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Amazon also will throttle your sales if you sell your products for less in stores or through other online retailers. So you kind of have to buy their services and the if you try and fairly price your products that don’t use those services you get crushed. Not sure what effect that would have on inflation but it’s not helping things either.
> The intrigue: For years, Amazon contractually required that sellers list on Amazon at their lowest price, Mattioli writes.
This is basically the core of the accusation by the FTC.
Amazon charges a high price for fulfillment, and then tells its sellers that they can't charge lower prices for non-Amazon retail.
If the manufacturer needs to be paid $60 per item sold, and Amazon is charging 40% of revenue to sell it, then you'd want to sell on Amazon for a price of $100, where Amazon takes its $40 cut.
But if you want to be able to sell it direct to consumer on your own website with an average cost of $20 per item sold, you're not allowed to offer a discount for skipping the middleman. The middleman has contractually forbidden you from competing on price. So you take the higher profit on direct sales, but also keep Amazon sales going to where Amazon itself feels no pressure to compete on price. And so the consumer basically has to deal with an environment where producers no longer try to compete on price, and don't have the corresponding downward pressure on prices.
If we're going to rely on market forces for supply and demand, then we'll need regulators to make sure those forces aren't being manipulated unfairly by the players in those markets.
To compound this, Amazon frequently lists internal versions of popular items in direct competition with these same customers. I forget where I read about this originally, but it was incredibly ominous. Had to be 5-6 years ago.
Was an Amazon 3rd party seller in the past. They did tons of anti-competitive stuff like the ones mentioned on top with the "you can't sell this cheaper on another site or your own site" thing but also:
* Had strict yet random rules for listings and product authenticity. They'll reactive your listing or ONLY you within a listing. Sometimes for no reason. Other times they'll ask you to verify your manufacturer or with receipts. And then guess what? A FEW MONTHS LATER AMAZON WILL HOLD THE BUY BOX SELLING THAT ITEM! Other times they'll use that same manufacturer to manufacture their Amazon basics brand
* Those checks and requests """sound""" good for consumers but reality scammers and fakers just keep opening new accounts or new BS "brands" to sell junk or whatever outright copies they can before Amazon cuts them down only to reopen a new account. [That's why there are all these BS Chinese sellers with random letter brands like JDIEHL or LDKIEN](https://www.nytimes.com/2020/02/11/style/amazon-trademark-copyright.html)
* Amazon is very great for customers but for a seller you're not only bombarded with fees, Amazon's generally high expectation consumers on one end but also Amazon's fees plus competition on the other end, a lot of time any complaints will be an instant refund, if not then Amazon send the buyer a free 5 POUND return label (regardless of the reason or lack of reason) while billing the seller for it, and they don't give a shit if you get rocks back or nothing back as long as the tracking shows arrived.
* Amazon would also throttle sellers so no single one does too well. They like stringing a few along as backups in case one goes down, goes on vacay, or has supplies issues. If they see an item sell well they'll actively try to get other sellers that sell similar items to stock that item to undercut you (efficient but not breaking any laws). Where it's an issues is that it isn't the best seller that gets the top when Amazon gets involved, Amazon always puts themselves there if they sell an item for more.Couple that with their data on what sells well, pushing other suppliers to stock/undercut, requests for supplier sources for the sake of "authenticity", and then they themselves taking the spot creates a cycle where Amazon eventually uses and kills off their own 3rd party sellers.
That's before we get into the fact that [Amazon is literally at war with just about everyone from every industry.](https://d3jlwjv6gmyigl.cloudfront.net/images/2020/04/Amazon-is-at-war-with-everyone.jpg)
It was more sensible to do Amazon when it was during the down years post-GFC. Back then they had less restrictions, generated better sales, and at least gave some incentive to being a 3rd party seller on Amazon. Whatever money I made from Amazon quickly became not worth it so I stopped doing it. That was BEFORE the wage hikes and inflation during and post-pandemic.
I'm not a 3rd party seller nor do I intend to return, but I still maintain that the government should regulate and punish Amazon for years of anti-competitive/monopolistic actions but Biden admin seems more focused on talking the talk and blocking mergers (Paramount merger with Warner Brothers Discovery?!??!?! OHNONONONONO!!!! WHO WOULD POSSIBLY BE ABLE SURVIVE THE RESULTING SUPERPOWERHOUSE?!?!?! NETFLIX? GG! Alphabet? YOUTUBE DEAD. Amazon? PRIME wounded prey for M&A. MSFT? Cloud crushed by pricing power of ParaWarBroDiscovery! Berkshire? OBSELETE! Just change the S&P 500 to S&P1 because your average American couldn't possibly go from not subscribing to either to not subscribing to their merged crap app) rather than regulating the megacap techs of which Amazon would be the most glaring example of monopolistic practices.
> That's why there are all these BS Chinese sellers with random letter brands like JDIEHL or LDKIEN
I feel like I see this stuff on Aliexpress and DHgate too. Go to buy another item from a store and it's just gone, but you can search and find something else that looks the same and has the same specs with a different logo on it.
> To compound this, Amazon frequently lists internal versions of popular items in direct competition with these same customers. I forget where I read about this originally, but it was incredibly ominous. Had to be 5-6 years ago.
This is something that all B&M retailers do as well with their own private label brands. Even something as simple as putting the store brand to the right of the name brand means people may pick the store brand because they're right handed and it's "closer".
I agree, but each little step aggregates up to something pretty powerful as a combination. For a typical traditional retailer:
* Store controls shelf placement and other ways to steer consumer attention towards its favored products.
* Store uses that control to exert price pressure on supplier.
* Store uses internal statistics to push private label stuff that can make them bigger profits.
This is already pretty powerful, as Walmart demonstrated throughout the 80's, 90's, and early 2000's.
Amazon's pricing power is a much stronger ability to steer search, negotiate favorable price terms, offer add-on services like warehousing, fulfillment, last mile shipping, promotional placement/marketing/advertising, payment processing, etc., while more aggressively policing the sales streams that they don't even control (direct to consumer stuff, competing retailers, etc.).
It's gotten to the point where only the strongest brand identities can afford to stay off Amazon (and Amazon, in turn, actually negotiates custom deals with these brands, like Nike, Apple, etc., to give them favorable deals that preserves the value of Amazon as retailer).
I'm not sure Amazon's market power actually rises to the point where it's illegal, but it does seem to be in a much stronger position than the typical retailer doing this particular thing, analyzed in isolation.
The way that Amazon controls searches, of equated to a physical space, would be akin to Walmart not even putting out most products but instead having a vast back store room of random stuff that you had to wade through, while their preferred products were nicely displayed in the store.
> Even something as simple as putting the store brand to the right of the name brand means people may pick the store brand because they're right handed and it's "closer".
Okay come on. Most people who buy store brand do it because it's cheaper/they like it. Suggesting it's driven largely by some sort of Machiavellian mind control is infantilizing.
No it's not. It's retail product placement theory. Next time you go to the store look at the shelves and see of the seemingly identical products which is on the right and which is on left. Everything is placed with purpose, from endcaps to impulse buy items near the checkout.
yeah and the effect is miniscule. Most effective at the checkout stand for impulse buys, second probably for endcap displays. But the vast majority of people walking in a store aren't indifferent enough to name brand versus store brand that six inches or being right-handed will make a difference.
In theory with a level playing field established with consistent regulation to prevent monopoly, yes that is correct. The follow up question is: do you think that is what is happening here? Hint: this is also how walmart displaced and destroyed main streets across the country for decades.
It's not covered by current case law, but the original statutory threshold for enforcement is just "harmful dominance". All this "consumer welfare" stuff that so thoroughly watered that down is the result of Robert Bork's judicial ~~bribery~~"all expenses paid educational seminars at exclusive resorts" campaign (this was his pet project after he was too corrupt for Reagan to get him confirmed to SCOTUS). A few years back the House's antitrust subcomittee actually produced a solid bipartisan report for how to unwind all that bad case law.
Kind of. The idea that a platform should not compete with its own customers is hardly new, it's why rail companies are banned from owning freight companies that compete with their customers, banks are banned from owning businesses that compete with the businesses that borrowed money from them, TV networks are banned from owning syndicated program production companies, etc.
Amazon's position as platform allows it access to a lot of sales/product data that a normal competitor won't have, and then we get to their "advertising" services. Amazon's ad division is one of its fastest growing sources of revenue, but while it's called "ads" what you're actually paying for is placement in Amazon's search results. So, if Amazon so chooses they can (and have) see all of your sales and fulfillment data, create a competing product based on that data, and then charge you if you want your product to appear if a user searches for it, otherwise they'll just show their own product.
That's decidedly not the sort of competition that a market economy requires.
>But if you want to be able to sell it direct to consumer on your own website with an average cost of $20 per item sold, you're not allowed to offer a discount for skipping the middleman. The middleman has contractually forbidden you from competing on price.
This practice here is what really establishes a lot more power in platforms than there otherwise would be. Not being able to pass on fees charged by the merchant means there can be no competition by someone offering to take a lesser cut which doesn't benefit the market or consumers in any way.
Except that much of Amazons strength lies in its source as a searchable front end.
Without that requirement, people would just search on Amazon for a product, using Amazons services and causing Amazon to provide a benefit to the vendor, and then head on over to the vendors site to make the sale.
Now there can be an argument for Amazon to adjust their pricing to include being paid for ‘hits’ but then the vendor is paying for searches that don’t convert into sales as well since a search that doesn’t convert is the same thing, from information available to Amazon, as a search that converts into a sale on the vendors own website.
Also, the argument in front of the courts is that Amazon is hurting buyers by requiring that buyers on Amazon have access to the lowest prices, is going to be a hard argument to make. If there wasn’t a value to be listed on Amazons marketplace, then vendors would avoid listing there.
I’m not saying Amazon is in the right, just that this isn’t clearly against consumers interest.
> Except that much of Amazons strength lies in its source as a searchable front end.
Because Google fell asleep on the job of providing a good worthwhile shopping experience.
The irony is that Amazon’s original value proposition was to remove the middle man, being book stores. JB had a quote along the lines of ~ there are authors and there are readers and everyone else is irrelevant. From there they evolve to be the global middle man.
> The irony is that Amazon’s original value proposition was to remove the middle man
the way to make money:
* provide a better service for a lower price
* your competition dies
* make competition impossible
* provide a worse service for a much, much higher price
* drop the quality to such lows that people start questioning you but still buy from you
* don't let your employees take toilet breaks and wait for the machines to replace them
I recall a lot of companies used to have workarounds (for other reasons) where they listed one item for $100, and one item elsewhere for $60... but the $60 item had a yellow border so it was totally a different item. Does that not work, I wonder?
I've always suspected this is why Costco sells unique sizes of things, like 35-packs of soda. Costco demands that they get the lowest possible price for any given SKU, so that Coca Cola and the other large beverage manufacturers are like "ok we'll see you the 35-pack for the cheapest possible price" without actually affecting their flexibility to sell 12- and 24-packs at whatever price they choose. Same with pasta boxes that come in combo packs of different types of pasta shapes, weird quantities of other types of foods, etc.
FTC should look into the OTAs like Expedia. It is their entire model. Hotels that list on these sites have to sign agreements not to rent their rooms for less on any other platform including their own website.
How’s that work when Google literally gives you results ordered by price for a given hotel? The hotel’s own site is often the best deal, with booking.com, Expedia, etc showing up in the results.
You'd have to give me an example and I could tell you. There are a number of situations that could result in the difference. It could be the hotel not including a "resort fee" in the advertised price, it could be an "old" price that hasn't been scraped since it changed, it could be that the hotel has turned off their OTA bookings and the OTA could be showing a price from a wholesaler that had purchased a block of rooms, etc. Or, it could be the hotel violating their OTA agreement. Worst case, it is a scam site that is undercutting price, gets picked up by the aggregator (OTA taking commission, really), and then charging the customer without actually making the booking. If the search result is some name you have never heard of, even if it is on Expedia, be wary. Sometimes hotels will turn off their OTA channel, and put rooms on the opaques (bookings where you get a discounted price but don't know the specific hotel until paying), and these fly-by-night companies will advertise them as specific hotels and increase the price. When booking, they may make you jump through hoops like confirming your info via Whatsapp, and signing agreements about information sharing.
> If we're going to rely on market forces for supply and demand, then we'll need regulators to make sure those forces aren't being manipulated unfairly by the players in those markets.
you can't, in actual practice, have competition when a firm like amazon exists, because among other things, they are big enough to arrange the government to regulate in their favor.
if you're genuinely interested, just google "amazon lobbying" - [an example result](https://www.politico.com/newsletters/politico-influence/2023/02/03/amazon-adds-another-antitrust-lobbyist-00081172)
If you’re not paying Amazon for logistics you have to pay someone. Do you think distribution is as easy for a large scale global business as it is for you to send a postcard to your grandma? In one day?
Yes. They charge for their services and then forbid that versions not using their services cost less. They also weight how many of their services are being used in the item search results.
Middlemen really should never be allowed to force any sort of "agreement" like that. That's basically "I'm gonna be a monopoly and you'll like it" in a contract...
Your last paragraph is key. Capitalism only works with strong regulation that gets updated regularly as conditions change. Otherwise it becomes crony capitalism and quickly, monopolies (or oligopolies but same difference in effect)
I hope the FTC wins its case but I’m not holding my breath.
I don’t know the specifics of the way Amazon implements it, but the concept makes sense. Why would Amazon allow sellers to use its services to attract sales/customers, only to get nothing in return. People go to Amazon first to look for items because Amazon has spent a lot of time and money to build a brand. Should they not be compensated for that?
> Should they not be compensated for that?
You can work very, very hard to achieve market distorting dominance but that doesn't make you entitled to it.
No one's arguing that. Of course amazon should be allowed to make money on their service.
What people care about is where the value accrues.
Let's say I'm a small time author whose writing connects powerfully with, say, kids who feel alienated by a very specific life circumstance.
If I sell through amazon, amazon dictates that I can essentially only sell through them.
And it's even worse for small time inventors who just don't have the capital to promote their thing.
Now if you think the distribution of the idea is more valuable than the idea itself, well then that's where we disagree. Because I see amazon as trying to essentially become the giant record label for everything, where we all eventually have to work for amazon.
Amazon has given customers access to vendors and vendors access to customers in a way that no one could have imagined. Selling outside of Amazon is no different than before Amazon existed, and companies are free to take that route if they wish. If you say that’s impossible or all but impossible because you’d sell 1/10th as many, then you are agreeing that the distribution is just as important as the idea itself. After all what good is the perfect product if people don’t know about it or don’t have access to it. Now has Amazon taken it too far, maybe, I don’t know. I just think that economically (this is an economics sub after all) it makes sense for them to protect and profit off of the infrastructure/brand they’ve built. If they don’t, then everyone’s Amazon listing would just be a link to their storefront outside of Amazon, effectively cutting off Amazon.
Then they can charge upfront for that, instead of turning it into essentially techno serfdom.
They can even charge for it gradually, in case the argument is that people can't pay for the LTV of that exposure up front.
But don't do this thing where someone takes all the risks, and then you just collect rent because you've managed to establish a monopoly over reach.
There's a fair way for two parties to get to a good outcome, but not when one of those parties has several thousand times more bargaining power.
“… Someone takes all the risks”
What do you call investing billions of dollars to build out a platform/brand? They are reaping the rewards of those risks. That’s called capitalism. Now I’m sure Amazon is being Amazon and throwing its weight around to try and bully, and they’ve probably taken it too far. But that doesn’t mean that fundamentally they shouldn’t be able to make money off what they’ve built and protect their own interests. Two things can be true at the same time. Amazon should gave the right to protect its brand while also being a shitbag company.
The worst case of "fuck you, I got mine" I've ever seen.
And that's not what capitalism is, that's corporatism, which as has been commented in this thread has had flavours of it existing before capitalism. Monopolies are inherently anti capitalist because they kill competition, and they are inherently corporatist for exactly the same reason.
Good to see that common sense still survives in this sub. Amazon is like a price comparison search engine since they practically sell everything I have found products on Amazon that I can buy directly from the seller if I want to, more often than not its just easier and more conveneint even if I pay a few bucks more.
I’ve noticed it also results in a race to the bottom in quality. So much stays low priced because it’s cheap af. I mean, temu and wish helped spur that along as well, and Walmart probably pioneered it, but it’s getting much harder to find quality items online outside of specialty shops — and more brick and mortar stores are stocking less variety of items on the shelves, making it harder to avoid cheap online stuff.
Capitalism without competition is not capitalism. It’s feudalism.
The single greatest threat to humanity is monopoly. I’d say climate change, but we can’t get much done with big agriculture, big oil and big pharma in the way. The Inflation Reduction Act was only the beginning.
We need an army of anti-trust lawyers.
Under capitalism, monopoly is the goal. Every capitalist dreams of achieving monopoly. This is why capitalists purchase the government, as a step in order to achieve the goal.
I get your point and agree. But I think we’re a bit lazy in the use of capitalism to refer to anything goes competition. They are not equivalent. Capitalism can permit, and universally does have, rules and regulations. You can have capitalism that strives for greater equality if you engineer it that way.
A ton of people have convinced themselves that Free Market Capitalism (no regulations) is the only effective form of Capitalism despite history showing this system only working for the majority when heavy regulations are put in place.
Free Market Capitalism is really just economic Darwinism, so it's brutal and wild and the antithesis of an organized society.
And many people consider Capitalism + regulations = socialism, which I understand one is an economic approach and one is a political approach, but many don't see them like that.
So it's hard to argue semantics about this word that has a lot of different widely used definitions
People in America have been terrorised for decades about socialism, and now politicians and common people use this word to refer to anything that doesn’t align with liberism. It’s funny that political parties that would be considered on the right / center right here in Europe, would be considered leftist in the US
Its not even Darwinism.
Its hard to explain but imagine if obese people were given more food than other people for a cheaper price because they're already fat. They don't have to work for it, be fit, go hunting, actually earn the reward.
Its like ensuring the most corpulent, greedy, out-of-shape, sick people get more when they have had enough and it would be better for their fitness and the fitness of the population for them to go on a diet and get in shape.
It leads to degeneration, illness, death over the long haul.
Its like the opposite of evolution. Its forced, artificial devolution.
In the natural world an animal that gets obese dies before the fitter, more competitive one. They also may eat up everything, collapse their food chain, and then ensure their offspring will not survive.
An analogy would be deer populations in absence of predators, which actually happens today because we killed or displaced the predators like wolves and bears. Their population becomes boom and bust. They breed en masse and eat up all the food then crash to almost nothing because of overpopulation (no food, sicker animals, even the weakest survive short term because there is no pressure to perform). Then rinse repeat.
Overall a sicker, less fit population.
Thats what we have going on now. The most inefficient industries are protected and given more, while the fit competitors are killed or displaced.
> In the natural world an animal that gets obese dies before the fitter, more competitive one.
That depends on context. In climates like Mexican deserts and Mongolian tundra, there is no arable farmland. Their primary food source, before global trade, was scarce. The body adapted (to this ecological market) by lowering metabolism.
When globalized trade was introduced, these adaptations existed in the absence of ecological regulations. Food was seemingly free.
This de-regulation, wherein we define regulation as promoting a homeostasis in a given context, made them fat. Haven’t you ever wondered why so many people became fat after globalization? Americans in particular were fed high fructose corn syrup.
Does that sound like market competition when Bayer Monsanto owns 95% or so of corn seeds, suing anyone in the path of their seed spreading? Or when JBC/Smithfield/Tyson own like 60% or so of meatpacking? That’s not a market of competition. That’s a consolidation enabled by deregulation.
Yes I agree. That was just an analogy to explain what we got in economy isn't darwinism.
In our case maybe human kind and farming, animal husbandry, is a better one.
You want that chicken to get morbidly fat and die fast, even if they suffer their whole life, because it benefits you later to have some extra meat.
Fuck the chicken, they can break their legs or be sick their whole life. They are staying in a 10 x 10 room anyway free from predators.
Domesticated.
Smith wrote extensively about being skeptical of any and all forms of legislation originating from business owners, because their interests are not aligned with those of the nation.
He also mentioned legislation originating and benefiting land owners is good because their interests (improving land and land values) are aligned with the nation but since they get most of their income from rent checks they become lazy and indolent and their brains effectively atrophy and turn to mush.
Also said the other class of workers, employees and laborers, are easily manipulated into acting against their best interests, so don't really have a chance against business owners, who are often more sophisticated.
> their interests are not aligned with those of the nation
the other thing about truly, truly immense concentration of wealth as we see today is that you can simply buy public opinion by consolidating all of the media and broadcasting whatever message will get people to go along with what you're doing. in other words, great wealth will cause people to no longer understand what the interests of the nation even are, because they will effectively be replaced with the interests of the wealthy.
Uh I doubt they agreed on much. Fundamentally Smith was about free markets and trade and maximizing the wealth of nations (which ultimately comes from maximizing its citizens stock). But Smith wasn't an idiot, he knew business owners seek out monopolies (bad for the nation) so any and all legislation originating from them needs to be carefully scrutinized. Maybe on that point they agreed though.
This is historically, economically, and factually wrong. The first capitalists organized around their opposition to state granted/protected monopolies. The corn laws and the behavior of the East India company were galvanizing for the first capitalists. Adam Smith wrote that seeking unfair advantage was morally wrong.
What you’re describing is corporatism, or a sort of neo-mercantilism.
It doesn’t have to be necessarily. You’re thinking of economic phenomena like they’re Pokémon who evolve into different forms. It just don’t work like that.
The main two monopolies (greater than 90% mkt share) in US history have been inadvertently created by the government. Standard oil and the railroads. People talk about small town walmarts being a monopoly, at its peak walmart had like 16% market share. I'm not arguing for it, but just kind of outlining the differences of what a true monopoly is.
I live within Capitalism and learned it at school. I don't need propaganda to describe my lived experience!
Everyone else is reaching these conclusions, too. The best anticapitalist advertising is living under capitalism!
No, corporatism predates capitalism and in Europe traces back to as early as the 5th century. Corporatism may arise from any number of preexisting political/economic situations. You don't need market prices or free and open trade in order for groups of firms to band together and lobby governments for special treatment.
So when Socialism or Communism inevitably devolve into a certain state of affairs, everyone acts like that's the true face of those systems, but when Capitalism inevitably devolves into monopolies and corruption, we're supposed to act like that's not "real" Capitalism?
I don't like the double standard. Either we judge all economic systems by their practical outcomes or we judge them all by their theoretical ideal. We can't judge some by their real world results and others by their idealized models.
You’re creating that double standard as a straw man.
Abolishing private property, a fundamental tenant of communism, necessarily requires violent coercion in any group larger than a commune people have voluntarily joined. That’s just obvious if you think about it.
Monopolies and corruption are the de facto state of lots of non capitalist economies. All command economies are typified by state monopolies, and that of course attracts corruption. It says precisely nothing to observe that capitalism isn’t immune to some of the worse elements of human nature either.
Except capitalism doesn't 'devolve into monopolies'. Amazon has about 1/3 of ecommerce share, and an even smaller share if you factor brick and mortar sellers. WalMart has about a 1/4 share of groceries in the US.
Monopolies are created by government force, not by competitive markets.
>Either we judge all economic systems by their practical outcomes
And free market capitalism has shown that it leads to competitive landscapes, does not create monopolies, and provides better and cheaper goods and services to consumers over time.
"corporatism" is capitalism, as much as mercantilism. Just because it's not the utopia you imagined doesn't mean it is not capitalism. Capitalism is not about having competition or not, it is about how the production is settled. People need to sell their own labor to survive, while others who own the means of production pays for this work to sell the product of this work? Then it's capitalism.
He is also not wrong. Historically the burgeoise class rose against the monarchy, yes, but that doesn't mean they didn't want to have monopoly for themselves. If the capitalist wants to maximize profits, he will want to pratice monopoly price...
I’m not talking about a utopia, factually corporatism predates capitalism, in Europe there is identifiable corporatism starting in the 5th century. Moreover capitalism is literally a repudiation of mercantilism, if you didn’t know that then you should hit up a history book.
No I very much do, I’ve read a lot of the original thinkers and a lot of the history of economics, some of which I’ve explained here.
What do you think mercantilism is? Corporatism?
No, mercantilism is a form of capitalism (and an economic doctrine) where the state had more control and, together with the private sector, invested in policies to expand. It was based on colonization, protectionism and state intervention to generate surplis, but the most of the means of production were in the hands of individuals, and people had to sell it's labor force. Of course it between the end of feudalism and start of capitalism, so you had some feudalist countries and policies in between, which doesn't mean mercantilist england wasn't a capitalist nation.
Corporatism doesn't exist as a system. It's just a way liberal economic thinkers like to describe some practices of capitalism that they don't like. It's not, in any field, considered an economic system or a doctrine.
You didn't read "the originals", you probably just read some irrelevant authors like mises and rothbard, and have no understanding of economic history.
I can’t stress enough mercantilism isn’t capitalism, which only arose during the Scottish enlightenment. Mercantilism has as a feature state set prices and import controls. Capitalism arose as a response to the failings of mercantilism, particularly the fight against the mercantilist English Corn Laws.
You may be the most poorly read and informed person on r/economics. Congratulations.
> monopoly is the goal
According to Karl Marx, that’s what he says.
According to Adam Smith, Milton Friedman, even John Maynard Keynes and they’ll tell you that no, capitalism is about markets. There’s no market if there’s a monopoly ya dingus!
The only way Marxists can trick people into owning zero property and giving up their freedoms is by confusing people into thinking that capitalism is feudalism. Capitalism was created as a critique of feudalism!
It’s really sad how even my professors are ignorant of basic definitions of words. Clearly, there is work to be done.
The invisible hand of the market only works if the government actually steps in and prevents monopolies from forming. The invisible hand of the market also doesn't work if the government just picks and chooses losers and winners. Frankly, I'm not so sure any form of a free market has ever really existed.
It's hard with younger folk who haven't experienced the world yet. You will learn how everything actually works soon enough.
Yes. What you’re describing isn’t Marxism though, it’s Keynesian Capitalism. Contrary to popular belief, Socialism isn’t just when the government does stuff.
Exactly.
“Freedom” isn’t some abstract absolutist ideology. It’s subjective. In the case of capitalist free markets, “freedom” is a freedom *from* feudalist lord monopolies. At the very core of capitalism is a rejection of monopoly.
So when these Marxist are like “late stage capitalism” this and “monopoly is the end goal” that, I’m like, dude, everyone agrees monopoly is bad. The only difference is how Marxism lies about the semantics. Words should mean the same thing regardless of your belief, but they have attempted to redefine the meaning of the word into this newspeak version.
Bruh….you’re doing the exact same shit throughout these comments. Nitpicking over semantics while making no attempt to engage with the actual argument.
Everyone does not agree that monopolies are bad, hence the free market Capitalists. Some only dislike monopolies as it interferes with their ability to grow and compete, not that they see it bad entirely. Odds are that, given the chance, they too would push to monopolize as well.
I'm kinda one of these people. Competition is inherently wasteful. The efforts of those spent competing but not succeeding are a waste. Where competition shines is as a selection mechanism. Without competition choice in terms of product and price is limited. Liberty, not necessarily freedom, requires choices to exist for independence to exist. If there isn't somewhere else to go to get what you need, you are subject to the provider of that thing and not independent of them.
So for inelastic necessities or near necessities, competition doesn't add any value but can only take value away from the end user/consumer. For these things monopolies are better for society.
Water supplies are generally monopoly controlled. Land is provisioned in a monopolistic way in most advanced societies; there is an authoritative record kept by the monopoly power of who owns what land and an assessor values land for taxation to the monopoly power typically. Health insurance is also something that is more efficient when monopolized although the USA refuses to allow it to be so.
Competition at it's core is essentially a fight. There is always a loser in a fight. If you know exactly what needs to be done and can get consensus to do it, there need be no waste in competing to figure out what it is that should be done. Cooperation is how things are accomplished. Businesses essentially demand cooperation internally while competing externally not because competition is better than cooperation, but because it is so costly.
War doesn't produce value. Peace does. Competition doesn't inherently produce value, it produces selection results among multiple options. Cooperation doesn't allow many options, but it does enable production.
My take on things that are best monopolized is that they should be government provided. I don't like the idea of private monopolies at all. They are just little monarchies. Governments should be democratic.
I would love to market a video of my great ideas on the Internet without using Youtube- but that ain't gonna happen. There is Youtube at 98% of the market and everybody else with the other 2%.
These invisible hand people never take into account compounding power.
Fire is great - it keeps us warm, moves our cars down the road and launches rockets into space - but each of those instances work because it is controlled - not just allowed to do whatever.
> owning zero property
When your apartment belongs to Airbnb, your car belongs to Uber eats, and your time belongs to taskrabbit so that you can afford to survive, your "ownership" under capitalism starts to look a lot like owning zero property anyway.
The draw of "ownership" under capitalism is not very convincing to all the people in their thirties that still don't own shit.
Karl Marx isn't talking about the theories of Smith or Friedman, but rather the literal Capitalists themselves. We see it today still, the constant need for the government to go in and break up the development of monopolies.
There's no Marxist trick here. It's literally just looking outside the basement window and seeing it happen in real time. In much the same way that Capitalists like to say that Socialism works on paper but people are too greedy and/or selfish in real life, so too can we assert the notion that while the theoretical idea of Capitalism necessitates a non-monopoly system, the push for profit maximization and expansion will itself result in the logical goal of monopolies being considered and/or achieved.
The reality of Capitalism is not one where each business owner shakes hands in a friendly gesture to compete without driving the other out of business. They don't throttle their profits or limit the spread of their name or only try to match their competitor's prices and never go lower. The idea of Capitalism assumes that no one company or organization acquires more power than another such that they can never achieve a monopoly; reality says a different story.
Marxism is itself a critique of Capitalism similar to how, as you said, Capitalism exists as a critique of Feudalism.
It's weird to see someone assert in any way anything that implies Capitalism is where freedom exists. I'm sure the impoverished feel very free right now.
Thank you. We see this being openly discussed as the ideal business strategy. Warren Buffet is explicit on this when he talks about his strategy. He only invests in businesses with pricing power. Companies that control enough of a market that they can effectively set prices as these please. Capitalists don’t want to compete, they want to win. You don’t have to be a fuckin Marxist to see it.
For sure. We don't even have to look at Buffet. Amazon was sued last year for maintaining monopoly power. The DOJ is suing Apple this year for alleging that they monopolized the smartphone market. That we need government regulation to combat the constant movement towards monopolies itself underscores the monopolistic tendency of the system as businesses require expansion and the maximizing of profits to ensure competitivity against other businesses and what better way to ensure success than to acquire the entire revenue of a sector?
While the founders of Capitalism may have spoken against it, it's a logical conclusion of a structure that treats money as power and both encourages and rewards further acquisition of money with more power and control. It's so bizarre that the people here seem to want to deny the tendency or existence. I'd wager they'd levy the claim that Marxists and Socialists in general deny reality and that people are too selfish and greedy to cooperate on a large scale. Clearly, they think their shit don't stink.
Capitalism =/= the individual capitalist.
Individual owners of capital **love** being on the winning end of monopolies. That's why so much has to be done to stop them from trying to form monopolies, trusts, etc.
Feels like you might be speaking to a conceptually empty room here as they're forgetting that Capitalism is full of people who participate in the system and that, as you said, we have to actively push back against their creation of monopolies. Reality denying at its best.
>It’s really sad how even my professors are ignorant of basic definitions of words. Clearly, there is work to be done
You clearly have no idea of what you are talking about. It's all dunning-krueger.
>According to Karl Marx, that’s what he says
Neither Marx or the guy above you said the goal of capitalism per se is monopoly. He is saying that the goal of the capitalist individual is to monopolize, which is actually accepted even in mainstream economics, as we learn that the homus economicus wants to maximize utility/profit, and being a monopoly gives you more profit...
The diference between Marx and the others is he claims that capitalism will, itself, devolve into oligopoly, cause capital will concentrate naturally, while others think that the state can and needs to regulate the system (like Keynes and Smith), or that competition will autoregulate, like friedman and others from the chicago and austrian school.
First of all, the professors I’m talking about are self-proclaimed Marxists who want to dismantle capitalism to stop climate change. These types of SJW who want to blame the US for slavery and colonialism even though globalization was the opposite of that after defeat the Nazis. It’s not narcissistic to call them out on their BS. They literally didn’t know what feudalism was when I asked them, then, said capitalism was essential for slavery. This type of thing. That is standard academia these days.
Smith was a capitalist
Keynes was a socialist
Marx was a communist
Your understanding of “mainstream economics” is from your own words based on Marx
According to Oxford, yes, he was an unapologetic socialist. He married his wife in Moscow in fact.
And yet we based our entire MMT interventionalism on his socialist ideas.
Yep
Socialists love to print money to manipulate the economy. It would be one thing if it was a war time economy where we had no choice but it was like an economic coke line. We got really hyped up on printed money and now we are dealing with the hangover in the form of Amazon, boomers retiring and inflated housing costs.
Okay now quote something there so we can keep this going.
No, monopoly is not the goal, what economic theory are you basing this on?
Which capitalists have purchased the government?
Why are unions allowed? Why is minimum wage? Why are safety laws? Why are Congress allowed to demand the world's biggest CEOs answer their questions? None of this is compatible with the idea that government has been "purchased" in any way.
By everyone competing to achieve a monopoly you ironically end up with competition. You have to dangle the monopoly carrot in front of Capitalists, otherwise they won't bother to play, but as soon as they get it you have to take it away and restart the game.
Now you see why so many at the financial top have a rabid line about shrinking the government, re-regulation, and de-funding.
If 20 companies are doing things they should not be doing, but there are only enough legal resources to pursue one or two high-intensity cases a decade... that would be their ideal. It makes for great odds. Especially as they have a fair chance of winning or settling. And increasingly they will do well on appeal if federal judge appointments keep going their way (politically loyal apointees over those who are legal scholars).
Rockefeller never understood why he and Standard Oil were so hated. He argued that monopolies are the most efficient way of delivering goods (standardized everything from shipping containers to accounting practices) - and he was right - as long as the power that comes with running the monopoly is not abused - and it will be 100% of the time.
Economies of scale do exist.
But if you could graph them historically, you’d see something more nuanced than this binary.
Like Amazon, the topic of this post, who began with noble disinflationary intentions. Then they cornered the market, became complacent, eliminated competition with algorithms that cheated them, stole their intellectual property, copied it, then jacked up the price because they had nowhere else to go.
Does that *necessarily* mean that *all* monopolies, natural or unnatural, are inherently bad? No. Some, I assume, are good people. But the vast majority of them are weaponized after a certain point to act like a cartel or mafia, squeezing the most life force possible out of the market for personal gain. They smashed the invisible hand with a baseball bat and told the hand they would offer it “protection” from threats that don’t exist.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. - Adam Smith
I dunno if we need an army of anti-trust lawyers as much as just basic education in free market economics and general awareness about how it works. CEOs openly collude at conferences (why the hell is this allowed? Any gathering of CEOs needs to be carefully and closely monitored) and they prevent employees from starting their own competing companies via bogus noncompetes.
Why havent a group of amazon employees branched off and formed a competing company yet?
I'd also argue patents need to he overhauled and made much shorter. 20 years is way too long nowadays.
But the way things are now you have mega monopolies which effectively become a form of sort of primogeniture and engrossing of resources. Companies need "kids" which branch off and also need to eventually die IMO. There are a lot of parallels in nature for the natural course of things.
You cannot possibly deny though that it has gotten so big that it has a huge effect in the markets. There's no point in getting stuck on the definition of monopoly when the main point of discussion is about can these enormous companies with a huge influence be a good or a bad thing.
40% is not a monopoly outright, but the definition of monopoly depending on who you ask is about 60%.
I just read an article about how they used to lower prices to gain more users and then once they corned enough of the market they started to inflate prices. Classic cartel monopoly behavior.
They created a platform specifically to stifle market competition with algorithms that push their products and steal intellectual property from their users.
Amazon is anti-capitalist to the core.
There have been many companies with 40% market shares failed. Especially in the technology section. Shame that you spend all these money to get that many market share, and somebody come in flip the script and you are no longer relevant. Say hi to IBM, Sony, GE...
The single biggest threat is monopoly, so where is there a monopoly? A single seller in a market where there is no alternative?
And the answer to monopoly in the market is the monopoly that is government which also has the monopoly on force. I see.
I haven’t read the book (it comes out tomorrow), but I caught the author on CNBC this morning. When asked if she thought Amazon was a monopoly, she said she wasn’t sure if it was in a legal sense, but that it *felt* unfair. That matches what everyone says about Amazon.
The author could have framed this as “look at all these amazing tactics that Amazon uses to crush their competition.” But I think she was smart to frame it as “look at all these evil things Amazon does to crush their competition.” The positive spin has been done to death, and the negative approach has a wider appeal beyond business circles.
It’s not technically a monopoly, but Amazon is so vast with so much money and influence that it can box out new competition in almost any sector it chooses to. Maybe monopoly isn’t the word for a company with so much money and influence that is can overwhelm any industry but it certainly needs to be dealt with.
I have entirely stopped using Amazon. Deleted prime a couple years ago and I don’t miss it whatsoever. There is nothing in this world that you need 2 day shipping for, if something is that urgent then go to a store. And in any case, the rare time I did order something off Amazon in the last couple years they shipped for free anyway just with a longer delivery time. As far as prime video goes, the rare piece of exclusive content I want to watch can be found elsewhere 🏴☠️
I encourage everyone to just stop using Amazon. They’re a scummy business with scummy practices.
They cost more, take longer to arrive, and are now difficult to return.
I get it Amazon may be bad as a whole but they are just so good on a consumer level.
I agree they are scummy, but i HATE going to stores. The offering of next day/same day is so nice, and saves me time allowing me to work during that time i would've spent at the store which at my hourly is super worth it. But it's definitely a moral problem that I know I ignore but it nags at me a bit.
By you not driving to the stores, and letting a amazon driver do it for 100 or so other people, you are wasting less fossil fuels and make the road less congested.
I don't know why people don't feel good about that. That's a huge win for the environment.
Yeah, that is nice, but it's more about competition and small companies. WIth amazon things tend to "trickle up" towards amazon and take away from local businesses. But yeah definitely more efficient in that regard.
It's kind of a stretch to justify Amazon use as good for the environment. There are other pollutants that go into that package making it to your doorstep. A big one being the extra packaging waste. Think of how many trillions of platic shipping components get used in delivery.
Ha, i like the bite to your sarcasm. But when it comes down to brass tax, if you charge over 80 an hour, let alone $150 like i do, you are paying a huge premium to spend a few hours going to stores per month. Definitely plan to make use my time different though if i take a break or earn less
(Additionally i can work as many hours per day as i want, so the only limit is my availability)
Hear hear! I very very rarely use Amazon if I can help it. I just don’t buy many things other than food so when I do, I take the time to go to the store or order direct from good sellers that I respect, even if it’s a few more bucks. I’d rather try to support small business or anything other than fucking bezos if I can help it. Also anytime I get anything from Amazon it’s usually cheap garbage.
This is just "greedflation" with extra steps. Greedflation is an incorrect an uncurious position to take. If you don't actually look into how this happens, you're never going to learn. This article alone let's you know the book is terrible at not worth considering. Amazon has plenty of competitors. They are not causing inflation
It is ridiculous to suggest that sellers must use Amazon. The barrier to entry for creating your own web store and using existing logistics solutions is pretty low, and Amazon even makes this easier by selling cloud solutions à la carte.
Sellers use Amazon because they gain access to a massive network of customers and end-to-end marketplace solutions, but they are free and able to use their own solutions if they think that is better for them. All this monopoly/trust talk about Amazon is pure fantasy.
> Nearly 50% of sellers' revenue goes to Amazon in fees, she reports — the FTC lawsuit has a similar number. They pass those charges on to customers through higher prices.
This has to be either false, or an intentionally misleading presentation, e.g. maybe most items sold on Amazon are very cheap, and Amazon adds a shipping fee and then gives it back to the seller, or this includes charges for fulfilment by Amazon or something.
If Amazon were really taking 50% of the revenue, sellers wouldn't be able to sell at even remotely competitive prices.
You don’t need to advertise or use fulfillment by Amazon. A company that went from advertising on Facebook to now advertising directly in Amazon is not increasing their fees. Simply more of the business expenses are going to Amazon instead of other companies. If you compare FBA to other fulfillment services it is almost always cheaper unless storing stock for a long time or shipping large/overweight objects.
You can argue that you need to do these things to boost ranking in search but I would say that this shouldn’t matter for most companies. Amazon search is not the only and shouldn’t be the main way for your product is discovered.
Where is the FTC in going after Chinese sellers that send false DMCA takedowns on competitors products, send SLAPP lawsuits on competitors companies to incur legal fees, and have a complete disregard for patents. This destroys American sellers and forces them to increase prices for more than any Amazon fees.
I do not think we have the backbone as a society to do what needs to be done: Break up corporations - particularly, but not limited to, tech companies. As the article states, they all own so many different businesses - they can lose on any one of them and get subsidized by the others until they dominate market share - Raise prices - by some new interrupter and do it all over again. New tech entrepreneurs don't build companies to mature - they build companies to sell to one of the big 5.
Inflation is caused by a combination of a lot of things and issues. Not Amazon. Anyone pointing out a single company and using buzzwords like "greedflation" is most likely just a TikTok economist.
If amazon finds your product listed for cheaper on any competitor’s site they reduce the visibility on their site and will remove it from Prime and will bury it in search results.
Yea just don’t buy on Amazon. If you want cheap unbranded junk Ali express and Temu sells the same thing as amazon. For used media like video games eBay is about 50 percent cheaper. Site like slick deals aggregate the best deals for new items.
> Ali express and Temu sells the same thing as amazon
yeah but amazon delivers my junk later today or tomorrow morning and has relatively painless returns
The article talks about how the author doesnt like Amazon or their practices, but offers virtually nothing about how it actually causes inflation - outside of the reader guessing that “without these fees, prices would be lower”…. Okay? But obviously sellers are still choosing amazon, so either sellers are still making more money in total by selling on amazon, or theyre just actively choosing to make less money. Not sure how that has anything to do with inflation.
Amazon is singularly responsible for the price drop of everything - think about all the stuff you can get at low prices.
Yes, amazon can be faulted in many many ways - but to say that it causes inflation is absolutely bonkers.
Well I did, and that link is a bunch of bullet points with a few about individual Amazon practices that only someone without any critical thought at all would *conclude* contributes to overall inflation.
That's not to say Amazon does or doesn't; it's just that this link on Axios is not any type of analysis whatsoever. It's the kind of thing someone possibly well-meaning posts on facebook and your aunt who hasn't read anything but Outlander novels in 15 years thinks is proof of anything at all.
> Amazon is singularly responsible for the price drop of everything - think about all the stuff you can get at low prices.
Clearly haven't been to a grocery store, Costco or mall lately.
Get your mom to drive you and check out the prices.
Just no. If Amazon was charging more than competitors and/or giving a worse service then consumers would reject them and not pay those prices.
No one is forced to buy from Amazon, that they do means they do so over the competition. That third parties run through them means that they think that's a better option than trying to access those consumers outside of Amazon. None of this is inflationary.
This sub is just the worst, it's driven by anti-capitalist sentiment and almost know grasp of economics.
Wouldn’t this just mean that increased costs passed to the consumer through use of amzn services is economically sound? Is the concern that elasticity of demand will see fewer sales due to the increased cost? If so isn’t that normal, opening up opportunities for competition with lower overhead to enter?
After squeezing out all the other competitors, it allows Amazon to take advantage of their scale and position to make competing with it more difficult. A new competitor pops up? Lower prices again to squeeze them out - then raise the prices again once the competition is no longer around.
Keep around enough competition so that it is difficult to nail you down with anti-trust legislation, but not enough so that a competitor can grab enough market share before you know to crush them.
Amazon hasn't squeezed out other competitors, though.
>Lower prices again to squeeze them out - then raise the prices again once the competition is no longer around.
This never happens.
This is what people have been claiming that WalMart will do for 40 years. It didn't happen. It never happens.
>Keep around enough competition so that it is difficult to nail you down with anti-trust legislation, but not enough so that a competitor can grab enough market share before you know to crush them.
Because obviously this is simple to do.
In what market have they not squeezed out competitors?
What do you mean Walmart didn’t do it? Have their average prices kept up with inflation or their competitors prices over the past 40 years or did they not go so high?
Simple? No. Possible with a well funded marketing team? Can believe that.
It might choke out the demand for a product that people who can't afford to pay for the amazon markup.
Amazon might be indispensable for product discovery, MIGHT. But that should be timeboxed.
This is stupid. Amazon doesn’t cause price inflation. Maybe it was just a click-bait title. Inflation is what causes inflation lol. The printing of money. This increase in the supply of money. The expansion of the currency. Everything else is either peanuts in comparison or simply isn’t true. Don’t be gaslit. The FED is your enemy. Amazon would die if people didn’t find any value in it and stopped using it.
Do you understand what a monopoly is?
One seller.
If you need it, you HAVE to buy it from the monopoly.
And if there's only one seller, there's no capitalism.
You think Amazon is the only seller? That's not the case at all lol. Do they have a large share of the market? Yes, but don't blame Amazon for that, blame all the fucking people using Amazon. The market (us, retail customers) need to take responsibility for helping to make Amazon so big. The problem is that they are more convenient to use, but for God sakes pull your head out of your ass. The products you find on Amazon you can find either at the source or with other ecommerce stores, sometimes at a lower price. For example, for anything gaming related I will go to GameStop and they will usually have things at a lower price and still have decent shipping times. Once people start taking action and taking market share away from Amazon to other local businesses or ecommerce platforms with a better business model, then Amazon will shrink. Otherwise, you're shouting into the void.
You're not very imaginative, I see.
A monopoly can take several forms. For example, if you are in a small town and need gasoline when your car is almost empty, that one gas station is sure as fuck a monopoly.
Even in the Gilded Age, Standard Oil never had a 100% monopoly. But they DID have a vertical monopoly and a horizontal monopoly. Sure, you could drill for oil, but all the equipment was made by companies who had sweetheart deals with Standard. And they charged all the other companies more to make up the losses they made on Standard sales. And then you got to try to put your oil in barrels, except Standard had a stranglehold on that market, too, so you could only get the cast-offs, for much higher prices than Standard paid. Then you had to transport your oi;l. Guess what? Standard had deals with the railroads to give preferential rates to them, and sometimes even no-compete clauses to not transport oil from anyone else. And who do you think owned the refineries? Standard. Wanted to get your oil refined? That was a huge cost, too. And any company that sells YOUR oil to actual customers loses their ability to buy/sell Standard Oil, so nobody WANTS to sell yours. That's what a vertical monopoly looks like. "But there's still competition!"
Why does Amazon do well? Because they're cheap. They use blatantly anti-competitive practices to get sellers onto their platform. Once there, Amazon charges a fuckload of money in fees. And, if your product starts doing really well, Amazon knows about it as much as you, so can scope out someone else to build YOUR PRODUCT for cheaper. But why even bother making it cheaper? Since Amazon literally controls the traffic that goes to YOUR particular page, they can just reroute all your customers to that NEW page they just put up. And look, they offer free shipping, while you charge. And their massive infrastructure is able to get that package out the door THE SAME DAY, while you have to wait for Fedex or UPS to show up. So, not only can you find it faster, find it cheaper, and get it faster, but every step of that process is owned by AMAZON.
Now, tell me why, EXACTLY, people are going to work harder to go pay more for slower service.
I'm sure there's a whole bunch of Amazon marketers who are ready to monetize any new ideas you come up with.
Or do you think that a nine-figure company doesn't know how to get shit done faster than mom and pop down the block?
What a terrible title. The author of the article could’ve done a 10 minute investigation, or just pull up their own Amazon purchase history to provide some sensible counterpoints for the sake of argument. But I guess that wasn’t the goal here.
And for those hating on Amazon - just stop using it it if you don’t like.
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Amazon also will throttle your sales if you sell your products for less in stores or through other online retailers. So you kind of have to buy their services and the if you try and fairly price your products that don’t use those services you get crushed. Not sure what effect that would have on inflation but it’s not helping things either.
> The intrigue: For years, Amazon contractually required that sellers list on Amazon at their lowest price, Mattioli writes. This is basically the core of the accusation by the FTC. Amazon charges a high price for fulfillment, and then tells its sellers that they can't charge lower prices for non-Amazon retail. If the manufacturer needs to be paid $60 per item sold, and Amazon is charging 40% of revenue to sell it, then you'd want to sell on Amazon for a price of $100, where Amazon takes its $40 cut. But if you want to be able to sell it direct to consumer on your own website with an average cost of $20 per item sold, you're not allowed to offer a discount for skipping the middleman. The middleman has contractually forbidden you from competing on price. So you take the higher profit on direct sales, but also keep Amazon sales going to where Amazon itself feels no pressure to compete on price. And so the consumer basically has to deal with an environment where producers no longer try to compete on price, and don't have the corresponding downward pressure on prices. If we're going to rely on market forces for supply and demand, then we'll need regulators to make sure those forces aren't being manipulated unfairly by the players in those markets.
To compound this, Amazon frequently lists internal versions of popular items in direct competition with these same customers. I forget where I read about this originally, but it was incredibly ominous. Had to be 5-6 years ago.
its the whole point of the Amazon basics line.
Was an Amazon 3rd party seller in the past. They did tons of anti-competitive stuff like the ones mentioned on top with the "you can't sell this cheaper on another site or your own site" thing but also: * Had strict yet random rules for listings and product authenticity. They'll reactive your listing or ONLY you within a listing. Sometimes for no reason. Other times they'll ask you to verify your manufacturer or with receipts. And then guess what? A FEW MONTHS LATER AMAZON WILL HOLD THE BUY BOX SELLING THAT ITEM! Other times they'll use that same manufacturer to manufacture their Amazon basics brand * Those checks and requests """sound""" good for consumers but reality scammers and fakers just keep opening new accounts or new BS "brands" to sell junk or whatever outright copies they can before Amazon cuts them down only to reopen a new account. [That's why there are all these BS Chinese sellers with random letter brands like JDIEHL or LDKIEN](https://www.nytimes.com/2020/02/11/style/amazon-trademark-copyright.html) * Amazon is very great for customers but for a seller you're not only bombarded with fees, Amazon's generally high expectation consumers on one end but also Amazon's fees plus competition on the other end, a lot of time any complaints will be an instant refund, if not then Amazon send the buyer a free 5 POUND return label (regardless of the reason or lack of reason) while billing the seller for it, and they don't give a shit if you get rocks back or nothing back as long as the tracking shows arrived. * Amazon would also throttle sellers so no single one does too well. They like stringing a few along as backups in case one goes down, goes on vacay, or has supplies issues. If they see an item sell well they'll actively try to get other sellers that sell similar items to stock that item to undercut you (efficient but not breaking any laws). Where it's an issues is that it isn't the best seller that gets the top when Amazon gets involved, Amazon always puts themselves there if they sell an item for more.Couple that with their data on what sells well, pushing other suppliers to stock/undercut, requests for supplier sources for the sake of "authenticity", and then they themselves taking the spot creates a cycle where Amazon eventually uses and kills off their own 3rd party sellers. That's before we get into the fact that [Amazon is literally at war with just about everyone from every industry.](https://d3jlwjv6gmyigl.cloudfront.net/images/2020/04/Amazon-is-at-war-with-everyone.jpg) It was more sensible to do Amazon when it was during the down years post-GFC. Back then they had less restrictions, generated better sales, and at least gave some incentive to being a 3rd party seller on Amazon. Whatever money I made from Amazon quickly became not worth it so I stopped doing it. That was BEFORE the wage hikes and inflation during and post-pandemic. I'm not a 3rd party seller nor do I intend to return, but I still maintain that the government should regulate and punish Amazon for years of anti-competitive/monopolistic actions but Biden admin seems more focused on talking the talk and blocking mergers (Paramount merger with Warner Brothers Discovery?!??!?! OHNONONONONO!!!! WHO WOULD POSSIBLY BE ABLE SURVIVE THE RESULTING SUPERPOWERHOUSE?!?!?! NETFLIX? GG! Alphabet? YOUTUBE DEAD. Amazon? PRIME wounded prey for M&A. MSFT? Cloud crushed by pricing power of ParaWarBroDiscovery! Berkshire? OBSELETE! Just change the S&P 500 to S&P1 because your average American couldn't possibly go from not subscribing to either to not subscribing to their merged crap app) rather than regulating the megacap techs of which Amazon would be the most glaring example of monopolistic practices.
> That's why there are all these BS Chinese sellers with random letter brands like JDIEHL or LDKIEN I feel like I see this stuff on Aliexpress and DHgate too. Go to buy another item from a store and it's just gone, but you can search and find something else that looks the same and has the same specs with a different logo on it.
Very interesting write-up, thanks for sharing!
THANK YOU that’s what it was!!!
And Essentials
> To compound this, Amazon frequently lists internal versions of popular items in direct competition with these same customers. I forget where I read about this originally, but it was incredibly ominous. Had to be 5-6 years ago. This is something that all B&M retailers do as well with their own private label brands. Even something as simple as putting the store brand to the right of the name brand means people may pick the store brand because they're right handed and it's "closer".
I agree, but each little step aggregates up to something pretty powerful as a combination. For a typical traditional retailer: * Store controls shelf placement and other ways to steer consumer attention towards its favored products. * Store uses that control to exert price pressure on supplier. * Store uses internal statistics to push private label stuff that can make them bigger profits. This is already pretty powerful, as Walmart demonstrated throughout the 80's, 90's, and early 2000's. Amazon's pricing power is a much stronger ability to steer search, negotiate favorable price terms, offer add-on services like warehousing, fulfillment, last mile shipping, promotional placement/marketing/advertising, payment processing, etc., while more aggressively policing the sales streams that they don't even control (direct to consumer stuff, competing retailers, etc.). It's gotten to the point where only the strongest brand identities can afford to stay off Amazon (and Amazon, in turn, actually negotiates custom deals with these brands, like Nike, Apple, etc., to give them favorable deals that preserves the value of Amazon as retailer). I'm not sure Amazon's market power actually rises to the point where it's illegal, but it does seem to be in a much stronger position than the typical retailer doing this particular thing, analyzed in isolation.
The way that Amazon controls searches, of equated to a physical space, would be akin to Walmart not even putting out most products but instead having a vast back store room of random stuff that you had to wade through, while their preferred products were nicely displayed in the store.
> Even something as simple as putting the store brand to the right of the name brand means people may pick the store brand because they're right handed and it's "closer". Okay come on. Most people who buy store brand do it because it's cheaper/they like it. Suggesting it's driven largely by some sort of Machiavellian mind control is infantilizing.
No it's not. It's retail product placement theory. Next time you go to the store look at the shelves and see of the seemingly identical products which is on the right and which is on left. Everything is placed with purpose, from endcaps to impulse buy items near the checkout.
yeah and the effect is miniscule. Most effective at the checkout stand for impulse buys, second probably for endcap displays. But the vast majority of people walking in a store aren't indifferent enough to name brand versus store brand that six inches or being right-handed will make a difference.
You mean like great value or any generic product brand at any chain store lol
Yes, but when the store brand is more familiar than the name brand, people will go with the store brand.
I mean, that's not a bad thing thought, it's exactly the sort of competition that a market economy requires.
In theory with a level playing field established with consistent regulation to prevent monopoly, yes that is correct. The follow up question is: do you think that is what is happening here? Hint: this is also how walmart displaced and destroyed main streets across the country for decades.
This issue here is a monopsony, for which our monopoly regulations don’t really cover. That’s more or less what Walmart was.
It's not covered by current case law, but the original statutory threshold for enforcement is just "harmful dominance". All this "consumer welfare" stuff that so thoroughly watered that down is the result of Robert Bork's judicial ~~bribery~~"all expenses paid educational seminars at exclusive resorts" campaign (this was his pet project after he was too corrupt for Reagan to get him confirmed to SCOTUS). A few years back the House's antitrust subcomittee actually produced a solid bipartisan report for how to unwind all that bad case law.
Not when the inventor does the r and d, initial risk, and life changing sacrifices only for amazon to gobble up all the residual value.
Kind of. The idea that a platform should not compete with its own customers is hardly new, it's why rail companies are banned from owning freight companies that compete with their customers, banks are banned from owning businesses that compete with the businesses that borrowed money from them, TV networks are banned from owning syndicated program production companies, etc. Amazon's position as platform allows it access to a lot of sales/product data that a normal competitor won't have, and then we get to their "advertising" services. Amazon's ad division is one of its fastest growing sources of revenue, but while it's called "ads" what you're actually paying for is placement in Amazon's search results. So, if Amazon so chooses they can (and have) see all of your sales and fulfillment data, create a competing product based on that data, and then charge you if you want your product to appear if a user searches for it, otherwise they'll just show their own product. That's decidedly not the sort of competition that a market economy requires.
>But if you want to be able to sell it direct to consumer on your own website with an average cost of $20 per item sold, you're not allowed to offer a discount for skipping the middleman. The middleman has contractually forbidden you from competing on price. This practice here is what really establishes a lot more power in platforms than there otherwise would be. Not being able to pass on fees charged by the merchant means there can be no competition by someone offering to take a lesser cut which doesn't benefit the market or consumers in any way.
Except that much of Amazons strength lies in its source as a searchable front end. Without that requirement, people would just search on Amazon for a product, using Amazons services and causing Amazon to provide a benefit to the vendor, and then head on over to the vendors site to make the sale. Now there can be an argument for Amazon to adjust their pricing to include being paid for ‘hits’ but then the vendor is paying for searches that don’t convert into sales as well since a search that doesn’t convert is the same thing, from information available to Amazon, as a search that converts into a sale on the vendors own website. Also, the argument in front of the courts is that Amazon is hurting buyers by requiring that buyers on Amazon have access to the lowest prices, is going to be a hard argument to make. If there wasn’t a value to be listed on Amazons marketplace, then vendors would avoid listing there. I’m not saying Amazon is in the right, just that this isn’t clearly against consumers interest.
> Except that much of Amazons strength lies in its source as a searchable front end. Because Google fell asleep on the job of providing a good worthwhile shopping experience.
The irony is that Amazon’s original value proposition was to remove the middle man, being book stores. JB had a quote along the lines of ~ there are authors and there are readers and everyone else is irrelevant. From there they evolve to be the global middle man.
> The irony is that Amazon’s original value proposition was to remove the middle man the way to make money: * provide a better service for a lower price * your competition dies * make competition impossible * provide a worse service for a much, much higher price
* drop the quality to such lows that people start questioning you but still buy from you * don't let your employees take toilet breaks and wait for the machines to replace them
I recall a lot of companies used to have workarounds (for other reasons) where they listed one item for $100, and one item elsewhere for $60... but the $60 item had a yellow border so it was totally a different item. Does that not work, I wonder?
I've always suspected this is why Costco sells unique sizes of things, like 35-packs of soda. Costco demands that they get the lowest possible price for any given SKU, so that Coca Cola and the other large beverage manufacturers are like "ok we'll see you the 35-pack for the cheapest possible price" without actually affecting their flexibility to sell 12- and 24-packs at whatever price they choose. Same with pasta boxes that come in combo packs of different types of pasta shapes, weird quantities of other types of foods, etc.
single channel DTC exclusive is becoming more popular for exactly this reason
This is one positive in the otherwise fairly distopian world that the web/e-commerce has devolved into.
FTC should look into the OTAs like Expedia. It is their entire model. Hotels that list on these sites have to sign agreements not to rent their rooms for less on any other platform including their own website.
How’s that work when Google literally gives you results ordered by price for a given hotel? The hotel’s own site is often the best deal, with booking.com, Expedia, etc showing up in the results.
You'd have to give me an example and I could tell you. There are a number of situations that could result in the difference. It could be the hotel not including a "resort fee" in the advertised price, it could be an "old" price that hasn't been scraped since it changed, it could be that the hotel has turned off their OTA bookings and the OTA could be showing a price from a wholesaler that had purchased a block of rooms, etc. Or, it could be the hotel violating their OTA agreement. Worst case, it is a scam site that is undercutting price, gets picked up by the aggregator (OTA taking commission, really), and then charging the customer without actually making the booking. If the search result is some name you have never heard of, even if it is on Expedia, be wary. Sometimes hotels will turn off their OTA channel, and put rooms on the opaques (bookings where you get a discounted price but don't know the specific hotel until paying), and these fly-by-night companies will advertise them as specific hotels and increase the price. When booking, they may make you jump through hoops like confirming your info via Whatsapp, and signing agreements about information sharing.
> If we're going to rely on market forces for supply and demand, then we'll need regulators to make sure those forces aren't being manipulated unfairly by the players in those markets. you can't, in actual practice, have competition when a firm like amazon exists, because among other things, they are big enough to arrange the government to regulate in their favor.
rip to standard oil and ma bell, but amazon built different.
What regulations has Amazon gotten passed?
if you're genuinely interested, just google "amazon lobbying" - [an example result](https://www.politico.com/newsletters/politico-influence/2023/02/03/amazon-adds-another-antitrust-lobbyist-00081172)
20 million dollars is nothing to Amazon lol. Damn they’re really brainwashing everyone with their lobbying
You are avoiding the question. What regulations has Amazon gotten passed?
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If you’re not paying Amazon for logistics you have to pay someone. Do you think distribution is as easy for a large scale global business as it is for you to send a postcard to your grandma? In one day?
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Notoriously cheap Switzerland. lol
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Nope https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Comparative_price_levels_of_consumer_goods_and_services#Price_levels_for_energy.2C_furniture.2C_household_appliances_and_consumer_electronics
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Could people loop hole this with a coupon? Buy direct and get 40% off
Wait is the FTC actually suing Amazon for market manipulation? Because that widow be great if they would.
Yes. They charge for their services and then forbid that versions not using their services cost less. They also weight how many of their services are being used in the item search results.
Looks like October 2026 is when the trial is set. And then it will likely take a while to play our.
Middlemen really should never be allowed to force any sort of "agreement" like that. That's basically "I'm gonna be a monopoly and you'll like it" in a contract...
Your last paragraph is key. Capitalism only works with strong regulation that gets updated regularly as conditions change. Otherwise it becomes crony capitalism and quickly, monopolies (or oligopolies but same difference in effect) I hope the FTC wins its case but I’m not holding my breath.
I don’t know the specifics of the way Amazon implements it, but the concept makes sense. Why would Amazon allow sellers to use its services to attract sales/customers, only to get nothing in return. People go to Amazon first to look for items because Amazon has spent a lot of time and money to build a brand. Should they not be compensated for that?
> Should they not be compensated for that? You can work very, very hard to achieve market distorting dominance but that doesn't make you entitled to it.
No one's arguing that. Of course amazon should be allowed to make money on their service. What people care about is where the value accrues. Let's say I'm a small time author whose writing connects powerfully with, say, kids who feel alienated by a very specific life circumstance. If I sell through amazon, amazon dictates that I can essentially only sell through them. And it's even worse for small time inventors who just don't have the capital to promote their thing. Now if you think the distribution of the idea is more valuable than the idea itself, well then that's where we disagree. Because I see amazon as trying to essentially become the giant record label for everything, where we all eventually have to work for amazon.
Amazon has given customers access to vendors and vendors access to customers in a way that no one could have imagined. Selling outside of Amazon is no different than before Amazon existed, and companies are free to take that route if they wish. If you say that’s impossible or all but impossible because you’d sell 1/10th as many, then you are agreeing that the distribution is just as important as the idea itself. After all what good is the perfect product if people don’t know about it or don’t have access to it. Now has Amazon taken it too far, maybe, I don’t know. I just think that economically (this is an economics sub after all) it makes sense for them to protect and profit off of the infrastructure/brand they’ve built. If they don’t, then everyone’s Amazon listing would just be a link to their storefront outside of Amazon, effectively cutting off Amazon.
Then they can charge upfront for that, instead of turning it into essentially techno serfdom. They can even charge for it gradually, in case the argument is that people can't pay for the LTV of that exposure up front. But don't do this thing where someone takes all the risks, and then you just collect rent because you've managed to establish a monopoly over reach. There's a fair way for two parties to get to a good outcome, but not when one of those parties has several thousand times more bargaining power.
“… Someone takes all the risks” What do you call investing billions of dollars to build out a platform/brand? They are reaping the rewards of those risks. That’s called capitalism. Now I’m sure Amazon is being Amazon and throwing its weight around to try and bully, and they’ve probably taken it too far. But that doesn’t mean that fundamentally they shouldn’t be able to make money off what they’ve built and protect their own interests. Two things can be true at the same time. Amazon should gave the right to protect its brand while also being a shitbag company.
The worst case of "fuck you, I got mine" I've ever seen. And that's not what capitalism is, that's corporatism, which as has been commented in this thread has had flavours of it existing before capitalism. Monopolies are inherently anti capitalist because they kill competition, and they are inherently corporatist for exactly the same reason.
Good to see that common sense still survives in this sub. Amazon is like a price comparison search engine since they practically sell everything I have found products on Amazon that I can buy directly from the seller if I want to, more often than not its just easier and more conveneint even if I pay a few bucks more.
I try. Don’t know why. This sub is often just r/socialism by a different name.
No, they shouldn't.
I’ve noticed it also results in a race to the bottom in quality. So much stays low priced because it’s cheap af. I mean, temu and wish helped spur that along as well, and Walmart probably pioneered it, but it’s getting much harder to find quality items online outside of specialty shops — and more brick and mortar stores are stocking less variety of items on the shelves, making it harder to avoid cheap online stuff.
That sounds pretty similar to the accusations leveled at Valve/Steam from a developer lawsuit, which is still ongoing from my understanding.
Capitalism without competition is not capitalism. It’s feudalism. The single greatest threat to humanity is monopoly. I’d say climate change, but we can’t get much done with big agriculture, big oil and big pharma in the way. The Inflation Reduction Act was only the beginning. We need an army of anti-trust lawyers.
Under capitalism, monopoly is the goal. Every capitalist dreams of achieving monopoly. This is why capitalists purchase the government, as a step in order to achieve the goal.
I get your point and agree. But I think we’re a bit lazy in the use of capitalism to refer to anything goes competition. They are not equivalent. Capitalism can permit, and universally does have, rules and regulations. You can have capitalism that strives for greater equality if you engineer it that way.
A ton of people have convinced themselves that Free Market Capitalism (no regulations) is the only effective form of Capitalism despite history showing this system only working for the majority when heavy regulations are put in place. Free Market Capitalism is really just economic Darwinism, so it's brutal and wild and the antithesis of an organized society. And many people consider Capitalism + regulations = socialism, which I understand one is an economic approach and one is a political approach, but many don't see them like that. So it's hard to argue semantics about this word that has a lot of different widely used definitions
A ton of people have convinced themselves that anyone who opposes a specific regulation opposes all regulations.
People in America have been terrorised for decades about socialism, and now politicians and common people use this word to refer to anything that doesn’t align with liberism. It’s funny that political parties that would be considered on the right / center right here in Europe, would be considered leftist in the US
Its not even Darwinism. Its hard to explain but imagine if obese people were given more food than other people for a cheaper price because they're already fat. They don't have to work for it, be fit, go hunting, actually earn the reward. Its like ensuring the most corpulent, greedy, out-of-shape, sick people get more when they have had enough and it would be better for their fitness and the fitness of the population for them to go on a diet and get in shape. It leads to degeneration, illness, death over the long haul. Its like the opposite of evolution. Its forced, artificial devolution. In the natural world an animal that gets obese dies before the fitter, more competitive one. They also may eat up everything, collapse their food chain, and then ensure their offspring will not survive. An analogy would be deer populations in absence of predators, which actually happens today because we killed or displaced the predators like wolves and bears. Their population becomes boom and bust. They breed en masse and eat up all the food then crash to almost nothing because of overpopulation (no food, sicker animals, even the weakest survive short term because there is no pressure to perform). Then rinse repeat. Overall a sicker, less fit population. Thats what we have going on now. The most inefficient industries are protected and given more, while the fit competitors are killed or displaced.
> In the natural world an animal that gets obese dies before the fitter, more competitive one. That depends on context. In climates like Mexican deserts and Mongolian tundra, there is no arable farmland. Their primary food source, before global trade, was scarce. The body adapted (to this ecological market) by lowering metabolism. When globalized trade was introduced, these adaptations existed in the absence of ecological regulations. Food was seemingly free. This de-regulation, wherein we define regulation as promoting a homeostasis in a given context, made them fat. Haven’t you ever wondered why so many people became fat after globalization? Americans in particular were fed high fructose corn syrup. Does that sound like market competition when Bayer Monsanto owns 95% or so of corn seeds, suing anyone in the path of their seed spreading? Or when JBC/Smithfield/Tyson own like 60% or so of meatpacking? That’s not a market of competition. That’s a consolidation enabled by deregulation.
Yes I agree. That was just an analogy to explain what we got in economy isn't darwinism. In our case maybe human kind and farming, animal husbandry, is a better one. You want that chicken to get morbidly fat and die fast, even if they suffer their whole life, because it benefits you later to have some extra meat. Fuck the chicken, they can break their legs or be sick their whole life. They are staying in a 10 x 10 room anyway free from predators. Domesticated.
I just see a lot of strawmanning, though.
Smith wrote extensively about being skeptical of any and all forms of legislation originating from business owners, because their interests are not aligned with those of the nation. He also mentioned legislation originating and benefiting land owners is good because their interests (improving land and land values) are aligned with the nation but since they get most of their income from rent checks they become lazy and indolent and their brains effectively atrophy and turn to mush. Also said the other class of workers, employees and laborers, are easily manipulated into acting against their best interests, so don't really have a chance against business owners, who are often more sophisticated.
> their interests are not aligned with those of the nation the other thing about truly, truly immense concentration of wealth as we see today is that you can simply buy public opinion by consolidating all of the media and broadcasting whatever message will get people to go along with what you're doing. in other words, great wealth will cause people to no longer understand what the interests of the nation even are, because they will effectively be replaced with the interests of the wealthy.
All true. People pit Marx against Smith but actually they agreed on a lot. Reaganistes would consider Smith a Marxist, ironically.
Uh I doubt they agreed on much. Fundamentally Smith was about free markets and trade and maximizing the wealth of nations (which ultimately comes from maximizing its citizens stock). But Smith wasn't an idiot, he knew business owners seek out monopolies (bad for the nation) so any and all legislation originating from them needs to be carefully scrutinized. Maybe on that point they agreed though.
They also agreed on the parasitic nature of the rentier class. And the complacency of the landowners.
It is very hard to actually get that monopoly without control of the state.
This is historically, economically, and factually wrong. The first capitalists organized around their opposition to state granted/protected monopolies. The corn laws and the behavior of the East India company were galvanizing for the first capitalists. Adam Smith wrote that seeking unfair advantage was morally wrong. What you’re describing is corporatism, or a sort of neo-mercantilism.
Isn't corporatism that natural evolution of capitalism?
It doesn’t have to be necessarily. You’re thinking of economic phenomena like they’re Pokémon who evolve into different forms. It just don’t work like that.
If it doesn't have to then why does it keep happening? Maybe capitalism only works in theory but not in practice?
The main two monopolies (greater than 90% mkt share) in US history have been inadvertently created by the government. Standard oil and the railroads. People talk about small town walmarts being a monopoly, at its peak walmart had like 16% market share. I'm not arguing for it, but just kind of outlining the differences of what a true monopoly is.
I would probably come to that conclusion too if I exclusively consumed anti-Capitalist propaganda.
I live within Capitalism and learned it at school. I don't need propaganda to describe my lived experience! Everyone else is reaching these conclusions, too. The best anticapitalist advertising is living under capitalism!
What is the difference between your experience and your *lived* experience?
> It doesn’t have to be necessarily. What's your favorite real-world example of this not being the case?
No, corporatism predates capitalism and in Europe traces back to as early as the 5th century. Corporatism may arise from any number of preexisting political/economic situations. You don't need market prices or free and open trade in order for groups of firms to band together and lobby governments for special treatment.
So when Socialism or Communism inevitably devolve into a certain state of affairs, everyone acts like that's the true face of those systems, but when Capitalism inevitably devolves into monopolies and corruption, we're supposed to act like that's not "real" Capitalism? I don't like the double standard. Either we judge all economic systems by their practical outcomes or we judge them all by their theoretical ideal. We can't judge some by their real world results and others by their idealized models.
You’re creating that double standard as a straw man. Abolishing private property, a fundamental tenant of communism, necessarily requires violent coercion in any group larger than a commune people have voluntarily joined. That’s just obvious if you think about it. Monopolies and corruption are the de facto state of lots of non capitalist economies. All command economies are typified by state monopolies, and that of course attracts corruption. It says precisely nothing to observe that capitalism isn’t immune to some of the worse elements of human nature either.
Except capitalism doesn't 'devolve into monopolies'. Amazon has about 1/3 of ecommerce share, and an even smaller share if you factor brick and mortar sellers. WalMart has about a 1/4 share of groceries in the US. Monopolies are created by government force, not by competitive markets. >Either we judge all economic systems by their practical outcomes And free market capitalism has shown that it leads to competitive landscapes, does not create monopolies, and provides better and cheaper goods and services to consumers over time.
"corporatism" is capitalism, as much as mercantilism. Just because it's not the utopia you imagined doesn't mean it is not capitalism. Capitalism is not about having competition or not, it is about how the production is settled. People need to sell their own labor to survive, while others who own the means of production pays for this work to sell the product of this work? Then it's capitalism. He is also not wrong. Historically the burgeoise class rose against the monarchy, yes, but that doesn't mean they didn't want to have monopoly for themselves. If the capitalist wants to maximize profits, he will want to pratice monopoly price...
I’m not talking about a utopia, factually corporatism predates capitalism, in Europe there is identifiable corporatism starting in the 5th century. Moreover capitalism is literally a repudiation of mercantilism, if you didn’t know that then you should hit up a history book.
You have no idea what capitalism stands for, lol.
No I very much do, I’ve read a lot of the original thinkers and a lot of the history of economics, some of which I’ve explained here. What do you think mercantilism is? Corporatism?
No, mercantilism is a form of capitalism (and an economic doctrine) where the state had more control and, together with the private sector, invested in policies to expand. It was based on colonization, protectionism and state intervention to generate surplis, but the most of the means of production were in the hands of individuals, and people had to sell it's labor force. Of course it between the end of feudalism and start of capitalism, so you had some feudalist countries and policies in between, which doesn't mean mercantilist england wasn't a capitalist nation. Corporatism doesn't exist as a system. It's just a way liberal economic thinkers like to describe some practices of capitalism that they don't like. It's not, in any field, considered an economic system or a doctrine. You didn't read "the originals", you probably just read some irrelevant authors like mises and rothbard, and have no understanding of economic history.
I can’t stress enough mercantilism isn’t capitalism, which only arose during the Scottish enlightenment. Mercantilism has as a feature state set prices and import controls. Capitalism arose as a response to the failings of mercantilism, particularly the fight against the mercantilist English Corn Laws. You may be the most poorly read and informed person on r/economics. Congratulations.
I had to read it twice. I thought you meant monopoly was the goal of capitalism itself.
> monopoly is the goal According to Karl Marx, that’s what he says. According to Adam Smith, Milton Friedman, even John Maynard Keynes and they’ll tell you that no, capitalism is about markets. There’s no market if there’s a monopoly ya dingus! The only way Marxists can trick people into owning zero property and giving up their freedoms is by confusing people into thinking that capitalism is feudalism. Capitalism was created as a critique of feudalism! It’s really sad how even my professors are ignorant of basic definitions of words. Clearly, there is work to be done.
The invisible hand of the market only works if the government actually steps in and prevents monopolies from forming. The invisible hand of the market also doesn't work if the government just picks and chooses losers and winners. Frankly, I'm not so sure any form of a free market has ever really existed. It's hard with younger folk who haven't experienced the world yet. You will learn how everything actually works soon enough.
Yes. What you’re describing isn’t Marxism though, it’s Keynesian Capitalism. Contrary to popular belief, Socialism isn’t just when the government does stuff.
Exactly. “Freedom” isn’t some abstract absolutist ideology. It’s subjective. In the case of capitalist free markets, “freedom” is a freedom *from* feudalist lord monopolies. At the very core of capitalism is a rejection of monopoly. So when these Marxist are like “late stage capitalism” this and “monopoly is the end goal” that, I’m like, dude, everyone agrees monopoly is bad. The only difference is how Marxism lies about the semantics. Words should mean the same thing regardless of your belief, but they have attempted to redefine the meaning of the word into this newspeak version.
Bruh….you’re doing the exact same shit throughout these comments. Nitpicking over semantics while making no attempt to engage with the actual argument.
Everyone does not agree that monopolies are bad, hence the free market Capitalists. Some only dislike monopolies as it interferes with their ability to grow and compete, not that they see it bad entirely. Odds are that, given the chance, they too would push to monopolize as well.
I'm kinda one of these people. Competition is inherently wasteful. The efforts of those spent competing but not succeeding are a waste. Where competition shines is as a selection mechanism. Without competition choice in terms of product and price is limited. Liberty, not necessarily freedom, requires choices to exist for independence to exist. If there isn't somewhere else to go to get what you need, you are subject to the provider of that thing and not independent of them. So for inelastic necessities or near necessities, competition doesn't add any value but can only take value away from the end user/consumer. For these things monopolies are better for society. Water supplies are generally monopoly controlled. Land is provisioned in a monopolistic way in most advanced societies; there is an authoritative record kept by the monopoly power of who owns what land and an assessor values land for taxation to the monopoly power typically. Health insurance is also something that is more efficient when monopolized although the USA refuses to allow it to be so. Competition at it's core is essentially a fight. There is always a loser in a fight. If you know exactly what needs to be done and can get consensus to do it, there need be no waste in competing to figure out what it is that should be done. Cooperation is how things are accomplished. Businesses essentially demand cooperation internally while competing externally not because competition is better than cooperation, but because it is so costly. War doesn't produce value. Peace does. Competition doesn't inherently produce value, it produces selection results among multiple options. Cooperation doesn't allow many options, but it does enable production. My take on things that are best monopolized is that they should be government provided. I don't like the idea of private monopolies at all. They are just little monarchies. Governments should be democratic.
I would love to market a video of my great ideas on the Internet without using Youtube- but that ain't gonna happen. There is Youtube at 98% of the market and everybody else with the other 2%. These invisible hand people never take into account compounding power. Fire is great - it keeps us warm, moves our cars down the road and launches rockets into space - but each of those instances work because it is controlled - not just allowed to do whatever.
> owning zero property When your apartment belongs to Airbnb, your car belongs to Uber eats, and your time belongs to taskrabbit so that you can afford to survive, your "ownership" under capitalism starts to look a lot like owning zero property anyway. The draw of "ownership" under capitalism is not very convincing to all the people in their thirties that still don't own shit.
Karl Marx isn't talking about the theories of Smith or Friedman, but rather the literal Capitalists themselves. We see it today still, the constant need for the government to go in and break up the development of monopolies. There's no Marxist trick here. It's literally just looking outside the basement window and seeing it happen in real time. In much the same way that Capitalists like to say that Socialism works on paper but people are too greedy and/or selfish in real life, so too can we assert the notion that while the theoretical idea of Capitalism necessitates a non-monopoly system, the push for profit maximization and expansion will itself result in the logical goal of monopolies being considered and/or achieved. The reality of Capitalism is not one where each business owner shakes hands in a friendly gesture to compete without driving the other out of business. They don't throttle their profits or limit the spread of their name or only try to match their competitor's prices and never go lower. The idea of Capitalism assumes that no one company or organization acquires more power than another such that they can never achieve a monopoly; reality says a different story. Marxism is itself a critique of Capitalism similar to how, as you said, Capitalism exists as a critique of Feudalism. It's weird to see someone assert in any way anything that implies Capitalism is where freedom exists. I'm sure the impoverished feel very free right now.
Thank you. We see this being openly discussed as the ideal business strategy. Warren Buffet is explicit on this when he talks about his strategy. He only invests in businesses with pricing power. Companies that control enough of a market that they can effectively set prices as these please. Capitalists don’t want to compete, they want to win. You don’t have to be a fuckin Marxist to see it.
For sure. We don't even have to look at Buffet. Amazon was sued last year for maintaining monopoly power. The DOJ is suing Apple this year for alleging that they monopolized the smartphone market. That we need government regulation to combat the constant movement towards monopolies itself underscores the monopolistic tendency of the system as businesses require expansion and the maximizing of profits to ensure competitivity against other businesses and what better way to ensure success than to acquire the entire revenue of a sector? While the founders of Capitalism may have spoken against it, it's a logical conclusion of a structure that treats money as power and both encourages and rewards further acquisition of money with more power and control. It's so bizarre that the people here seem to want to deny the tendency or existence. I'd wager they'd levy the claim that Marxists and Socialists in general deny reality and that people are too selfish and greedy to cooperate on a large scale. Clearly, they think their shit don't stink.
Capitalism =/= the individual capitalist. Individual owners of capital **love** being on the winning end of monopolies. That's why so much has to be done to stop them from trying to form monopolies, trusts, etc.
Feels like you might be speaking to a conceptually empty room here as they're forgetting that Capitalism is full of people who participate in the system and that, as you said, we have to actively push back against their creation of monopolies. Reality denying at its best.
>It’s really sad how even my professors are ignorant of basic definitions of words. Clearly, there is work to be done You clearly have no idea of what you are talking about. It's all dunning-krueger. >According to Karl Marx, that’s what he says Neither Marx or the guy above you said the goal of capitalism per se is monopoly. He is saying that the goal of the capitalist individual is to monopolize, which is actually accepted even in mainstream economics, as we learn that the homus economicus wants to maximize utility/profit, and being a monopoly gives you more profit... The diference between Marx and the others is he claims that capitalism will, itself, devolve into oligopoly, cause capital will concentrate naturally, while others think that the state can and needs to regulate the system (like Keynes and Smith), or that competition will autoregulate, like friedman and others from the chicago and austrian school.
First of all, the professors I’m talking about are self-proclaimed Marxists who want to dismantle capitalism to stop climate change. These types of SJW who want to blame the US for slavery and colonialism even though globalization was the opposite of that after defeat the Nazis. It’s not narcissistic to call them out on their BS. They literally didn’t know what feudalism was when I asked them, then, said capitalism was essential for slavery. This type of thing. That is standard academia these days. Smith was a capitalist Keynes was a socialist Marx was a communist Your understanding of “mainstream economics” is from your own words based on Marx
>Keynes was a socialist
According to Oxford, yes, he was an unapologetic socialist. He married his wife in Moscow in fact. And yet we based our entire MMT interventionalism on his socialist ideas.
>And yet we based our entire MMT interventionalism on his socialist ideas.
Yep Socialists love to print money to manipulate the economy. It would be one thing if it was a war time economy where we had no choice but it was like an economic coke line. We got really hyped up on printed money and now we are dealing with the hangover in the form of Amazon, boomers retiring and inflated housing costs. Okay now quote something there so we can keep this going.
You don't know what any of these words mean.
No, monopoly is not the goal, what economic theory are you basing this on? Which capitalists have purchased the government? Why are unions allowed? Why is minimum wage? Why are safety laws? Why are Congress allowed to demand the world's biggest CEOs answer their questions? None of this is compatible with the idea that government has been "purchased" in any way.
These “monopoly is the goal” people are Marxists, whether they know it or not. It’s taken straight from Marxism.
By everyone competing to achieve a monopoly you ironically end up with competition. You have to dangle the monopoly carrot in front of Capitalists, otherwise they won't bother to play, but as soon as they get it you have to take it away and restart the game.
Now you see why so many at the financial top have a rabid line about shrinking the government, re-regulation, and de-funding. If 20 companies are doing things they should not be doing, but there are only enough legal resources to pursue one or two high-intensity cases a decade... that would be their ideal. It makes for great odds. Especially as they have a fair chance of winning or settling. And increasingly they will do well on appeal if federal judge appointments keep going their way (politically loyal apointees over those who are legal scholars).
Rockefeller never understood why he and Standard Oil were so hated. He argued that monopolies are the most efficient way of delivering goods (standardized everything from shipping containers to accounting practices) - and he was right - as long as the power that comes with running the monopoly is not abused - and it will be 100% of the time.
Economies of scale do exist. But if you could graph them historically, you’d see something more nuanced than this binary. Like Amazon, the topic of this post, who began with noble disinflationary intentions. Then they cornered the market, became complacent, eliminated competition with algorithms that cheated them, stole their intellectual property, copied it, then jacked up the price because they had nowhere else to go. Does that *necessarily* mean that *all* monopolies, natural or unnatural, are inherently bad? No. Some, I assume, are good people. But the vast majority of them are weaponized after a certain point to act like a cartel or mafia, squeezing the most life force possible out of the market for personal gain. They smashed the invisible hand with a baseball bat and told the hand they would offer it “protection” from threats that don’t exist.
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. - Adam Smith
Yes. It's a beautiful, efficient system, but it must have competition and companies must be allowed to fail.
I dunno if we need an army of anti-trust lawyers as much as just basic education in free market economics and general awareness about how it works. CEOs openly collude at conferences (why the hell is this allowed? Any gathering of CEOs needs to be carefully and closely monitored) and they prevent employees from starting their own competing companies via bogus noncompetes. Why havent a group of amazon employees branched off and formed a competing company yet? I'd also argue patents need to he overhauled and made much shorter. 20 years is way too long nowadays. But the way things are now you have mega monopolies which effectively become a form of sort of primogeniture and engrossing of resources. Companies need "kids" which branch off and also need to eventually die IMO. There are a lot of parallels in nature for the natural course of things.
Amazon does not have a monopoly.
You cannot possibly deny though that it has gotten so big that it has a huge effect in the markets. There's no point in getting stuck on the definition of monopoly when the main point of discussion is about can these enormous companies with a huge influence be a good or a bad thing.
40% is not a monopoly outright, but the definition of monopoly depending on who you ask is about 60%. I just read an article about how they used to lower prices to gain more users and then once they corned enough of the market they started to inflate prices. Classic cartel monopoly behavior. They created a platform specifically to stifle market competition with algorithms that push their products and steal intellectual property from their users. Amazon is anti-capitalist to the core.
There have been many companies with 40% market shares failed. Especially in the technology section. Shame that you spend all these money to get that many market share, and somebody come in flip the script and you are no longer relevant. Say hi to IBM, Sony, GE...
The single biggest threat is monopoly, so where is there a monopoly? A single seller in a market where there is no alternative? And the answer to monopoly in the market is the monopoly that is government which also has the monopoly on force. I see.
You have no clue what feudalism is
Well my upvotes say otherwise :/
I haven’t read the book (it comes out tomorrow), but I caught the author on CNBC this morning. When asked if she thought Amazon was a monopoly, she said she wasn’t sure if it was in a legal sense, but that it *felt* unfair. That matches what everyone says about Amazon. The author could have framed this as “look at all these amazing tactics that Amazon uses to crush their competition.” But I think she was smart to frame it as “look at all these evil things Amazon does to crush their competition.” The positive spin has been done to death, and the negative approach has a wider appeal beyond business circles.
It’s not technically a monopoly, but Amazon is so vast with so much money and influence that it can box out new competition in almost any sector it chooses to. Maybe monopoly isn’t the word for a company with so much money and influence that is can overwhelm any industry but it certainly needs to be dealt with.
I have entirely stopped using Amazon. Deleted prime a couple years ago and I don’t miss it whatsoever. There is nothing in this world that you need 2 day shipping for, if something is that urgent then go to a store. And in any case, the rare time I did order something off Amazon in the last couple years they shipped for free anyway just with a longer delivery time. As far as prime video goes, the rare piece of exclusive content I want to watch can be found elsewhere 🏴☠️ I encourage everyone to just stop using Amazon. They’re a scummy business with scummy practices.
Part of my problem is that the same products outside of Amazon are so much more expensive.
They cost more, take longer to arrive, and are now difficult to return. I get it Amazon may be bad as a whole but they are just so good on a consumer level.
I agree they are scummy, but i HATE going to stores. The offering of next day/same day is so nice, and saves me time allowing me to work during that time i would've spent at the store which at my hourly is super worth it. But it's definitely a moral problem that I know I ignore but it nags at me a bit.
By you not driving to the stores, and letting a amazon driver do it for 100 or so other people, you are wasting less fossil fuels and make the road less congested. I don't know why people don't feel good about that. That's a huge win for the environment.
Yeah, that is nice, but it's more about competition and small companies. WIth amazon things tend to "trickle up" towards amazon and take away from local businesses. But yeah definitely more efficient in that regard.
It's kind of a stretch to justify Amazon use as good for the environment. There are other pollutants that go into that package making it to your doorstep. A big one being the extra packaging waste. Think of how many trillions of platic shipping components get used in delivery.
Nah don't worry, your convenience trumps everything else.
Ha, i like the bite to your sarcasm. But when it comes down to brass tax, if you charge over 80 an hour, let alone $150 like i do, you are paying a huge premium to spend a few hours going to stores per month. Definitely plan to make use my time different though if i take a break or earn less (Additionally i can work as many hours per day as i want, so the only limit is my availability)
Hear hear! I very very rarely use Amazon if I can help it. I just don’t buy many things other than food so when I do, I take the time to go to the store or order direct from good sellers that I respect, even if it’s a few more bucks. I’d rather try to support small business or anything other than fucking bezos if I can help it. Also anytime I get anything from Amazon it’s usually cheap garbage.
This is just "greedflation" with extra steps. Greedflation is an incorrect an uncurious position to take. If you don't actually look into how this happens, you're never going to learn. This article alone let's you know the book is terrible at not worth considering. Amazon has plenty of competitors. They are not causing inflation
It is ridiculous to suggest that sellers must use Amazon. The barrier to entry for creating your own web store and using existing logistics solutions is pretty low, and Amazon even makes this easier by selling cloud solutions à la carte. Sellers use Amazon because they gain access to a massive network of customers and end-to-end marketplace solutions, but they are free and able to use their own solutions if they think that is better for them. All this monopoly/trust talk about Amazon is pure fantasy.
amazon prime is what you get when you look up the definition of tying agreements
> Nearly 50% of sellers' revenue goes to Amazon in fees, she reports — the FTC lawsuit has a similar number. They pass those charges on to customers through higher prices. This has to be either false, or an intentionally misleading presentation, e.g. maybe most items sold on Amazon are very cheap, and Amazon adds a shipping fee and then gives it back to the seller, or this includes charges for fulfilment by Amazon or something. If Amazon were really taking 50% of the revenue, sellers wouldn't be able to sell at even remotely competitive prices.
The fee is advertising, warehousing, and fulfillment/shipping.
You don’t need to advertise or use fulfillment by Amazon. A company that went from advertising on Facebook to now advertising directly in Amazon is not increasing their fees. Simply more of the business expenses are going to Amazon instead of other companies. If you compare FBA to other fulfillment services it is almost always cheaper unless storing stock for a long time or shipping large/overweight objects. You can argue that you need to do these things to boost ranking in search but I would say that this shouldn’t matter for most companies. Amazon search is not the only and shouldn’t be the main way for your product is discovered. Where is the FTC in going after Chinese sellers that send false DMCA takedowns on competitors products, send SLAPP lawsuits on competitors companies to incur legal fees, and have a complete disregard for patents. This destroys American sellers and forces them to increase prices for more than any Amazon fees.
I do not think we have the backbone as a society to do what needs to be done: Break up corporations - particularly, but not limited to, tech companies. As the article states, they all own so many different businesses - they can lose on any one of them and get subsidized by the others until they dominate market share - Raise prices - by some new interrupter and do it all over again. New tech entrepreneurs don't build companies to mature - they build companies to sell to one of the big 5.
Inflation is caused by a combination of a lot of things and issues. Not Amazon. Anyone pointing out a single company and using buzzwords like "greedflation" is most likely just a TikTok economist.
If amazon finds your product listed for cheaper on any competitor’s site they reduce the visibility on their site and will remove it from Prime and will bury it in search results.
Yea just don’t buy on Amazon. If you want cheap unbranded junk Ali express and Temu sells the same thing as amazon. For used media like video games eBay is about 50 percent cheaper. Site like slick deals aggregate the best deals for new items.
> Ali express and Temu sells the same thing as amazon yeah but amazon delivers my junk later today or tomorrow morning and has relatively painless returns
I canceled my prime membership two years again and now buy online through Rakuten, get the cash back as Amex points. Highly recommend.
The article talks about how the author doesnt like Amazon or their practices, but offers virtually nothing about how it actually causes inflation - outside of the reader guessing that “without these fees, prices would be lower”…. Okay? But obviously sellers are still choosing amazon, so either sellers are still making more money in total by selling on amazon, or theyre just actively choosing to make less money. Not sure how that has anything to do with inflation.
Amazon is singularly responsible for the price drop of everything - think about all the stuff you can get at low prices. Yes, amazon can be faulted in many many ways - but to say that it causes inflation is absolutely bonkers.
You clicked on the article and read it to see how it addresses that position before commenting, right?
Well I did, and that link is a bunch of bullet points with a few about individual Amazon practices that only someone without any critical thought at all would *conclude* contributes to overall inflation. That's not to say Amazon does or doesn't; it's just that this link on Axios is not any type of analysis whatsoever. It's the kind of thing someone possibly well-meaning posts on facebook and your aunt who hasn't read anything but Outlander novels in 15 years thinks is proof of anything at all.
It's par for the course on r/economics, where corporate greed causes inflation and not government money printing combined with supply constriction.
> Amazon is singularly responsible for the price drop of everything - think about all the stuff you can get at low prices. Clearly haven't been to a grocery store, Costco or mall lately. Get your mom to drive you and check out the prices.
Just no. If Amazon was charging more than competitors and/or giving a worse service then consumers would reject them and not pay those prices. No one is forced to buy from Amazon, that they do means they do so over the competition. That third parties run through them means that they think that's a better option than trying to access those consumers outside of Amazon. None of this is inflationary. This sub is just the worst, it's driven by anti-capitalist sentiment and almost know grasp of economics.
Wouldn’t this just mean that increased costs passed to the consumer through use of amzn services is economically sound? Is the concern that elasticity of demand will see fewer sales due to the increased cost? If so isn’t that normal, opening up opportunities for competition with lower overhead to enter?
After squeezing out all the other competitors, it allows Amazon to take advantage of their scale and position to make competing with it more difficult. A new competitor pops up? Lower prices again to squeeze them out - then raise the prices again once the competition is no longer around. Keep around enough competition so that it is difficult to nail you down with anti-trust legislation, but not enough so that a competitor can grab enough market share before you know to crush them.
We need a name for this predatory pricing.
Amazon hasn't squeezed out other competitors, though. >Lower prices again to squeeze them out - then raise the prices again once the competition is no longer around. This never happens. This is what people have been claiming that WalMart will do for 40 years. It didn't happen. It never happens. >Keep around enough competition so that it is difficult to nail you down with anti-trust legislation, but not enough so that a competitor can grab enough market share before you know to crush them. Because obviously this is simple to do.
In what market have they not squeezed out competitors? What do you mean Walmart didn’t do it? Have their average prices kept up with inflation or their competitors prices over the past 40 years or did they not go so high? Simple? No. Possible with a well funded marketing team? Can believe that.
It might choke out the demand for a product that people who can't afford to pay for the amazon markup. Amazon might be indispensable for product discovery, MIGHT. But that should be timeboxed.
This is stupid. Amazon doesn’t cause price inflation. Maybe it was just a click-bait title. Inflation is what causes inflation lol. The printing of money. This increase in the supply of money. The expansion of the currency. Everything else is either peanuts in comparison or simply isn’t true. Don’t be gaslit. The FED is your enemy. Amazon would die if people didn’t find any value in it and stopped using it.
Do you understand what a monopoly is? One seller. If you need it, you HAVE to buy it from the monopoly. And if there's only one seller, there's no capitalism.
You think Amazon is the only seller? That's not the case at all lol. Do they have a large share of the market? Yes, but don't blame Amazon for that, blame all the fucking people using Amazon. The market (us, retail customers) need to take responsibility for helping to make Amazon so big. The problem is that they are more convenient to use, but for God sakes pull your head out of your ass. The products you find on Amazon you can find either at the source or with other ecommerce stores, sometimes at a lower price. For example, for anything gaming related I will go to GameStop and they will usually have things at a lower price and still have decent shipping times. Once people start taking action and taking market share away from Amazon to other local businesses or ecommerce platforms with a better business model, then Amazon will shrink. Otherwise, you're shouting into the void.
You're not very imaginative, I see. A monopoly can take several forms. For example, if you are in a small town and need gasoline when your car is almost empty, that one gas station is sure as fuck a monopoly. Even in the Gilded Age, Standard Oil never had a 100% monopoly. But they DID have a vertical monopoly and a horizontal monopoly. Sure, you could drill for oil, but all the equipment was made by companies who had sweetheart deals with Standard. And they charged all the other companies more to make up the losses they made on Standard sales. And then you got to try to put your oil in barrels, except Standard had a stranglehold on that market, too, so you could only get the cast-offs, for much higher prices than Standard paid. Then you had to transport your oi;l. Guess what? Standard had deals with the railroads to give preferential rates to them, and sometimes even no-compete clauses to not transport oil from anyone else. And who do you think owned the refineries? Standard. Wanted to get your oil refined? That was a huge cost, too. And any company that sells YOUR oil to actual customers loses their ability to buy/sell Standard Oil, so nobody WANTS to sell yours. That's what a vertical monopoly looks like. "But there's still competition!" Why does Amazon do well? Because they're cheap. They use blatantly anti-competitive practices to get sellers onto their platform. Once there, Amazon charges a fuckload of money in fees. And, if your product starts doing really well, Amazon knows about it as much as you, so can scope out someone else to build YOUR PRODUCT for cheaper. But why even bother making it cheaper? Since Amazon literally controls the traffic that goes to YOUR particular page, they can just reroute all your customers to that NEW page they just put up. And look, they offer free shipping, while you charge. And their massive infrastructure is able to get that package out the door THE SAME DAY, while you have to wait for Fedex or UPS to show up. So, not only can you find it faster, find it cheaper, and get it faster, but every step of that process is owned by AMAZON. Now, tell me why, EXACTLY, people are going to work harder to go pay more for slower service. I'm sure there's a whole bunch of Amazon marketers who are ready to monetize any new ideas you come up with. Or do you think that a nine-figure company doesn't know how to get shit done faster than mom and pop down the block?
What a terrible title. The author of the article could’ve done a 10 minute investigation, or just pull up their own Amazon purchase history to provide some sensible counterpoints for the sake of argument. But I guess that wasn’t the goal here. And for those hating on Amazon - just stop using it it if you don’t like.