I’ve heard it stated that in order for a company to survive it must expand but it has never really been explained to me why that is.
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tendency for the rate of profit to fall to zero. You gotta keep ekeing out diminishing returns not despite them diminishing but because of it.
Plus nominal 2% inflation year on year etc idk money is a lie
TRPF and competition in a capitalist market means that if they don’t grow, more innovative players will eventually eat into their market share and then them
most bestest economic system
The most successful companies use debt and investment capital to grow. Your bank and/or investors want their money back plus some, so in order to make that happen your business must grow. If you don’t do this, you’ll typically lose market share to the business that grows instead of yours.
Tiny businesses have different rules. You can maybe set something up that’s economically sustainable in theory, but eventually inflation is gonna catch up to you from all the debt/investment the real multimillion/billion dollar corporations are doing and something will need to change.
I am economically illiterate. Could you please explain why does inflation exist at all?
There are many sources on this topic but off the top of my head:
All the loans given out by private banks to companies and investors, often leads to those loans not being able to be repaid in time. Then, in order to be given more liquidity for them to keep on playing their game, the central bank owned by the state prints money in order to help them.
Printing money leads to more money existing and therefore lower value of the currency.
So in the end, the whole economy suffers as a sacrifice so that the rich can keep on doing their thing, hoping that it will eventually pay off and be worth it (or lead to a market crash).
I don’t think this is necessarily a good explanation. Inflation doesn’t necessarily have anything to do with more money being printed. No money could be printed and inflation could still happen.
All inflation means is the average price of goods is rising. That could be because workers are unionizing leading to higher wages and capitalists decide to raise prices to keep profits similar, it could be because unemployment is down and a similar effect occurs, it could be because of supply line problems, capital strikes, a whole myriad of things.
Yeah that’s very true
Billionaires also pull money out of the economy to put in untaxed hordes in off shore bank accounts
In addition to the more technical answers you got it also serves to incentivize consumer spending or investing. If you put your money in a bank you get interest, or you invest in stocks and increase the value of your investment over time.
If you cash your paycheck and throw it in a box for 20 years the real value of your money (how many goods you can buy) will have decreased. Therefore the peak value of that money is usually right when you get it. It serves to keep money going back into the economy. Silly example: you have 5 dollars. A can of beans is $1. You can get 5 cans of beans. In 5 years due to inflation that can of beans is now $1.25. Now that $5 is only worth 4 cans of beans.
The rich look down on the paycheck-to-paycheck consumers but really they kick a lot of money right back into the economy when it’s at peak value.
The fact that profit does not primarily serve the consumption of the capitalist, but the constant utilisation of capital, i.e. the restless movement of still more profit, may sound absurd. But this is not a matter of individual madness. The individual capitalists are forced into this movement of restless profit (constant accumulation, expansion of production, introduction of new techniques, etc.) by the competition of other capitalists: if they do not accumulate, if they do not constantly modernise the production apparatus, their own enterprise is in danger of being overrun by competitors who produce cheaper or better products. If an individual capitalist wants to avoid constant accumulation and innovation, he is threatened with bankruptcy. He is therefore forced to go along with it, whether he wants to or not. “Excessive profit-seeking” is not a moral failing of individuals under capitalism, but necessary to survive as a capitalist. As will become clearer in the next sections, capitalism is based on a systemic relationship of domination that produces constraints to which both the workers and the capitalists are subjected. Therefore, a critique aimed at the “excessive pursuit of profit” of individual capitalists, but not at the capitalist system as a whole, falls short.
A passage to some modern german companion reader to “Das Kapital”, forgot the exact name, but copied this part.
Been meaning to read das capital. Tried listening to it while gaming and quickly realized it was not a background process type of book.
Investors buy shares in a company because they expect it to expand, and for the shares to gain value as the company becomes more valuable. Most companies can’t really exist without investors buying more shares.
Right investors. Forgot about those guys, thanks.
Most companies can’t really exist without investors buying more shares.
ackshually
except for high-risk companies that can’t much appeal to the debt markets it’s not so common for public companies to raise capital through secondary offerings / convertibles. in most cases shareholders buy their shares on secondary markets and the company itself doesn’t depend on its own stock price, at least for its operations and its balance sheet. management still seeks profits anyway bc the board is legally answerable to shareholders and shareholders usually want to make as much (risk-adjusted) profit as possible - that’s why they have their money parked in equity in the first place, no matter how they acquired their shares
Because if they do not, they will be eaten by those who do
Because in the end if they don’t they will be overtaken by their competitors
Because like slurping up and emptying pockets of water, markets themselves are finite within an economy where the main force of capital movement is profit seeking. The amount of slurping a company can do will depend on how much water is left in the pocket and how many other slurpers there are, so to speak, and the rate of slurping intensifies as the amount left dwindles, naturally incentivizing companies to gobble each other up in the name of being able to slurp more for less expenditure. And then that gets exhausted and new markets need to be sought so they get the state to crack open markets elsewhere to get more slurpin going, and the cycle repeats until that pocket doesn’t have water anymore. And if they don’t slurp then other companies will slurp, because the basis of the whole thing is trying to accumulate as much water as you can as an individual, instead of trying to figure out how much water does even require to meet their needs and grow in a more symbiotic way with the water
what happened to being able to use multiple slurp juices
Somebody stole all the apes
This is why I appreciate the extremely cheap 24/7 convenience store in my street that’s clearly there to launder some kind of criminal activity. It’s suspiciously cheap, and they sell everything, lmao.
