[p2p-research] open-source gadgets have the best chance in markets where the technology has matured to the point that it is commonplace.

[Ryan Lanham]

On Thu, Mar 25, 2010 at 7:49 PM, Patrick Anderson <agnucius at gmail.com>wrote:

> Ryan Lanham wrote:
> > I see it happening everywhere where huge natural resources are not
> required
> > in production.  If such resources are required, the price falls to the
> value
> > of the resources.   Labor and IP go to zero.
>
>
> If the Price for the Consumer "falls to the value of the resources",
> does that mean that Owner_Costs and Consumer_Price would be the same?
>
> And if Owner_Costs and Consumer_Price are the same, then Profit must be
> Zero.
>
> But if Profit is Zero, then why are these big corporations (such as
> ConAgra, Tyson, etc.) still in business and reporting 'earnings' even
> while moving very non-innovative products such as chicken meat and
> frozen potatoes, etc.?
>

Innovation in food industries is huge.  Cost reductions, improved nutrients,
etc.  Grocers are ready proof that people care about brands and quality.  It
is where differentiation is most apparent.

You are right about profit.  Profit approaches zero because it is difficult
to differentiate enough to earn rents for long periods.  In short,
competition is approaching infinity, so profit goes to zero.  If everyone
can make a cell phone, no one will cell one at a profit.




>
> On the other hand, if you are correct, and if Price is moving toward
> Cost (causing Profit to approach Zero), then not only do we have a
> "problem" that work is being automated away, but we also do not have a
> good explanation as to why anyone would be willing to invest in the
> future.
>

Yep.  Been saying that on this list more than a couple of years.  Exactly.
The problem with capitalism right now is that there are no expectations of
long term cash flows.  That dries up credit.  When credit dries up, the
system stops. We are slowing again right now...you can watch it in the
financial pages.  Capitalism is dying.  It won't "die" for decades, but the
changes are not far too obvious to be reversed unless some unforeseen
prospect of huge technology innovation (equivalent to the age of
microcomputers) is around the corner.  It isn't.  Stem cells and nanotech
are huge, but they aren't game changing.  There is not distributed
technology that can justify wide scale labor costs that are high.  Germany
has the best model...really high end products.  China has a good
model...really cheap labor.  The US is squeezed in the middle.  It is really
surviving now on fat accumulated over the decades and on huge advantages in
technical innovation. Those are slowing and closing.



>
> There *is* a reason to invest besides Profit; it is called Product.
>
> But production for the sake of Product alone would require (by
> definition) for those investors and owners to be the very consumers of
> those goods - and for each of them to be invested only to the degree
> it would take to supply themselves.
>
> That is an odd arrangement compared to the notion most people have -
> where they envision the *workers* to be the investors and owners.
>


It is true that product is interesting to small producers, but in the global
economy, it is meaningless.  Profit is what makes the world go round.  But
your conclusion is sound.  Wages are falling in real terms and profits are
drying up.  People will therefore go into small scale production.
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