We hear it all the time, from tv talk shows, to economics classes, to world leader’s speeches: “free market” is the solution. And to be honest yes “free market” capitalism theory does make a lot of sense. It even works in reality, sometimes. You just hardly see it.
The only problem is no capitalist ever really allows “free market” to flourish. You see, when a capitalist realizes that their profits may be at risk of being reduced or wealth can end up being shared; said capitalist tries to build barriers to prevent others from enjoying what he/she just did.
Broadly there are two kinds of impact this has on the society (there is a third one but thats kind of on all of us):
First is Impact on Consumers. Products / service sold to consumers get more expensive as there is limited competition on price. Meanwhile quality gets worse. Think about stuff as varied as train travel, telecom or internet service, even taxi apps. All of these when they were invented brought about a structural uplift to society. Consumers and public appreciated it. The creators got rewarded by earning a decent equity upside. So far so good. From thereon the desire for maximum profit and year on year growth resulted in the creator capitalists trying to come up with rules and lobbies to restrict others from entering the market. Because if they did allow others, free market would ensure prices remaining low for consumers and therefore limited increase in profit for capitalists. Think about Uber surcharges or Deliveroo/Grubhub delivery fee increases or regular mobile tariff increases. It’s not like these companies are unable to generate profit at pre-increases levels. They totally can and are generating profit. They just want more. Thats why once the competitors are killed off they go about collecting monopoly profits. That way they ensure that no new guy comes on the block. Free market failure assured.
Second is Impact on Employees/Labour. Any business, good or bad, has only two toggles to increase profitability: increase revenue or cut costs. We discussed revenue increase from price gouging perspective above. The cost cutting side generally manifests itself in cutting human capital cost. This has a few permutations ranging from: outright lay-offs, outsourcing people, no or reduced pay increases in an inflationary world. Let’s be honest if a business is doing well enough to let the owners buy multiple homes for themselves, surely the lowest earners in that company should be able to make some sort of life improvement. But that’s not the case in vast swaths of companies like Walmart, Starbucks, big / small pharma, fast food chains etc. They pay daily wage only because the government mandates it. Their attitude is such that they would be keen to pay less if they can force government to change the laws. Thankfully they can’t. But guess what, technology evolves and now you have the ‘gig economy’. Gig economy effectively bypasses existing wage laws and enables corporates to hire workers for less than daily wage by reducing number of payable hours of work. Add to that the fact you have no other rights e.g. healthcare, holidays, sick days pay, termination notice, nothing. Why? Because you are not really an employee you are just a contractor. Just to remind this is all being done in the name of “free market” which actually only means desire of higher profits and equity value for the owners.
So what do you do? What can OurSurplus do? Frankly you can’t do anything alone. And neither can OurSurplus. If either could it would have happened. However together the corporates can be held true to “free market” mantra and theoretical benefits of free market can be made practical. How? Read here
P.s. the third one is about environmental impact but frankly thats on all of us not just the capitalist. We all are doing that to the next generation. Can’t blame everything on the rich.