Is there a theoretical limit to profit?
Is there a theoretical limit to profit?
Like at some point won't all of the profit be squeezed out of society?
You've discovered capitalism's super hidden secret; infinite growth on a finite planet is impossible.
[Muse performs “The 2nd Law:Unsustainable” in the background]
How the hell did I miss this? I physically own that album. It's kinda like orchestral dubstep. 🤘
It is if you count your profit in terms of percentage of global profit, and then, should that break down, in terms of global wealth.
Similar to how it's impossible to reach the speed of light, it's not possible to reach 100% of global wealth unless you're the only sentient being left alive, but you can get arbitrarily close. And getting closer requires more and more human suffering, as reaching light speed requires more and more energy.
Only time will tell whether the rich will (publicly) switch to this metric because so far, "Newtonian" measurements of profit have been sufficient, and fractions of global wealth generation look piddly by comparison.
This article explores that. The Delusion of Infinite Economic Growth
Yes, there is a limit.
First, you need to look at the difference between 1. money and 2. value.
That theoretical one rich person (or company) might own all money printing facilities in the world, and therefore can make endless numbers. That is money, not value.
There is theoretically no limit for the money. But this is meaningless, because this kind of inflated money would be valueless.
The one rich person might own everybody else, and all their belongings, and all that they can produce.
That's all the value then. That's your limit.
And further on point 2, the limit would determined by all that people can produce as well as, on the minus side, the costs of keeping those people alive and producing.
As it so happens, people will produce more under better conditions, so spending the least amount possible keeping those people alive doesn't yield maximum profit - there is a sweet spot somewhere in the curve were the people's productivity minus the costs of keeping them productive is at a peak - i.e. profit is maximum - and that's not at the point were the people producing things are merelly surviving.
Capitalism really is just a way of the elites trying to get society to that sweet spot of that curve - under Capitalism people are more productive than in overtly autocratic systems (or even further, outright slavery) were less is spent on people, they get less education and they have less freedom to (from the point of view of the elites) waste their time doing what they want rather than produce, and because people in a Capitalist society live a bit better, are a bit less unhappy and have something to lose unlike in the outright autocratic systems, they produce more for the elites and there is less risk of rebelions so it all adds up to more profit for the elites.
As you might have noticed by now, optimizing for the sweet spot of "productivity minus costs with the riff-raff" isn't the same as optimizing for the greatest good for the greatest number (the basic principle of the Left) since most people by a huge margin are the "riff-raff", not the elites.
Technically, money is just a number on a ledger. Practically, there's a finite amount of wealth in the solar system, much less on earth, significantly less accessible to humans and only a slim amount can be taken from the working class before people start starving. We already have little enough that the population is going to start contracting.
Numbers in ledgers is a description of banking but money and banking are not the same thing.
Alternatively you could be describing money management, keeping a ledger of an account. Money management is the management of money but it is not money itself.
A collection of coins or bills is worth a certain amount and when you add or remove money the amount changes but you do not need to update any accounts.
I'm making a distinction between money as a system of abstracting wealth and what wealth practically means. You're making a highly disputable philosophical argument about the ontological nature of money instead of engaging with the germaine ideas. Simply put: I don't consider a physical representation of money to be money in-and-of-itself; I consider each bill to be a part of a grand fragmented ledger. Furthermore, bitcoin is literally a public ledger for which there is no physical exchange of any representation of money. As a final example, the Yap isles famously have a monetary system that has physical Incarnations but no physical exchange among the people of the isles. It's literally just a public ledger that exists in the minds of those who use it.
In case you want a serious treatment, for nominal profit:
https://en.wikipedia.org/wiki/Keynesian_economics#The_Keynesian_multiplier
For real profit, labor productivity must put some limit on it somewhere, but I have never seen anybody look at it.
Either way, "profit" is not something you squeeze out of society. The nominal one can't be unbalanced, and the real one is hard to even track.
You may get some better answers if think in terms of wealth inequality. But that one won't appear on the coarse level of the wikipedia article.
I beg to differ, how the modern shareholder capitalism works is nothing but squeezing profit out of society
Well profit can be defined as money_in - money_out therefore the maximum profit is the least amount of money_out with the maximum amount of money_in. So let’s assume that the minimum amount of money_out is 0. So it becomes a question of what is the maximum of money_in well currencies are generally just numbers. So we need to know the total amount of matter in the universe and the value that an organization of that total amount can represent. If the universe is infinite then infinite profit, if not then there is some number. However, at this point we delve into the zone of philosophy as we might need to take some of that matter out to have some witnesses. But still might not buy you a house in 2024.
Yes. It's when the workers are driven to the point that they cannot do enough reproductive labor and/or they revolt.
One way historic economic systems prevented total market capture by family dynasties was large families.
A big family dividing a concern will eventually sell it, break it up so it can be split.
With smaller families this division will take much longer, and with corporate personhood we are in a new weird self perpetual bureaucratic regimen
Isnt that why there are transnational conglomerates?
In a sense yes. Once a company has captured the entire (global) economy, including banking, it would control who to give credit to, who to employ, what to pay them, what their own products are priced.
They could at most reap as "profit" what they give out in credit and payment.
There may be sub-limits for capturing entire industries.
Huh? At any point in time, even if there are 2 humans left in society, and one human procures something and gives it to the other guy in exchange for something more than what cost him, it will be profit?
No. To my knowledge there isn't a scenario where this is possible. Greater inequality means greater profits.
That is probably correct to the phrasing of the question but I don't think it's correct to the spirit of the question .
If I have a billion dollars and everyone else has one dollar, I am powerful.
Time moves forward, inflation, whatever.
I have 2 billion dollars now and everyone else has 2 dollars.
Nothing has substantially changed in that scenario.
But even if we only allow me to grow:
Again I have 2 billion dollars now and everyone else still has 1 dollar.
Nothing has substantially changed.
That's my disagreement. There is a limit. Diminished returns.
The difference between a one bathroom house and a 2 bathroom house is huge. The difference between a 20 bathroom house and a 21 bathroom house is basically meaningless.
You can only be "so" rich and people can only get "so" poor. At a certain point the change isn't meaningful, but once you pass a a certain threshold it's worse than meaningless. It becomes worthless
If you have all the money in the entire world and no one else has any money... The money no longer has any value at all. It then becomes pointless and valueless.
I'm not smart enough to point out the exact line. There is a line where the rich can't be richer in a significant way. Elon musk i think is at the point. He could lose 50 billion dollars or gain 50 billion dollar tomorrow. It wouldn't impact his life or our life.
Likewise people can only get so poor before the concept of currency breaks down completely. We kind of see a glimpse of that with credit scores. I have bad credit. I don't care that I have bad credit. I'm not going to own a home anyway. I don't care if a credit card company sues me because I have no liquidatable property or items. Even my wages can't be garnished because my child support maxes that out alrwady. My debt and credit score are meaningless. Money itself can get that low as well. If the imbalance gets too far the money becomes worthless.
There is absolutely a limit. There is a line.
Likewise people can only get so poor before the concept of currency breaks down completely. We kind of see a glimpse of that with credit scores. I have bad credit. I don't care that I have bad credit. I'm not going to own a home anyway. I don't care if a credit card company sues me because I have no liquidatable property or items. Even my wages can't be garnished because my child support maxes that out alrwady. My debt and credit score are meaningless. Money itself can get that low as well. If the imbalance gets too far the money becomes worthless.
Fucking real
No. They can always print more money. Money is no longer backed by anything other than faith; if people believe money has value, there's no hard set limit on that value
But people do stop believing money has value, or more specifically, their trust in the value of money can go down - you all over the History in plenty of places that people's trust in the value of money can break down.
As somebody pointed out, if one person has all the money and nobody else has money, money has no value, so it's logical to expect that between were we are now and that imaginary extreme point there will be a balance in the distribution of wealth were most people do lose trust in the value of money and the "wealth" anchored on merelly that value stops being deemed wealth.
(That said, the wealthy generally move their wealth into property - as the saying goes "Buy Land: they ain't making any more of it" - but even that is backed by people's belief and society's enforcement of property laws and the mega-wealthy wouldn't be so if they had to actually protect themselves their "rights" on all that they own: the limits to wealth, when anchored down to concrete physical things that the "owners" have to defend are far far lower that the current limits on wealth based on nation-backed tokens of value and ownership)
Tendency of the rate of profit to fall
https://en.m.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall
Maximum profit would be achieved by charging the most for the least stuff. And minimizing the cost of that bare minimum. You can do that by eliminating competition so that your prices are the only option. You'd end up with something like feudalism.
But it also depends if you target maximum profits as compared to the population, or maximum profits over all. If maximum profits over all, you'd want to grow the work force as much as possible, maybe colonizing other planets or inhospitable regions of earth.
But maximizing the value of those profits to you requires development to get you more value for less resources. Being a king hundreds of years ago still didn't get you decent plumbing. So you'd want effecent ways to maximize your pleasure for the lowest cost. Some brain computer interface could be useful there, so that you can create full planets more cheaply.
What happens after all of humanity are enslaved as software devs for the god kings personal virtual reality, I couldn't guess.
Theoretically? I'd imagine it's equal (or close) to the difference between global money supply and global money supply but I don't think that's what you're asking
There's a limit with any particular set of tools and labor, but a universal limit doesn't exist, no. Profit comes when you take money and use it in a more productive way than letting it sit under your mattress, and there's no theoretical limit on productivity.
This is a great take
Once one person has all the power, they de facto have all the wealth. Slaves don't own anything.
No, let me know if you find one though
absolute or percentage wise. in absolute terms all of the universe. in percent terms nope because like gambling allows for infinite profit. ie guaranteed profit on rolls that will most times not result in any loss.
There's an actual limit to profit, they are called profit margins and different industries have different profit margins.
No. Or at least not while inflation exists.
That's not the point of inflation.
Our economy needs inflation to discourage saving and incentive investing.
If there was no inflation and 3% interest on savings, that's all people would do.
So they make inflation more, and people lose purchasing power in a savings account, and instead invest, which pumps up stock prices for the whales who knows when to cash out.
On a smaller level it incentives people to spend as soon as they get it, because next year a $100 is worth less, so they spend while it's worth more.
It's a house of cards and when the wealthy owns the government there's no one to hit the brakes on profits before the economy crashes and burns.
So they make inflation more, and people lose purchasing power in a savings account, and instead invest, which pumps up stock prices for the whales who knows when to cash out.
That's... not really how that works. I mean inflation is there to keep people from saving when they could be investing their money, but that's not to make money for the whales. Money sitting in a bank account doing nothing is bad (economically speaking) even when the owner of the money isn't rich. More money moving is better for everyone.
Where do you think profit comes from? Spending is what makes profit happen.