Perfect Capitalism

Adam Smith

The first successful semaphore network was invented by Claude Chappe and operated in France from 1792 through 1846.

If there is a point here, it is lost on me.

What is the point of the post? I kinda hoped it was a step above the astrology or love posts but read what you want into it or not. What is the point about semaphore? Except it was a very limited early communication.

Today and tomorrow we will see much faster and readily available communication that forces every seller to compete differently than he ever had to in the past. It would be interesting to operate a business that has immediate access to demand and could control production. Buyers can start shopping globally for products. Amazon is a result of the smart seller recognizing the type of modern shopper. Business is not the same as even a decade ago. It will look much different in 30 years. Our business model has been changing and fast. Will all products eventually be sold at some lowest common denominator anywhere? Excluding shipping, tariffs, and handling of course.

Although there are many jobs that will be affected by the way everyone is beginning to purchase. Will we need the middle brokers, wholesalers, etc? There are job markets today that will likely not exist soon. Will we need assemblers in factories where we automate and gear to demand? Will we need travel agents? Should we gear to jobs where the supply/demand cycles will not affect your position? Think in terms of a plumber, barber, medical, carpenter, butcher, farmer, where the job does not depend on the supply and demand change. Will we really need libraries and physical shops in the near future? What are the best jobs of tomorrow based on the changing business atmosphere or should we say the greying of the markets. Technology is changing our lives. The perfect capitalism will permeate to every corner of the world. Our geography is changing because of it.

Not sure if there is a point other than to try to start a discussion about our markets and how one may be able to forecast job markets. As a retired person, I don't actually buy into a lot of the hype and do not even own a smart phone for my own reasons. However, as a rural person who hates to go to malls, I find the internet an interesting and cheaper place to shop on the occasions I do get to compare. They even deliver cheaper than I can drive to town.

What I find most useful is reviews by people who have purchased items, especially negative reviews, and "reviews of reviews" (m out of n people have found this helpful). If I plan to spend any significant amount of money, I have learned from experience to search the internet and learn from others' experience.

Good pick. That is another thing that will push to uniform purchasing or force better quality from producers. I also look at sites like trip advisor for reviews of hotels, restaurants, etc. A drawback to purchasing on internet may be the difficulty of returning goods. I once purchased some electrical product (power pack for HP laptop) from California that was defective. When I tried to return it, the seller gave me an address in China. It was more expensive to send it to China than to buy elsewhere. So a review of that site was posted to avoid if you had concerns about returning goods. Some sites give a star rating on reliability of sender. I guess that is one of the imperfect capitalism problems. The more people rate sites the more responsive the sender will become or become not in business.

When I saw your first post reply, I said, 'he is going to say, "what is the point?"'

Oblivion is a lovely place for a picnic.

I'll take oblivion over petty jealousy any day.

Time delays and geographical variations have indeed constituted limitations to capitalism (and also for any other economic system). Faster exchange of such information could improve matters. However, there is still a cost for faster/better information, which falls into the category of transaction costs.

So how come we keep getting into "bubbles", even with all this information?

Political demands and greed throw monkey wrenches into the system. Too true.

So how come we keep getting into "bubbles", even with all this information?

That's a good point.

I'm afraid some of this information is what other people are doing. Because of the herd instinct, if everybody is buying stock A and the price keeps going up (because of demand), you have a bubble. The price of the stock doesn't reflect the worth of the company, and when enough people realize this and start selling, the price plummets.

Information about what stock A is worth is useful. Information about what everybody else thinks about what everybody else thinks about what everybody else thinks ...... etc, generates a positive feedback loop (in the signal processing sense) like an amplifier with too much feedback.

Nothing succeeds like success.

And here is where I think the idea of "perfect" capitalism breaks down. The "value" of something is the sum of many value factors for which we are not likely to be able to evaluate. Each factor will require info. The info will need to be evaluated and weighed. But for some, the over-riding factor is emotion-based and not ammenable to proper parsing and evaluation. I'm thinking along the lines of "irrational exuberance."

That's very interesting, but might the real effect be to create irrational expectations of value by qualifying purchases with irrelevant information. (the basis of the penny stock industry, BTW) The ability to make good value based decisions is not entirely, or even mostly, empirical. If 1000 people like a certain loudspeaker, are the qualifications of those reviewers/ebuyers relevant to the value of the information? Might listening to several different brands be a more reliable way to gain that valueable information? One takes 4 hours, one takes 10 minutes.

Is the trend as reward54 says, to rely on less reliable sources of information to make buying decisions, thereby reducing odds that a successful transaction will occur. (the buyer received fair value) Or is that information (online pricing, reviews) truly less reliable. I think the older you are, the more you are likely to think it is. Or can I use the information more wisely than you can, and are my sources better than the ones you use.

Perfect capitalism is not here today. But we are trending towards a perfect capitalism. That is when both the producer and the buyer have "infinite" knowledge of the markets. Then there will be an optimal pricing based on the information known to all parties. It is technology that will drive the markets of tomorrow and there should be less and less variations in what you want to buy. Aesthetic purchases based on colour or shape or feel or whatever will still be subjected to Perfect capitalism because each individual market will be under the influence of infinite information. Michio Kaku thinks such markets are 50 to 100 years away. At the rate of growth, I suspect the perfect market system is going to be here sooner. At least to those connected to the electronic information highway.

Our kids are already tied to the information. How many times have you purchased something when someone tells you; " Oh, I could have got that for X dollars cheaper on the internet." It is aggravating to hear sometimes but it is also already true.

that is unrealistic, and is historically invalid, as variety exists not as a differrentiator of value, but as a result of quality of life and financial ability of the buyer to pay up for aesthetics and quality. You can buy an expensive Stickley bed, or a cheap Ikea bed, and they don't exist as strong brands because buyers at one place don't know about the other. My point was that it does seem that access to some information creates value; the question is, does customer access to a large quantity of low quality information equate to increased value. People may have had the same questions when the Sears and Roebuck catalog was widely circulated, and the general store owner took a step down in stature because customers had more, (and questionably better) information.

You are right. Perfect Capitalism does not discount buying a Stickley bed or an Ikea bed. However, if you were to buy whichever bed you want, you will know that the price you paid for it was an optimal price based on market value provided by information obtained. Buyers ability to buy will always be based on information he/she has access to but also on the buyers preferences. So both the Stickely and Ikea producers will also know exactly what to produce and when to produce to optimize their production. Markets will always have variation based on what the consumer wants. It is just that as information becomes infinite, the consumer can optimize his own purchase. I do not think nor would I wish for a uniform product to be produced. We already have enough subdivisions that look alike and we know they are practical for a producer and buyers but I do not want to live there. Access does not add value but it will put pressure on producers of similar products to add something of value to attract customers.

The point of the article is that it is no longer the manufacturer or retailer that dictates how products will be moved, or what will move.

The ability of consumers to be even more informed before a purchase is made is changing the face of sales. Consumers aren't as strictly loyal to a brand anymore, except for maybe Apple people, because they have access to so much more information that impacts the purchasing decision. We go where we get a better value. The variable which can help businesses retain or build loyalty is customer satisfaction, both in product satisfaction and customer service. A great book and example of customer satisfaction is "You Will Be Satisfied" by Bob Tasca who developed the premier Ford dealerships in the world.

It is the community of people who are the asset in today's markets. Facebook doesn't make anything and yet Mark Zuckerberg is worth billions. It is because he helped to formulate a community of people that can be exposed to advertizing.