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Monday, September 30, 2013
Investors Prefer Profitable Firms.
Market demand
is out there. The profitable firms hold onto consumers’ demand by the means of
product differentiation, and they innovate, lowering costs and prices. All of
this catches the attention of investors. Since investors prefer profitable
firms more capital is made available to them. Alert firms that command
sufficient capital funds will be the ones that fill the market demand gaps.
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Twitter @DivineEconomy
Check out my new website: http://bruce-koerber.squarespace.com
Thursday, September 26, 2013
Profit Seeking Advances The Tendency Towards Homogeneity!
Profit seeking
has a revelatory effect in the economy. Seeking profit opportunities by
examining them relative to each other, reveals what people want. This
continually directs resources towards the production of those particular goods
and services. The reason differential profits are possible in the real world is
because not all firms are equally innovative or even able to mimic the
innovation of others. In the real world innovation is an advantage, yielding
differential profits because there is a lag time before others can catch up.
The talents and creativity within firms is not equal and so part of the competitors’
strategy to catch up with the innovator is to lure away key personnel, along
with intensifying both market research and product research and development.
As a consequence, profit seeking advances the tendency towards homogeneity, ironically offsetting the tendency for product differentiation. Necessarily, the tendency is for the rate of profit among close competitors to become equalized. Economy-wide profit-seeking leads to the tendency for profits in all of the different fields of endeavor to equalize in the market.
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As a consequence, profit seeking advances the tendency towards homogeneity, ironically offsetting the tendency for product differentiation. Necessarily, the tendency is for the rate of profit among close competitors to become equalized. Economy-wide profit-seeking leads to the tendency for profits in all of the different fields of endeavor to equalize in the market.
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Monday, September 23, 2013
Profit Seekers Create The Possibility Of Greater Cooperation.
In the real
world it is the producer who most often takes on the role of perceiving and
making changes, motivated by profit opportunities. Many of the opportunities
for more efficient use of resources simply go unnoticed by non-producers
because only those who are involved in the production process actually
encounter them or understand them. Often these opportunities are the result of
imperfect coordination between transactions in the resource markets and in the
product markets. By involvement in the market process profit seekers create the
possibility of greater cooperation between otherwise disconnected segments of the
economy.
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Twitter @DivineEconomy
Check out my new website: http://bruce-koerber.squarespace.com
Friday, September 20, 2013
The Profit Seeker Is A Risk Taker.
Profit seeking
is just that – seeking. There is no guarantee. The profit seeker is a risk
taker that uses market prices to determine what to produce or what can be
produced more efficiently. The risks taken to initiate new production or
improved production will yield various outcomes such as: lower price, better
quality, and/or product differentiation.
The enticing wonder of the discovery of a profit opportunity, which keeps the entrepreneur coming back and entering into the market process, is the discovery of something obtainable for nothing at all. It is the same as the quest of the explorer and the artist and the scientist and the philosopher – to discover something never known before. The profit seeking motive is this same motivation, this same human phenomenon. Therefore as you can see, the profit seeking motive is part of the human operating system, something to be appreciated – not to be condemned as an evil.
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The enticing wonder of the discovery of a profit opportunity, which keeps the entrepreneur coming back and entering into the market process, is the discovery of something obtainable for nothing at all. It is the same as the quest of the explorer and the artist and the scientist and the philosopher – to discover something never known before. The profit seeking motive is this same motivation, this same human phenomenon. Therefore as you can see, the profit seeking motive is part of the human operating system, something to be appreciated – not to be condemned as an evil.
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Wednesday, September 18, 2013
Actions of Profit Seekers Benefit Everyone.
We humans,
endowed with the propensity for alertness and classified as Homo agens,
act upon the information about what is valuable. Some are passive, only finding
ways to increase their own happiness. Others are out there as profit seekers,
and their actions benefit everyone.
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These profit
seekers try to identify the relevant ends-means framework and how to make it
more efficient. Through their efforts to discover price differentials
throughout the economy and along the time horizon they bring to the surface
market knowledge. Their actions benefit themselves but also everyone else.
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Wednesday, September 11, 2013
Profit Maximization Is A Fleeting Thing!
It is
inaccurate to describe human beings as merely profit maximizing economizers! First
of all, decisions made by humans are not simply monetary. There is a psychic
cost, the lost ‘utility’ of the next best alternative that one has to forgo, to
every action taken. And there is a psychic revenue that results from the
increase in happiness that comes from the action chosen.
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In this sense
profit is purely subjective and cannot be measured. Even if we were speaking
about both monetary and non-monetary profit, profit maximization is a fleeting
thing since the real world is always in a state of disequilibrium, never really
reaching equilibrium.
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Saturday, September 07, 2013
There Is Nothing Evil About Profit.
In the real world of uncertainty
and imperfect knowledge there are no guarantees. The market process ultimately
determines the selling price and the market price determines all costs. (Remember
the backward reaching effect of derived demand? If not, contact me and I will explain.)
In the end the result may be a profit or it may be a loss. And since production can continue only if it yields positive results (i.e. yielding a profit) there are limits to production. Unequivocally, it must be clearly stated that there is nothing evil about profit. It is what motivates production despite the uncertainty!
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In the end the result may be a profit or it may be a loss. And since production can continue only if it yields positive results (i.e. yielding a profit) there are limits to production. Unequivocally, it must be clearly stated that there is nothing evil about profit. It is what motivates production despite the uncertainty!
Check out my new website: http://bruce-koerber.squarespace.com
Thursday, September 05, 2013
Consumers Are Often Passive Entrepreneurs.
There is a
seamless nature to production. Everyone along the way contributes, everyone
along the way is a ‘middleman.’ The process of production includes every step,
all the way up until the good is consumed, including making the consumer aware
of the availability of the product and the desirability of the product.
Everywhere along the production line someone playing this particular role of a
middleman will perform this service. All of these ‘selling costs’ are all a
part of the process.
Since consumers are often passive entrepreneurs it is the producer who must complete the production process by taking active steps to get the potential customers to know about these purchase opportunities. Producers reduce the uncertainty of the total supply on the market by product differentiation but this then suggests that the producer needs to educate the consumers about the product.
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Since consumers are often passive entrepreneurs it is the producer who must complete the production process by taking active steps to get the potential customers to know about these purchase opportunities. Producers reduce the uncertainty of the total supply on the market by product differentiation but this then suggests that the producer needs to educate the consumers about the product.
Twitter @DivineEconomy
Check out my new website: http://bruce-koerber.squarespace.com
Sunday, September 01, 2013
Use-Value Production.
There are
three types of production for use-value. The first one is production for a more
useful form. The second is production for the place more
preferred or more valued. And finally there is production that is made
available at a more desirable time. Capital and especially the
combination of capital and storage make time production feasible. Producers’
goods are examples of time use-value.
Due to the equilibrating power of arbitrage the economy operates and is characterized by the tendency towards the principle of uniformity-of-profit. This is what keeps in proper balance the production of all types, and of all of the different items that are directly or indirectly necessary for our survival.
Check out my new website: http://bruce-koerber.squarespace.com
Due to the equilibrating power of arbitrage the economy operates and is characterized by the tendency towards the principle of uniformity-of-profit. This is what keeps in proper balance the production of all types, and of all of the different items that are directly or indirectly necessary for our survival.
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