Just sat in a lecture that made me rethink capitalism

[Steeplerot]

Capitalism is an Economic System, not a form of Government.

Unless it is in a state of decline. This is the dangerously fine line between corporate fascism and capitalism that occurs when the electorate grows apathetic (or bribed/fooled by media) enough to let the elites and industry dictate in a degenerated corrupted democracy. (usually in the form of neutered, compliant and wholly bought out 1-3 party systems offering false choices to the people when in reality it is the whispering of big industry dictating the state)

This is how Democracies die and become banana republics owned by corporations, it happens a lot more then most Americans think since we generally have had a pretty stable society since the 1960s.

Capitalism is a soulless beast out for the bottom line, democratic governments, peoples livelihoods, and even the survival of the corporate entity itself is by nature up for grabs when it comes to short term profit. Capitalism is as destructive to itself as it is to humans if let to run around irresponsibly throwing its weight around.

Capitalism is not "evil", but like anything else when taken to a irresponsible extreme it can be murderous for those stuck under the boot of profit without people power to keep capitalism competitive. If people are not represented capitalism stagnates and concentrates wealth until it topples unto itself. (usually taking the workers -not the capitalists with it!)

 

[daishi5]

So I was sitting in my technology commercialization class and the speaker, a former technology commercialization officer at a major bio medical researcher, said: "we had to turn down many discoveries that came out of our basic research; If it wasn't going to return 250million in the first 3 years we just didn't produce it"

Can you imagine the number of amazing discoveries this company simply didn't bring to market because it wasn't profitable enough to them?

Disgusting.

Was there some reason that this persons company decided that they just didn't like 200 million dollars, and that if they couldn't have that extra 50, they were just going to leave the 200 million sitting there? The story you just relayed to us makes the company sound like complete morons who just decided that they were not going to take money. Or, it sounds a lot like that tired argument against increased taxes on the rich, if taxes go up people will just quit working because now they cant be bothered to get out of bed to make 2 million when they used to make 2.5.

If your story is all of the tale, then capitalism failed because the capitalists who own that company should not let the people running the company just pass up 200 million dollars in free profit.

 

[AlienCraft]

Capitalism the worst form of government besides all the others tried.

Capitalism isn't a form of Government. It is an economic system.
Democracy isn't required for Capitalism, see China.

 

[jackace]

Problem is the company probably patented it.

This right here is one the major problems we have right now. So many companies discover new technologies, but sit on it because their current technology is more profitable. Even if the new technology has better long term prospects. HP in my area is one company I know that has done this very thing. They even try to lease some of these ideas to would be entrepreneurs. They won't sell the ideas only lease.

 

[jackace]

Pure capitalism would absolutely have mega-corps, especially for commodity production. Capital gains reinvested into production leads to more acquisitions leads to economies of scale, leads to the ability to out-price competitors.

Wealth begets wealth.

Again I agree. Pure capitalism would be full of Monopolies and mega-corps. I just don't understand how people can't see this.

 

[Dr. Zaus]

So you would rather 250 million dollars be invested to help FEWER people? Do you want to do the most good, or do you want to help fewer people?

I would prefer that the limits of the marketing department didn't limit the production of those things that might benefit those populations that didn't have 250mill to spend in the first 3 years.

Was there some reason that this persons company decided that they just didn't like 200 million dollars,

If Steve Jobs spent all day picking up dollar bills he would be out a LOT of money; some times it isn't worth the time and effort commercialize a technology that will not return as much as the next technology over.

I would imagine that spin-off company would make more fiscal sense, but then I don't run a big bio-tech firm.

 

[HendrixFan]

Care to name a market where a monopoly exists and preferably one that is not govt supported.

Mom and pops died, because they lacked economy of scale. The little shops got beat. And now blockbuster will soon be dead because new competitors killed them.

Blockbuster lowered prices to below cost in certain areas to run out competition while keeping prices profitable in other areas. After the competition was run out, prices shot up.

There was a 10-15 year window in which they were able to have free run of the market before Netflix/Redbox came in. That was not healthy for the marketplace/consumer.

Mega-corporations look at short term windows of profitability. Without long term planning, and the desire to ride out slow developing innovations, we do not get the benefit of new ideas that would be profitable, but take too long to get there.

 

[Monster_Munch]

Would innovations like the internet and the web have come from commercial research if there was no public funding for stuff like that?

If they did, would they have been as open and free, or patented and exclusive?

 

[LegendKiller]

The ability to out-price competitors dwindles away competition (see Blockbuster vs Mom and Pop rental stores) until you have a handful of players left, or just one in the market. Capitalism breaks down at that point as companies cannot compete, and the buyer/seller relationship has no balance at all. The individual buyer cannot purchase from a competitor (none exist), nor can it leverage any power against the seller.

I guess it is still capitalism, but it loses most of its free market aspects.

A "Free market" is one that is not regulated by the government, capitalism occurs whether there is a free market or not. "Free markets" have nothing to do with your ability to be able to purchase from competitors, monopolies are still "free markets" if it's a natural monoply. Your last sentence almost gets you there but you're still confusing the situation.

 

[LegendKiller]

That's a problem of government, not capitalism.

Protection of IP is a capitalist problem, not a government problem.

 

[LegendKiller]

Blockbuster lowered prices to below cost in certain areas to run out competition while keeping prices profitable in other areas. After the competition was run out, prices shot up.

There was a 10-15 year window in which they were able to have free run of the market before Netflix/Redbox came in. That was not healthy for the marketplace/consumer.

Mega-corporations look at short term windows of profitability. Without long term planning, and the desire to ride out slow developing innovations, we do not get the benefit of new ideas that would be profitable, but take too long to get there.

The free market let Bockbuster drive out the competition like that, there was no regulation to prevent dumping. The strongest survived, until it didn't. Sure, it wasn't "efficient" to consumers, but that doesn't make it not a "free market" nor "capitalist".

 

[gingermeggs]

Capitalism is fine, this leaves the opportunity for someone to come along and figure out how to do it and make money.

Yeah if you got access to the "Capital" to be able to develop it, figure is a good word and without over 6 figures you ain't getting no where!
The amount of people who die every year because of individual and corporate greed is the biggest disgrace of all humanity!
Capitalism has a shelf life, it's evolution baby!

 

[gingermeggs]

A "Free market" is one that is not regulated by the government, capitalism occurs whether there is a free market or not. "Free markets" have nothing to do with your ability to be able to purchase from competitors, monopolies are still "free markets" if it's a natural monoply. Your last sentence almost gets you there but you're still confusing the situation.

A government who was funded to win the election by the "company".
Collusive duopoly is what really occurs(it creates an illusion of a healthy market place), the Boards' split the market up, after wiping out the rest of the "little" competition, then jack up prices to milk the population for as many fat bucks as their fat little finger can clutch!
Its about access to capital, he who has the most financial depth wins the market.
There is still a little goodness out there, there still is hope that wal-mart won't own the world!
What about asset stripping of little operators?
Money moves mountains and as Josiah Stamp once said-

"But if you want to continue to be slaves of the banks and pay the cost of your own slavery, then let bankers continue to create money and control credit."

Nothing is free even a market place!
You need the right regulations and nothing has changed for the last 30 years, just the fat cats are getting fatter. disgraceful.

 

[charrison]

I would prefer that the limits of the marketing department didn't limit the production of those things that might benefit those populations that didn't have 250mill to spend in the first 3 years.

If Steve Jobs spent all day picking up dollar bills he would be out a LOT of money; some times it isn't worth the time and effort commercialize a technology that will not return as much as the next technology over.

I would imagine that spin-off company would make more fiscal sense, but then I don't run a big bio-tech firm.

That is the point, capital is scarce resource. Chances are that the more profitable a widget is, the more people it is going to affect. While finding a cure for a 1 in a million disease is noble, there is far greater need for finding a cure for a 1 in 10000 disease.

 

[gingermeggs]

That is the point, capital is scarce resource. Chances are that the more profitable a widget is, the more people it is going to affect. While finding a cure for a 1 in a million disease is noble, there is far greater need for finding a cure for a 1 in 10000 disease.

1 in a million....like malaria???
Capital is what? resource, so why is so much of it tied up in things that don't do much for society in general. Its not the money, it who controls it, they are mostly evil at this present time.

 

[charrison]

Blockbuster lowered prices to below cost in certain areas to run out competition while keeping prices profitable in other areas. After the competition was run out, prices shot up.

There was a 10-15 year window in which they were able to have free run of the market before Netflix/Redbox came in. That was not healthy for the marketplace/consumer.

Mega-corporations look at short term windows of profitability. Without long term planning, and the desire to ride out slow developing innovations, we do not get the benefit of new ideas that would be profitable, but take too long to get there.

Was blockbuster predatory, or was it just more efficient? It was probably far more efficient than a mom and pop. And blockbuster was never a monopoly as other chains existed at the same time. Hollywood video was another large chain.

 

[Ancalagon44]

The free market concept breaks down because companies are run by humans, and humans are greedy. Humans, when running companies, do not like competition because it limits how much money they make, so they will do anything and everything they can to make the competition go away.

 

[Phokus]

Care to name a market where a monopoly exists and preferably one that is not govt supported.

Mom and pops died, because they lacked economy of scale. The little shops got beat. And now blockbuster will soon be dead because new competitors killed them.

OpenTable is a non-government sponsored monopoly. Every Restaurant owner i know hates their ass because they have a monopoly on the online reservation system and they extract way more surplus value from them via economic rents than they deserve and they can't NOT use them. Open Table's monopoly is due to the network effect.

http://www.reddit.com/r/Economics/comments/eajrd/the_open_table_service_a_simple_example/

 

[Thump553]

You gotta pick your battles. There are opportunity costs to pursuing marginal ideas. Plus if you are projecting you are going to make $250M by bringing something to market, there is a chance it won't get approved at all, and you'll spend a lot of money trying, but make nothing. BTW, if they patent a discovery, but don't pursue it themselves, they may still be open to licensing that patent to a third party that wants to take a risk and pursue it.

What senseamp said. Frankly I don't see this as a problem with capitalism-any system is going to require economic decisions. The more productive systems-which tend to be more stable over the long term-must, of necessity, tend towards decisions that produce the greatest rewards.

The problem (if any exists) is the patent and trademark system, which given their grant of legal monopolies are anti-capitalistic and anti-free market to the core. But these systems are a necessary evil to encourage new discoveries. The real question is whether our present system is flawed because of corporate influence. I mean, someone explain to me why Disney still has the exclusive rights to Mickey Mouse (developed in the 1920s) while a cartoon or book developed by the ordinary Joe back then has long gone into the public domain.

Also, I think there is some sort of system to encourage drug companies to develop solutions for rare dieases-where they will never make any big bucks. Otherwise all we would have in development is baldness/stiff penis/fattie drugs.

 

[sunzt]

So then maybe the cost didn't justify the income? Sometimes market actors aren't rational but in the end the market allocates supply to demand better than any systems.

Econ 101.

Econ 101 assumes that the market is efficient, which it is not. Thus the market does not necessarily allocate supply to demand as well as it should.

 

[rudder]

The government funding research through tax dollars. This prevents the problem the OP described and was a huge part of many advances in previous decades when most research was done by the government.

So let's say we give a laboratory or a university research department $100 billion of taxpayer money and say find a cure for cancer. Let's say from the get go this lab heads in the wrong research direction with no hope of ever finding a cure for cancer. They burn through $100 billion. Then we come to find out that the particular lab was chosen because the senator who has on the scientific committee making the choice was elected from that district.

 

[Siddhartha]

Another impressionable mind warped by a leftist lecture.

Isn't college fun kids!?


Why don't people realize that if you are presented only one side of a situation/debate, your mind will generally tend to find ways to agree with what is being said?

I work for a large corporation and we are constantly told to only work on big ideas, meaning the projects that offer the opportunity the make the most money. It takes the same amount of resources to work on a small idea as to work on a big idea.

I would not call the people who run the company I work for "leftist".

 

[Texashiker]

Capitalism is fine, this leaves the opportunity for someone to come along and figure out how to do it and make money.

Not when other companies thought of it first and have a patent on it.

From what I heard, companies like exxon buy up free energy patents to keep them from ever going into production.

Overall, I think pure Capitalism is a very bad thing.

 

[Phokus]

So let's say we give a laboratory or a university research department $100 billion of taxpayer money and say find a cure for cancer. Let's say from the get go this lab heads in the wrong research direction with no hope of ever finding a cure for cancer. They burn through $100 billion. Then we come to find out that the particular lab was chosen because the senator who has on the scientific committee making the choice was elected from that district.

I doubt there's that much money in earmarks for that type of research, most of those types of medical research grants are given via the NIH and it's extremely competitive to get it. My dad gets his research money via the NIH and he literally sleeps at his lab when he's writing proposals for that grant money - the 10 people who work under him depend on that for a living. University research is as cutthroat, if not more so, than private research.

He does research at MIT (and does some joint stuff with Harvard) which is in Cambridge, which is the epicenter of bio-everything research (both private and public), i've never heard of him or any of his colleagues getting grants via some earmark before. I'd have to ask him.

 

[kranky]

Was there some reason that this persons company decided that they just didn't like 200 million dollars, and that if they couldn't have that extra 50, they were just going to leave the 200 million sitting there? The story you just relayed to us makes the company sound like complete morons who just decided that they were not going to take money. Or, it sounds a lot like that tired argument against increased taxes on the rich, if taxes go up people will just quit working because now they cant be bothered to get out of bed to make 2 million when they used to make 2.5.

If your story is all of the tale, then capitalism failed because the capitalists who own that company should not let the people running the company just pass up 200 million dollars in free profit.

That's what I was thinking. We don't know if the speaker meant they wanted to NET $250 million or get $250 million in revenue. And we don't know what was left unsaid regarding the cost to bring the idea to market. And in any event, if the idea was worth anywhere near $250 million, the company would be stupid to sit on it when it would be a valuable asset to sell to another company. And it's also very possible that the speaker was talking out of his rear end and his impression of the value of a discovery was highly inflated.

Medical research is a hot field, and if a company had a shelf full of discoveries worth "only" $50 million or $100 million, they would have no problem finding another company to sell them to. It makes no sense to pass up that kind of money, no matter how big the company is.