Profit requires an imperfect market
Patrick Anderson
"'... it is impossible for a firm in perfect competition to earn
economic profit in the long run, which is to say that a firm cannot
make any more money than is necessary to cover its economic costs.'"
But, since normal, for-profit business measure success by the amount
they can keep price above cost, truly perfect competition brought
about by Consumer Owned enterprises would spell certain disaster - for
all Capitalist would then close their doors proclaiming failure!
A business must pay it's investors SOMETHING, otherwise, why would
they invest? So, if the investors are expecting profit, then they
require the business they invested in to be able to operate in an
imperfect market. Profit is a measure of this imperfection.
But there is another thing that we could pay investors if those
investors are in a certain set.
If the investors are also CONSUMERS (some could incidentally be
workers too) of the product being produced, then they would be
satisfied with receiving product alone, and would never need the
business to keep price above cost.
When the investors of production are the consumers of the output, the
organization can withstand perfect competition because those that
pre-paid will expect PRODUCT instead of profit.
In contrast, if the all investors are all WORKERS (some could
incidentally be consumers too), and the market has perfect
competition, then the workers would be paid the same wages as any
worker that was not an owner, yet would have the risk of holding the
debt of that incorporation.
If you say "Well, they would be consumers too, so would also be paid
in product" then you are describing why consumers should be the owners
of the Means Of Production and avoiding the issue of whether ownership
should be limited to those that happen to have the skills to operate
it.
If you say "Well, the workers could pay themselves a higher wage than
non-owning workers" then you are talking about how profit would be
'hidden' in those wages since owners can arbitrarily make that
division. But in that case, the organization would be less efficient
than "consumer owned" - since, when many of the owners are not
neccessarily workers, then wages and profit are cleanly and clearly
separated. If a worker tried to collect too high of a wage for the
quality of work he was supplying, then the collective owners would put
that job up for reverse-bid (just as employers do today) until a
worker with a better quality-to-wage ratio was found.
Sincerely,
Patrick
marc fawzi
Perfect competition doesn't mean perfectly identical positions, since
no matter how hard the competition is (or how perfect it is) there
will always be some differences between the players' positions.
Let's say two players enter the market at almost the same time with
almost similar mobile phone models. Let's say that they almost have
the same production efficiency and almost the same quality/appeal
(based on market response) The keyword is "almost."
When such small wins in beating the others to market, beating the
others in efficiency of production or beating others in quality are
repeated they add up to a big win.
In the Wikipedia writeup they ignore profit that is due to "margin due
to higher production efficiency X higher number of units sold due to
better quality" (or better perception of quality that builds up due to
small wins on the quality front repeated over time) which is the kind
of profit that _CAN_ exist under perfect competition.
marc fawzi
logical flow, I would rephrase it the same way I had it in the P2P
Energy Model: "improvements" or "features" that generate higher
demand.
In other words, under perfect competition (i.e. competition with zero
collaboration except in the sense that everyone is self-preserving and
no one commits kamakazi acts), profit CAN exist due to the combination
of higher production efficiency (even just slightly higher than the
rest) and the selection of features that generate higher demand.