Actually, they wouldn’t cease to exist without profits. Profits are income in excess of expenses.
Without profits, investors don’t get dividends. Businesses can be entirely successful without every turning a profit because they “only” produce goods and distribute the income entirely to cover costs including labor.
If we did something radical like taking ownership of companies away from investors and holding them in public trust, you wouldn’t see the companies cease to exist, you’d see prices come down, wages go up, or heavy infrastructure investment.
Profit is an indicator of market inefficiency. The equilibrium state for a market is zero profit.
You also end up with management and incentive issues. You can correct those with violence or starvation in the short term and hope everything works out in the long term.
What, to you, is the difference between the owners being the government, and the owners being investors, all else being equal?
Do you think people don’t get paid if there’s no profit? Profit is just money left over after everyone gets paid and the bills are settled. It just goes to investors, and the employees don’t see it.
Do you think that transition would happen without severe turmoil? That’s the period I’m referring to. I think there’s a huge difference in incentives to create new businesses as well as to keep running them efficiently between private investment and government…I’m not sure what method you propose to regulate industry.
It doesn’t matter if people get paid if shelves are empty. The economy isn’t a magical portal that delivers toilet paper to those in need: it’s an insanely complicated set of (highly compromised at the moment, thanks to rich fucks and the officials/politicians they buy) human behaviors that act as market signals.
Profit is an indicator of market inefficiency. The equilibrium state for a market is zero profit.
What a dumb take. If I work all day to earn money, and I use some of it to pay my bills and save the rest, does that mean I’m being inefficient? Is my employer being inefficient by paying me more than I need?
That’s literally a guiding tenet of capitalism. Profit is an indicator of market inefficiency because not enough of a good is being produced to satisfy demand. The existence of profit in a market segment signals to others that they should enter the market to try to capture some of the profit, which lowers the profit each party gets. As competition increases, profits lower until supply is in equilibrium with demand.
If it’s a situation where competition isn’t feasible, then profit is an indicator that the business is artificially charging more than they need to.
Market efficiency is one type of efficiency. Is a widget maker suddenly becomes more efficient at producing widgets, they can sell more widgets at the same price, leading to increased profits.
Production became more efficient, but the market became less efficient, signalling that other firms should find a way to compete and get those profits, until competition drives prices down to the cost of production.
https://youtu.be/b-4ry8ZLwoQ?si=1r0GU8HVCT7dC1OP
You are not a market segment, so your personal finances aren’t comparable.
Your boss is being inefficient if they’re paying more for labor than they have to. Labor is a market, and high wages signal to workers that they should enter a labor segment, which eventually drives wages in that segment down until an equilibrium is reached.
you wouldn’t see the companies cease to exist, you’d see prices come down, wages go up, or heavy infrastructure investment.
Exactly, you’d also see the inovation to drop, effectiveness of people’s work would decrease slowly and also quality of products would go down. It’s actually not that radical, many, many countries have tried that, both small and large, gigantic even. But rarely (if ever) it worked in a long run
Why do you think work effectiveness or innovation would drop? The people doing the work already don’t see the profits. Nothing would change for them.
There’s no difference between the board of directors being appointed by investors and then being appointed by elected officials, as far as the employees are concerned.
There’s a difference between a state run and a state owned enterprise.
A publicly owned enterprise is perfectly common, and indistinguishable from any other business.
They’re quite common around the world, and some of the largest companies on the planet are state owned.