Comment by jollybean | Hacker News Reader

Comment by jollybean | Hacker News Reader

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I'm sorry but this is upside down.

Pricing in Supply and Demand is decided by Bargaining Power, not the other way around.

The idea that workers 'outnumber' the capitalists does not give them power, it's the complete opposite.

I have no idea why you would think think they have some kind of power in that equation especially when there is probably a labour surplus.

If workers merged and formed a coherent Union, and acted as a single monolithic entity i.e. 'all labour in the colonies comes from a single Guild', then they'd possibly have more power, but this wouldn't really be possible obviously.

The entire treatise is essentially about the disproportionate power of concentrated wealth and that's what will ultimately drive wages.

That it's difficult to quantify doesn't make it false.

'Profit concentration' is literally a measure of value chain power: if you can collect a lot of profit, it's a sign that you have leverage over the other entities: workers, financiers, customers and suppliers.

Apple has incredible leverage over vendors, which is why even if you sell some really cool and awesome component to them for their iPhone you might not make Jack in profits, and may find yourself out of business a few years later.

Apple makes 100x more margin per device than Foxxcon, which illustrates the capital vs. labour dynamic quite well.

> Apple makes 100x more margin per device than Foxxcon

It's important to note that it's not necessarily labor-vs-capital. Capital-vs-capital also exhibits the same dynamics.

One might argue that Foxcon's business model is providing low margin manufacturing manpower; and that the real value-added is in an design and R&D of an always-connected device that fits into the pocket.

But there's a counterpoint - mobile connectivity requires radio networks. There's no a-priori reason why Apple should make 60% margins, while Nokia and Ericsson barely break even. Radio networks also require a lot of R&D, are designed in Western countries and their business model is not about exporting cheap labor.

The key difference is the power disparity. Nokia/Ericsson are facing powerful network operators, some of them close to an order of magnitude larger than the vendors themselves. The operators dictate the terms of the deal, the vendors have to adapt. With Apple - they're facing customers. Apple dictates the terms, customers have to adapt.

In fact, 6 out 7 largest corporations by market cap (the odd one out is Saudi Aramco) are all in the same position as Apple - power dynamics heavily tilted their way.

So I agree with a lot of that, but Apple is different than the Big Oil companies.

Market power is usually a function of competition - so mobile devices have a dynamic where in some ways (verticalized platforms), that's limited.

Apple also has systematic leverage from their Mac and other products and expertise.

Finally is the Brand and Marketing intangible. Nike doesn't have any 'real power' other than that, but they wield it well.

So those three things together, and scale, give them leverage.

The other immensely powerful players are the carriers. They have a kind of bought monopoly / oligarchy over airwaves - while they do pay into the public purse in the form of auctions, in reality, it's not a very competitive market.

They reap massive revenues from their position. That said - these companies are kind of older, they have unions, and they are not hyper efficient, and they don't post the same margins as Apple, and because there's limited growth in a market, it's not likely their stock will be highly leveraged.

The Carriers have immense power in some ways like Apple, but it's just that they don't have the apparent surpluses and glowing stock price due to the systematic power of their own entrenched bureaucracies.

Finally you have equipment vendors. They're an essential component, but the reality is the market is much smaller, there's no direct to consumer relationship, no recurring revenues, they have China nipping at their heels. So they are in a somewhat weaker position.

Also - the CCP has directed the Chinese Banking system to offer cheap loans for Huawei gear, a kind of Economic Dumping which is totally against free trade but it's like heroin to buying parties who can forgo huge cash outflows.

If carriers were dynamic and efficiently run without a lot of the legacy and went with fewer storefronts - and - somehow 'got good at marketing' - and - Apple wasn't quite as good at marketing and especially if they were like Android i.e. licenced their OS, then carriers would rival Apple for power.

Big Oils dominance comes from massive scale and systematic integration into the economy, geopolitical leverage (literally the US Armed Forces secure their supply chain), major geostrategic interventions (the state will represent Oil Companies or work with them), etc. etc.. If we were not facing Green Crisis then I suggest they would be much more powerful, as they were historically.

"If workers merged and formed a coherent Union, and acted as a single monolithic entity i.e. 'all labour in the colonies comes from a single Guild'", will they win a bargain to get paid $1million and the capitalist only get paid the minimum?

Think of the 'Super Guild' as just a corporation selling it's services aka labour, to other corporations.

The more powerful corporations will accumulate more of the profits that are available to be divided.

So each corporate participant will get back it's 'costs' i.e. the minimum requirement for equipment (and maybe include very base salaries) - after that, everything is up for negotiation.

The 'Super Guild' that had 'All of the Workers in the Colonies' would probably be able to negotiate so that the corporations it sold it's services to didn't make any profits at all.

So the 'Super Guild' would accumulate most of the profits, and then they'd have to figure out how to divide those profits among themselves.

There are actually is not remotely 'that much surplus' in these systems, and that if workers took 'all the profits' it wouldn't make them rich. Just somewhat better off. So if the 'Super Guild' distributed the profits fairly evenly, everyone would get a nice raise and that's that.

Since workers tend to spend most of their income, almost all of that surplus would end up back in the economy pretty quickly, and all businesses would grow. This is Henry Ford's realization: "I have to pay my workers enough to be able to afford my car!"

FYI you can see this in action with professional designations, like MD, RN. They keep wages 'artificially' high by limiting the number of those that can do the work. That said, even without their Guilds, because they do work that not many can do, they'd still command good wages.

The 'Bad Asymmetries' in the economy happen at either end: the unskilled labour pool, who's wages would be 'barely survival wages' (i.e. workers in favelas, no proper sanitation, no healthcare), and on the other end concentration of corporate and private wealth that gives immense advantage.

The former needs something like 'minimum wage' (we can do better than that) and the later needs smarter taxation, getting rid of loopholes, offshore, unfair lobbying etc..

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