Quote:
Originally Posted by a_Username
Capitalism, in the theory proposed by the Austrian School, is one of the few, if not only model of economics based upon human action. Also, better is not an objective term, instead it is a subjective term. Capitalism is the only system where consumers are the ones who decide what meets their needs, consequently no single individual can say what is better than another.
You're assuming that consumers are simply defensive against advertising. If that were the case, then the success of a company would only depend on its skill in advertising. But, we both know this isn't the case; only one company can have the advantage of a superior product.
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You are absolutely correct. That is why I believe a modified version of capitalist theory must be considered. The original version of the theory incorrectly assumes that the mere existence of a superior product corresponds with its success. Practice shows that consumers buy based on what is available. A store is successful based more on location and price than service and quality. As a result, a store with inferior products could feasibly sell better than a store with superior products, disputing the entire basis of the theory.
Let us also consider how a supply line works. In practice, someone invents a product. The product is the best of its kind. Now, this someone must sell the product to stores. Let's say Venture signs an exclusivity agreement with this company to carry this product. The product competes with a product sold at Target. Venture, as we all know, goes out of business. Target's inferior product continues to sell. The holder of Venture's rights gets the exclusive rights to this superior product and foolishly does nothing. Capitalism ignores this almost entirely.
Instead, capitalism assumes that the market is open, but companies restrict rights to monopolize relationships they have with vendors and product lines. Let's take a look at Camaro5. Many of our vendors carry competing products. On this, I'm sure, we can agree. Have you noticed that our suspension specialists tend to advertise either Pedders or Pfadt? I have not noticed both logos carried on the same vendor's signature. Let us, for the sake of argument alone—not an invitation to debate suspension companies—say that one makes a part better than the other and that the other reciprocates this. Now, let us further point out that vendors tend to have repeat customers due to their customer service. This tendency reduces odds that the superior product from the reciprocating company ever gets purchased in favor of the inferior product that is more easily accessible. Do you follow?
Basically, capitalism assumes that everyone has access to everything and that the best product will prevail. This is almost never the case. For that reason, we have fanboys who perceive their products to be superior despite the obviousness of some of their faults. Take, for instance, the heavy duty trucks of 2011. The Chevrolet is better in all the ways that count, but Ford and Dodge fanboys will leap in here just to tell me I'm wrong despite their lack of engineering, mechanical, or functional knowledge of how a truck works. If the best product prevailed, it would instantly generate the most revenue or perhaps even all the available revenue for that market, which is also rarely the case because existing titans would do whatever they could to earn exclusivity in the largest possible share of the market. The only reason to buy an inferior product would be because that is the only product available. This availability thesis points to a fundamental problem in capitalism: that we reward inferior products simply for existing despite their faults.
Right now, the market we have is not an open capitalism. It is a very corporate protectionist bastardization of capitalist theory. This bastardization takes what we know about capitalism and makes it work for the biggest companies, inflating the wealth of those who already have money by giving them the opportunity to nip competition in the bud. Most of us, were we to have brilliant ideas, would eagerly sell them for millions to industry leaders and retire on our newfound assets while they use these ideas to fund generational dynasties of their ostentatious lifestyles.
I won't draw any conclusions or say what should be done about this. That would be politics, and I'd like to keep us on the intelligent discussion at hand without divulging into a forbidden debate about how the world should be. On observation alone, it appears that we agree on some things, but we can't find a lot of common ground on how big a role advertising is. Let me simply point to evidence the preposterous funding given to advertising. Ask any drunken college student if he would buy from a company simply because the ad was awesome, and he would probably say yes. Those ads have value. They may mean nothing to you and me, but they do convert to sales, tilting the balance toward those with the largest bank accounts.