost view—it is just harder to measure the long term (since it hasn’t happened yet), so you can’t hold the managers to it. Similarly, if managers can respond “ah but the stock price is low because we are serving other constituencies,” that gives them another argument against the shareholders.
... So when an association of big public-company CEOs gets together and declares that corporations should serve the community, take care of the environment, and be responsible to employees and customers, not just shareholders, that might be because the CEOs have thought it over and decided that employees and the environment are getting a raw deal, but it is also possible that the CEOs have thought it over and decided that shareholders are annoying.
The question is: Is there any socialist theory that provides a solution to this lack of dynamism? I'm asking not necessarily because I want socialism, but because pure free-market capitalism has some obvious flaws when it comes to natural monopolies and the pricing of externalities, so I'd like to know if there is a better system that doesn't devolve into the real-world socialism we've already seen.
 I'm not disputing that socialist regimes did horrendous things to their subjects, but I'm focusing on the economic perspective here.
This one thing is their secret strength and that's where the strength of capitalist economy comes from.
Any mechanism that prevents companies from dying or makes their deaths more destructive than it needs to be makes the whole system weaker and less valuable to humanity.
We may think about these as backroom deals between senators and lobbyists but I'd argue that you actively participate in such deals by just sitting in front of your TV or surfing the web. In America the biggest governing body is voters.
I'm not saying profit motive is the only thing that drives corporations, but it's like breathing is to living creatures.
PS @YC I ain't politically correct so u can downgrade my score all u want. Honestly I though u would better than -3
They extract the power from the serfs and transfer it to the ruling class.
Government: Please kindly pay taxes with these papers that we print.
Serf: Where do I get those papers?
Government: Participate in involuntary servi... in economy. Maybe trade something to a... corporation. Let us know if they don't treat you fairly. <gently kisses in the forehead>