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Apr 16 2013

Nice diary on capitalism

I enjoyed this diary because it had two important info age features: it was short and informative. This part was well written especially and it brings up something — a way corporations are exploiting employees at every level except, of course, the very tippy-top — I may do a full feature article on in the next month or two:

Daily Kos: Marx for Dummies — Second, and more importantly, it follows that in capitalist systems, money will gradually come to be concentrated in the hands of a few. Returning to our example of the three doughnut shops, there will always be a doughnut company willing to go further in reducing the costs of production to maximize profit. This means that gradually the competing businesses will go out of business because they cannot compete with the company that produces at the cheapest cost thereby maximizing profit, and money will come to be concentrated in the hands of that few that were more ruthless than all the others.

The diarist also notes that capitalism does not lead to the best product, that sooner or later cost reduction will affect quality and the company will be moving forward only on the social inertia of things like brand name.

What I’m thinking of writing about soon is more a particular way companies have recently begun to contain costs: the promotion without raise scam. I hope to have some concrete examples of this, but th gist of it is a company gives you a supposed promotion, meaning you have to learn new job skills and have different and likely greater responsibility, but there is no bump in pay, or the raise is a vague promise that somewhere down the road maybe there will be an unspecified pay raise. Companies do this under a lot of guises, the most common being the intern scam or the temp scam. They’re basically taking advantage of people desperate to make more money, usually but not always the hourly worker making peanuts, to get essentially free labor and expertise. Capitalism you see is only for you, when you are being screwed, when it comes to corporations, socialism by wage and government handouts are awesome!

4 comments

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  1. 1
    Marcus Ranum

    Also: once a company’s competition is eliminated, they can raise prices or drop quality. In capitalist terms, they are obligated to do so, for the benefit of the shareholders.

    One of the problems with the “shareholders’ first and foremost” ideology of capitalism is that it implicitly means “screw the customers if you can, whenever the customers and the shareholders’ agendas don’t align.”

  2. 2
    Didaktylos

    It even means screw the shareholders who don’t have large enough holdings to matter.

  3. 3
    unbound

    @1 – Yep

    @2 – It isn’t really about screwing the shareholders, it’s more about who gets the shares. You are free to buy as much as you can afford (maybe a handful of shares for the masses)…all the while, the top executives of the company are handed tens of thousands of shares whether they do a good job or not. Heck, at my company, the CEO was handed over 25,000 shares (over $1.5 million worth) for…wait for it…nothing!! It was just a gift.

    Overall, it is a bit over-simplified, but accurate enough. I think to think of capitalism in the modern era as analogous to the eye-opening of Spooner in “I, Robot”:

    “Capitalism is perfect…Capitalism will lead to only one logical outcome…Monopoly”

  4. 4
    Jeremy Shaffer

    What I’m thinking of writing about soon is more a particular way companies have recently begun to contain costs: the promotion without raise scam. I hope to have some concrete examples of this, but th gist of it is a company gives you a supposed promotion, meaning you have to learn new job skills and have different and likely greater responsibility, but there is no bump in pay, or the raise is a vague promise that somewhere down the road maybe there will be an unspecified pay raise.

    The company I used to work for did something like this. When I was first hired by them they told me that when there was a position to be filled they preferred doing so from within the company if possible. I thought that was great until I found out why.

    Say there’s a position that needs to be filled that starts off with a salary of $60,000 a year. If they make a new hire to fill it they have to offer them at least $60k to start. However, if you are already working for the company, are promoted to the position and make, say, $30k they don’t immediately have to give them the bump in pay to match the starting salary. Deepending on the position the “promoted” employee has to go through a probationary period that lasts from 6 months to a year before they see an increase in pay. Once that time is over they’ll get an gradual increase in pay to match the starting salary for the new position but it wouldn’t be anything over 5% a year and that’s only if you’re very lucky. Usually it was more like a 1 or 2% raise and, due to constant freezes and performance being reviewed on a bell curve, might come every 2 or 3 years.

    There was also a way for middle- level management to game the system and increase their bonuses by accounting for employee raises in their yearly projected budgets and then coming in under budget, and thus claiming they saved the company money, by not giving the raises that made the situation even worse.

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