In a perfect marketplace, nobody would profit...

In a perfect marketplace, nobody would profit, because competition forces you to offer your services at the lowest possible price, otherwise someone else will steal your customers.

Thus, profit is a symptom of having no genuine competition.

Furthermore, the value of a corporation is based upon how much profit it generates.

Thus, the current rise in the Dow Jones Industrial Average is a bad thing, because it shows that monopolies are getting stronger (i.e. corporate profits are rising due to weaker competition in the marketplace).

Agree or Disagree?

What? Lol there are ways to sidestep lowering your prices. Quality and convience come to mind.

>Thus, profit is a symptom of having no genuine competition.
No. Profit is a symptom of winning your competition. In a perfect market, it's still possible to win.
Even in a totally ideal world where there would be infinite amount of competitors that are equally easy to reach, you could create an idea, get a patent for it (we're not against patents, right?) and gain advantage against your competitors.

Your competitors will offer quality and convenience too.

>In a perfect market, it's still possible to win.
No it is not, because once a product reaches its maturity, it cannot be further improved. Thus at certain point all suppliers will offer exactly the same product at exactly the same price.

Profit is a result of a fact that smithian economy is an idealistic model, not a reality, thus there is information assymetry to expliot - consumers don't make perfectly rational decisions, because consumers, in reality, can't know everything, and knowing everything is required to make perfectly rational decision.

Overall - OP is right. In a perfect free market, according to smithian principles, profit cannot be made.

>No. Profit is a symptom of winning your competition. In a perfect market, it's still possible to win.

I agree, monopolies/profit are a symptom of winning your competition.

>Even in a totally ideal world where there would be infinite amount of competitors that are equally easy to reach, you could create an idea, get a patent for it (we're not against patents, right?) and gain advantage against your competitors.

Patents are a government granted monopoly. Patents are proof of the concept that profit is a symptom of having no genuine competition.

>being this dumb

in perfect competition everybody profits. Its actually more profitable than monopolizing a market.

First, define a perfect marketplace.
Second, learn that innovation attracts customers, and that it takes time and investment for competitors to copy a winning concept.
Thus, there will a time window under which an innovator has a natural monopoly - everybody wins.

I disagree

you are confused with a few things. At some point that you cannot make a profit, there is no longer a reward for your risk to having the business

there is a term economic rent, which you may want to investigate

The Dow Jones is only rising because the US has been printing money since 2008, and it had no where else to go

In a perfect marketplace, your competitors will be offering competitive innovation too.

>competition forces you to offer your services at the lowest price, otherwise someone else will steal your customers
I disagree with this, only because lower prices exist for a temporary amount of time until one of the competing businesses goes bankrupt.

>you are confused with a few things. At some point that you cannot make a profit, there is no longer a reward for your risk to having the business

When there are no profits, you still have the reward of wage/salary. Your employee's wages/salaries are expenses, not profit. The wage/salary still incentivizes people to take on the risk of the business, otherwise they starve.

>The Dow Jones is only rising because the US has been printing money since 2008, and it had no where else to go.

While it is true that inflation is contributing to the rise of the DJIA, the DJIA is still rising after you correct for inflation.

Agree

While I agree with your first premise, the second one doesn't necessarily follow. There are foreign markets.

if you are a business owner, you need a profit, period, you dont do it for the "reward" of paying people

Again the DJIA is rising because of the money printed. Inflation is measure against a basket of goods, and in the basket it shows deflationary pressures. This is why you have the discrepancy you just mentioned. The printing of money went directly into the stock market, well actually it went into the Bond market, which displaced private money, and forced it into the stock market. Understand this, what i just shared with you, is the correct answer. Actually my comments are really meant for 3rd parties who might be reading your fallacies.

Stocks are comic books, or baseball cards.
The value they possess are based on perception of value.
You're looking at a broad based asset bubble.
Who cares. It's going to crash in the most spectacular way possible,
and begin a new feudal era.

>In a perfect marketplace, nobody would profit
only in the very long-term assuming all things equal
in the short-term advances in technologies is what makes the profit
and by tech I mean anything such as real tech, but also less regulations, better management (more important one), or even good weather, etc

>Patents are a government granted monopoly.
patents are incentives.

without patents no one would waste money on R&D and everyone would wait on everybody (ex: China-Rest of the world)

>if you are a business owner, you need a profit, period, you dont do it for the "reward" of paying people

I know a lot of business owners that own businesses that generate very little profit, but they still engage in the activity because the expense/wage that they pay themselves is worth their risk.

>Again the DJIA is rising because of the money printed. Inflation is measure against a basket of goods, and in the basket it shows deflationary pressures. This is why you have the discrepancy you just mentioned. The printing of money went directly into the stock market, well actually it went into the Bond market, which displaced private money, and forced it into the stock market. Understand this, what i just shared with you, is the correct answer. Actually my comments are really meant for 3rd parties who might be reading your fallacies.

See pic related. The DJIA is still rising even after correcting for inflation. That is not a fallacy.

Your thesis is completely wrong.

>What is M2?
>What is inflation?

That's the most flawed logic I've seen. Read what you just typed. You're dumb, kill yourself.

I agree with op's premise. However the rise in the stock market is due to QE, zero percent interest rates, and companies going into debt to repurchase shares of their own stock.

Disagree. Profits attract competition. Where there is a lot of money to be made, many people will compete to make it. Likewise where there is not much profit to be made, businesses will not invest resources or try to compete in that area.

In this way profits are self regulating and are an important signal about where resources and risk should be spent.

>be me
>gordon gecko
>taught everything to himself
>connected the dots
>outperform the market big time
People don't understand this:
Capitalism won't simply end or destroy itself.
Once the growth curve slows you can only generate growth by M & A.
Then the time of the grande bouffe will come and it will be nasty.
These so-called free markets breed monopolies, uncontrolled capitalism is a meme.

profit exists because there aren't infinite talent pools, resources, ideas and competition and the economy is dynamic in nature with profit margins changing with respect to time as new competition emerges with new ideas and because humans aren't infinitely intelligent to always pursue the best value option.

>being this dumb

learn economics, in that sit everyone loses.

> competition forces you to offer your services at the lowest possible price

So those services are completely free?

Profit exists because of the assumption of risk and the infinite right of an owner to discriminate (Commies don't understand this)

Could you just stfu while the grown-ups have a talk, please?

A product can always be further improved. Matter has infinite complexity and structure. We first discovered cells, then molecules, then atoms, then quarks, etc. We can always go higher and deeper. This is the ultimate destiny of mankind and the reason God created us. To explore the infinite universe and learn to control it.

This logic only works for commodities. Econ 101 fail.

>In a perfect marketplace, nobody would profit, because competition forces you to offer your services at the lowest possible price, otherwise someone else will steal your customers.

NIGGA HUH?

This.
Nobody buys a nike shirt because of the quality of its fibers.

So much this. People who bitch about economics are too dumb to understand dynamic time based systems and feedback loops.

Run your business without seeking a "profit" and let me know how that goes.

Patents reward someone for creating something by giving them a headstart. They don't last forever. Look at all the cameras that print photos now. That's because the patent Polaroid had expired.

The creator benefits with a headstart, humanity benefits long term for the new research.

A business owner is not going to pay themselves a "wage", the taxes are too high, the business owner is going to let the business have a surplus, and then take it as a profit

either way, the amount is the same, but in one way, the business owner pays less taxes

Again, once again, the DJIA rose because of the printed money displaced the money in the bond market, and asset prices rose. This is why when the FOMC met last week, and announced that they are going to let billions roll off their balance sheet every month, the stock market got flakey, and DJIA 9 day up streak ended

this is why the stock market is guaranteed to crash on or before March, and "may" drop around 10% before November 1st

you should understand what quantitative easing is

seriously dude, I can understand your simplistic logic, is because you are not having enough information or understanding about that information


you can lead a donkey to water, but cant force them to drink

Ive did what you requested, I disagreed with you, and tried to educate you, if you wish to continue to have a misunderstanding of the world, you have my permission it doesnt negatively or positively impact me

if you thought you were having a discussion with someone as uninformed as you were, you are wrong

at this point, you just might be a banker shill

But I would buy a nike shirt because of its fibers over a shirt my neighbor made out of weeds in their backyard. Not disagreeing, just illustrating some additional perspective.

True, others may buy your neighbors shirt because it's made out of weeds in his backyard, but brand recognition is real.
That's why it is retarded to judge the value of an iphone by its internals.
As long as enough people are buying it, it's not too expensive.

No hes talking about lowering those things to achieve higher profits. Play both sides of the coin, get double the buff.

>In a perfect marketplace
Perfect competition doesn't exist. It's total nonsense contrived by equilibrium theory and your supply/demand graphs are totally worthless in the real world; they can no better predict market pricing than reading tea leaves.

>Thus, profit is a symptom of having no genuine competition.
Monopolistic competition exists and it is indeed 'genuine competition.'

no you dummy when a market reaches saturation you position a new product for example pepsi and coca cola have the lion share of the industry so you position a new product like diet cola or a new type of cola or look for a new niche market for your product

>Thus at certain point all suppliers will offer exactly the same product at exactly the same price.
This will never occur. All suppliers actively pursue distinguishing their products from competition. There will never be a moment in time where a Pepsi becomes a Coca-Cola or a Coca-Cola becomes a Pepsi.

You right on the second part though; market participants operate off of an imperfect understanding of imperfect information. They can only be rational from their own point of view. However, in addition to that, competition is monopolistic as well.

We don't have a perfect market. Deal with it

Markets go higher everyone in the industry makes more money on management fees. It's not hard. There will be no wall st. after the reset. Last hurrah.

> Hi. I've never run or managed a business before. Debate me faggots.

If what you were saying was true, then the inflation adjusted P/E ratio for the DIJA would have risen in correlation with the rising DJIA, but it hasn't. See pic related (pic is for the S&P 500, but the same holds true for the DJIA.). Even if what you are saying is true, it can't explain all of the rise in the DJIA. You simply don't want to admit that the DJIA is rising, at least in part, because monopolies are growing stronger.

pic related

Wrong. In a perfectly competitive market ECONOMIC profit is zero. Not actual profit.

You don't even know what a natural monopoly is so I'd stop talking about economics

>Who cares.

When you're 70 years old and living in a van down by the river owned by your corporate overlords, and you realize that you could have passed some laws 60 years ago to prevent these monopolies from getting stronger, then you'll care.

Im not sure if you noticed by the P/E did rise and is at its 3rd highest in history

average PE is 17, current PE 21

keep trying

the DJIA is rising, but the main drivers are different than you understand

also, you changed your argument from the beginning so at least I am educating you

DJIA is rising, "at least in part", because monopolies

which is actually totally different than your first hypothesis

> In a perfect free market profit cannot be made
> retards speak of real implementation of the model

No wonder libertards never get anywhere.

Marginal revenue = marginal cost

They can still make a profit.

>First, define a perfect marketplace.

All sellers can, and do always compete
All buyers can, and always make rational decisions.

In a real market not all sellers can always compete, because for example - patents, limited production capacity, NIH syndrome, incompetent leadership or whatever.

In a real market no all buyers can make rational decision, because of lack of capability to judge a product, brand loyalty, deceitful or incomplete information about a product or a limited exposure to a product and probably other reasons.

>retards speak of real implementation of the model
>what is the point of economics

Congratulations, you took your ECON101 and attempted to apply it to a much more complex situation. Reality is growth alone will create profits, as well as additional competition.

The reason for the stock market rise has more to do with inequality and post-recession monetary policy. Fed pumped shitloads of money into the economy through the banks by buying up assets.The idea was to encourage lending to help the economy get back on it's feet, but in reality interest rates were so garbage and unemployment was so high that they just invested in the stock market, which was yielding higher returns and was far safer. Everyone with any kind of wealth was doing the same, since it was just a get rich quick scheme since all the banks were doing it. Fed kept doing this, since as long as the banks were staying afloat they didn't give a shit. It's also why it took 8 fucking years for the recession to actually end, and why inequality is at an all time high.

Now that this policy is ending, expect the stock market to level off. Expect a drop of about 5000 points sometime in the next 6 months, year tops. Even the best tax reform and real decent real economic growth isn't enough to justify the levels it's at now.

>ctrl-f
>treasur - 0 results found
this thread is full of brainlets. you can't look at P/E ratios by themselves, you have to look future inflation expectations and low-risk fixed income rates

Load of nonsense. The US market was undervalued relative to historic PE in 2009/10.

Today the US is somewhat overvalued but still some way short of 1999.

A 200%+ run up since 2009 has little to do with inflation, more to do with investor valuation.

>9 posts by this ID

Alright, what you've mangled into this argument is the efficient market hypothesis. I.e., if more money could be made elsewhere, people would go there and make more money.

>Doesn't that mean that people wouldn't make profit?
No, people, if the strong form is correct, would make as much profit as the current market grows. Why? Because if there was no possibility of profit to be made, the dis-utility of the action would surpass its utility and the action wouldn't be performed until the market bids its price upwards.

>So, why do people make more than the market rate?
In general, no one as a fair actor in the market out performs the market forever. Sheer chance does allow people to out perform the market in the temporary.

The only way to ALWAYS out perform the market is to have information available to you that the market does not... essentially insider trading.

>Does the fact that the market is improving mean that monopolies are stronger?
No, not even close. It means that people have more faith in esoteric securities and financial instruments and thus are willing to invest more in the hopes of larger returns.

My OP states:

>"the current rise in the Dow Jones Industrial Average is a bad thing, because it shows that monopolies are getting stronger"

I never said monopolies are the only cause for the rising DIJA. I'm fully aware of inflation and P/E bubbles.

Came to post this

In this theoretical situation, accounting profit will still exist, however economic profit would be zero for everyone

If no one was making a profit, some of the sellers would drop out and find something else to sell in an attempt to make a profit. Even banana growers make a profit, and bananas are as close to an ideal marketplace as you can possibly get.