The Myth of Competition

Cael

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We often hear capitalists justify price in terms of supply and demand. The myth is that the supply curve will intersect the demand curve at some equilibrium point, and that will be the price. Of course, even in theory, this model only holds for perfect competition - which has never actually existed in the real world. But, even if it did, in any system were supply was able to move in response to demand, the key factor in determining price would be the marginal cost of production (for most products, labour costs) not the intersection of supply and demand. If this were not the case, supply could track demand at all points, which it can't.

However, when talking about the real world, there is no need to mention perfect competition at all - or any kind of competition. We live in a time of monopoly capitalism, where corporations plan the demand for years in advance, as Galbraith and others noted. This is central planning on a grand scale.

(Of course, the system of corporate central planning has taken a major blow since 2007, and may well not recover - we can only hope.)

Demand is controled by control of what Baudrillard refers to as the Code, i.e. the language that the public uses and the fantasy life of the population. The Code is written by the oligopoly, and enforced by the educational system and the media. Corporations don't have to worry about demand - as they can now program it in the world's populations. In such a situation, of course, price has nothing at all to do with supply \ demand curves. Price is pumped up by pumping up the hysterical demand for certain products. Such advertising \ brainwashing nearly always appeals to feelings of sexual insecurity (and the population is kept in a state of sexual insecurity by being bombarded by shows and magazines that tell them how to correct themselves and how to become their "real" selves.)

However, the myth of competition is all important as a veil for this oligopoly. The myth of competition is the weapon by which governments and publics are forced to privatise their state industries and services, and hand them over to the corporate oligopoly. Yes, it will look like there are several corporations offering goods and services instead of one state institution - but this is a mirage. Look behind the scenes, and you will see that all the corporations in a given market are really owned by the same people - particularly the same bankers hedge funds. Ever wonder why so many insurance companies can all make fantastic profits - and can all charge fantastically high prices?
 


Cael

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In his The Poverty of Philosophy, Marx notes three distinct stages in the development of the commodity:

1. In archaic and feudal production, where only surplus material production is exchanged, e.g. if a tribe has a big harvest and has more than it needs for the winter, it may exchange the surplus with another tribe for something it needs but cant produce itself.

2. Capitalism proper, where all of production is geared towards producing exchangeable commodities. A good example of this is the incredible sight of a dairy farmer going to the shop to buy milk. Yes, I know the taste is different, but the principal holds. That farmer is producing nothing for his own direct needs, as the feudal farmer was.

3. The stage where all human qualities are reified and commodified. In other words, the time when human feelings and human fantasy becomes commodified. Love, honour, virtue, knowledge, art, all have a price. Life becomes a spectacle that we play out for ourselves. We imagine oursleves as these "successful" people, trading what we are for the love and reward of the capitalist order.

Baudrillard brings our attention to the great insight of Marx in seeing this third stage. In a way, it was easy enough to see the first two. In Marx's time society was structured on the commodity as a manufactured thing. Class was very easy to see. People from different classes wore different cloths, lived in different houses, had different accents, and had vastly different incomes. The genius of Marx was in seeing the development of an even more insidious and totalitarian stage of capitalism - the one we now live in. This is the time when even our deepest thoughts and fantasies have been turned into sellable commodities. When really nothing is our own. When absolutely nothing escapes the claws of capitalism. This is the time when class has been abolished in fantasy. The richest man has the exact same fantasies as the poorest man. (and this is the very reason that today Socialists have such problems with the question of class. Today fantasy is more important than reality, and, in fantasy, class doesnt exist. Everybody is equally bought and sold.)

This is the world of X Factor. Where the young lad or girl from a council estate can become a millionaire celeb overnight. And, if you dont, you have only yourself to blame.

Marx's great work was the analysis of capital, in his magnum opus Das Kapital. But he foresaw a world where real capital would no longer be king. He foresaw the nightmare of our present day world. A world were wealth would be based on the brianwashed "needs" of the misled masses. A world were monopoly corporations would herd the masses into wanting some useless crap and making them willing to work their lives away for it. ( think if the ques everytime Apple starts selling some new ipod or the like - and ipod is not even the worst of it, as they have some use. I remember huge ques outside Brown Thomas a couple of years ago to buy a bag with a logo on the front of it saying "I am not a plastic bag." It seems people were seriously injured in Asian countries in the rush for this bag.)

So, if we look at stage three, the current form of capitalism, we see a society structured on fantasy - not on real manufactured things. That bag didnt actually matter to the brainwashed sheep who qued up for it, it was being the kind of person who had it that mattered. They were paying a corporation to be allowed to be a certain type of person. You can't get much more profitable than that. You are not paying a corporation for a useful thing any more, but paying it to allow you to be the kind of fantasy person you imagine yourself to be.
 

Cael

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So, lets put that last post in more general terms. The three stages of capitalism are:


1. Archiac\Feudal exchange of Surplus.

2. The Commodity Form of Society

The exchange of all material products is carried out under the law of general equivalence (that means all produced "things" and labour are measured in terms of money.)

3. The Sign Form of Society

In the Sign Form of Society, ALL exchanges are carried out under the law of the Code. This is the Political Economy of the Sign\Symbol. It is a market in symbols. It is symbols that are bought and sold. As absolutely every thing and every human action is a symbol\sign of some sort, every thing and human action is brought into this commodified economy. Nothing can escape. All human values are transformed into exchange value. As Baudrillard puts it, this market in symbols operates under the hegemony of the Code, and this Code is written by the ruling class. What is this Code? Its the total sum of information that we are told by the ruling class to believe in. They enforce it through their educational system and their media. Anything outside this Code is condemned as "irredentist" or "unreconstructed" or as "tin hat conspiracy." Needless to say, Irish Republicanism and Communism are outside the Code, and are condemned, by our masters, as heresy of some sort.


As I said in the above post, commodities no longer have to have any exchange value or use value, they just have to relate to some fantasy that the ruling class have managed to brainwash the masses with. In other words, each commodity is now just a symbol in the Code, with which the masses are controled. For the last few years, ever sad fool had to have decking in his back garden. Decking was great business. Did these people need decking? Of course not. They just wanted to be a certain type of people, to occupy a certain place in the Code, i.e. to be the sort of people who had decking.


Baudrillard says:

This is a structure of control and of power much more subtle and much more totalitarian than that of the exploitation of surplus labour.
 

jcdf

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The Myth of Competition.

Airfares are lower now than at any time in the past. Even though oil which is used to create jet fuel is more expensive now than it once was.

Micheal O Leary brought airfares down using competition. Are not cheap airfares a good thing?

Do you deny this Cael?
 

Realityman

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In fairness to Cael though you have to admire his conviction.
I mean who else could call our system failed-by comparison to albania,cuba,pre free russia,china..the list of failures goes on and on
but he still believes the economic rhetoric
you do have to hand it to him
Must have been great crack sitting beside him in the economics lectures!
 

Cassandra Syndrome

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Gosh, do I suspect a little bit of Austrian School coming out of you Cael?!

Yes, Perfect competition does not exist. Market Equilibriums are dynamic and are for ever changing and are never static. People move markets not governments. The biggest failure of both Keynesian and Neo Liberal economics is that they presume they can mimic markets in their theoretical ivory classroom academias and establish the perfect competition model through subsidies, taxation etc. which plays favourably into the hands of the large established corporations and crucifies the small fish.

In today's world competition is stifled and the burden on startups in a lot of industries is too excessive to motivate a potential entrepreneur.
 

Cael

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Once the corporate monopoly, the oligopoly, has taken absolute control of the Code, the system then can afford itself the luxury of contradiction and dialectic. It can indulge itself with all the signs of Revolution (the very profitable Che Guevara t-shirts, for example) since it already produces the only possible answer to any given question. The Code annihilates all responses, and, in effect, all questions - since if its impossible to repond, then its equally impossible to ask. The Latin verb respondēre means "to promise in return," from the verb spondēre, "to promise." We live in a world without promise, or return of promise.

The only form of "reponse" allowed to the oligopoly is response within its own terms, according to its own rules - the "reponse" it has already preprogrammed. Needless to say, Adam Smith's idea of perfect competition has been totally erased from this code - except as a sort of ideological fig leaf.

Of course, the hard fact of the monopoly of the means of production remains, but, now put in force, above all else, by the control of language and fantasy. It is at this level that we live in the most totalitarian regime of all time. Our deepest and most secret thoughts are determined by the Code, which is determined by the oligopoly. And, if we do break away, and see the Code at work, it doesnt matter - because the individual is easily isolated and his or her thoughts are easily condemned as "tin hat heresy," that is, if they are refered to at all. The corporate media and the educational system have come to the point where anything outside the Code is so alien, so other, that it is simply unrecognisable as having any meaning.
 
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Cael

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Gosh, do I suspect a little bit of Austrian School coming out of you Cael?!

Yes, Perfect competition does not exist. Market Equilibriums are dynamic and are for ever changing and are never static. People move markets not governments. The biggest failure of both Keynesian and Neo Liberal economics is that they presume they can mimic markets in their theoretical ivory classroom academias and establish the perfect competition model through subsidies, taxation etc. which plays favourably into the hands of the large established corporations and crucifies the small fish.

In today's world competition is stifled and the burden on startups in a lot of industries is too excessive to motivate a potential entrepreneur.
I wouldnt say the Austrian school is wrong on all questions. Its the underlying logic that I find faulty, i.e. that capitalism could ever be made to actually work according to the principals of competition.
 

Cael

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The Myth of Competition.

Airfares are lower now than at any time in the past. Even though oil which is used to create jet fuel is more expensive now than it once was.

Micheal O Leary brought airfares down using competition. Are not cheap airfares a good thing?

Do you deny this Cael?
Competition has absolutely nothing to do with Ryanair having cheap flights. Ryanair has cheap flights because it has gotten rid of the concept of worthwhile work. Instead, it hires an army of low paid temps. How anyone could imagine tht this is good for society is beyond me. Yes, now you get cheap flights - but chances are, you dont have a decent job and you need everything to be cheap and third rate.
 

Cael

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In fairness to Cael though you have to admire his conviction.
I mean who else could call our system failed-by comparison to albania,cuba,pre free russia,china..the list of failures goes on and on
but he still believes the economic rhetoric
you do have to hand it to him
Must have been great crack sitting beside him in the economics lectures!
Clearly the USSR failed. But, so has capitalism. That is not in question. What we are discussing here is the totalitarianism of the corporate oligopoly posing as "freedom" and "competition."
 

arcadeparade

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The Myth of Competition.

Airfares are lower now than at any time in the past. Even though oil which is used to create jet fuel is more expensive now than it once was.

Micheal O Leary brought airfares down using competition. Are not cheap airfares a good thing?

Do you deny this Cael?
There's no tax on aeroplane fuel, never mind a carbon tax, how is it fair competition that private companies get away with this? Thats quite a subsidy for air travel.

Also, every transaction on a market has externalities. For example, lets say I buy a car of you. You're happy because you get money, I'm happy because I get the car, but the neighbour isnt because the car causes pollution in the neighbourhood. When you extrapolate the amount of pollution that world transport causes, thats serious environmental degradation and climate change. What amount of competition will fix that? None, and thats quite an externality that the market ignores because there's no profit motive in solving it.

Also, the market will give you the choice between a ford and a toyota, but not a public transportation system that would be overall much more efficient than the private system we have.
 

Cael

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It might be argued that in the system of 19th and early 20th century capitalism (and indeed before) that signs\symbols were also of the highest importance in the economy of the commodity. The wealthy man had his fine cloths and good house, while the poor man had rags and a hovel. But, this is the very point where todays monopoly Code form differs from the classical capitalism of use value and exchange value. Commodities really did have a use value and\or exchange value. The rich man's suit was expensive because of the quality of its material and the value of the labour put into it. It was a sign, but it refered to its own value - as use and as exchange.

Today, this is sometimes still the case, but such cases are rarely of interest to monopoly capitalism. Massive profits cannot be made from quality. Instead, what we have is poor quality items - such as clothes - being made in Asian and Eastern European sweat shops, and being turned into items of high price - simply by sewing on a brand name such as Gucci on them. People are paying for the sign - literally in this case, literally they are paying for the Gucci sign - not for the quality of the item itself, and certainly not for the labour time that went into it, as a real item.

People in a shop will value two pairs of jeans, for example, not on the quality and cut of the jeans themselves, but on the "value" of the brand name attached to them. So a pair of Gucci jeans will "naturally" be considered more valuable and desirable than a pair of Levi's jeans. We see here that it is the signs that are relating to each other, not the items themselves, and the signs relate to nothing in the real world. One sign, e.g. Gucci, has a higher place in the Code than another sign, e.g. Levi, has. The jeans themselves have little or nothing to do with it.

This is how to make real profits today. Control people's fantasies and tack those fantasies onto signs which you generate, to the point where they will work their lives away just for a sign - regardless of what crap that sign \ brand name is tacked on to.
 
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Cael

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Also, the market will give you the choice between a ford and a toyota, but not a public transportation system that would be overall much more efficient than the private system we have.
Thats a key point, and when you remember that its the same hedge funds that own both Ford and Toyota, then you have the reality of "competition."
 

jackryan

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So we'd all be better off with say 1 shop controlled by the state? interesting? I have my doubts!
 

Realityman

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Seven paradoxes of the socialist state:

Nobody works, but the plan is always fulfilled. The plan is fulfilled, but the shelves in the stores are empty. The shelves are empty, but nobody starves; nobody starves, but everybody is unhappy; everybody is unhappy, but nobody complains; nobody complains, but the jails are full.
:p:p:p
 
D

Dylan2010

There's no tax on aeroplane fuel, never mind a carbon tax, how is it fair competition that private companies get away with this? Thats quite a subsidy for air travel.

Also, every transaction on a market has externalities. For example, lets say I buy a car of you. You're happy because you get money, I'm happy because I get the car, but the neighbour isnt because the car causes pollution in the neighbourhood. When you extrapolate the amount of pollution that world transport causes, thats serious environmental degradation and climate change. What amount of competition will fix that? None, and thats quite an externality that the market ignores because there's no profit motive in solving it.

Also, the market will give you the choice between a ford and a toyota, but not a public transportation system that would be overall much more efficient than the private system we have.
backwards logic. Air travel doesnt get a subsidy, its the lack of market prices and government monopolies in other areas of transport. Leave roads, rail etc to the market instead of the vanity projects they are under state hands.
 

Realityman

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A woman walks into a food store in a socialist country. "Do you have any meat?"

"No, we don't."

"What about milk?"

"We only deal with meat. Across the street there is that store where they have no milk."

Need i say anymore??????????????
 

Soldier of Density

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oly posing as "freedom" and "competition."
Cael.....I love you man....I really do.

I see you've been a member since 2006, so I can safely assume you are at least 4.

So here's my view.... you are posessed of great intellect, and have given much thought to socio-political circumstance..... but to paraphrase John Lennon....you're not going to get far with people carrying pictures of chairman mao,,,,,

Or to paraphrase Frank Zappa, a bank manager has more power to change the system than a hippie...

Here's my point. You know what's wrong with the system. You've overstated it on numerous occasions.

Wouldn't you be better off changing it incrementally with measurable degrees of success rather than alienating the world with the whole 'citizen smith' thing?

Just a thought.
 


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