“Beijing has directed several key state-owned automakers, including VW partner FAW Group, to prioritize technology and market share over profitability. That’s hardly an option for Germany’s publicly-listed carmakers.” https://www.bloomberg.com/news/features/2024-10-14/bmw-mercedes-and-volkswagen-bmw-mbg-vow-evs-struggle-to-compete-in-china
// rents to shareholders are simply unaffordable under a dynamic, competitive capitalism
@interfluidity Maybe, but this probably has more to do with China's geopolitical ambitions. They'll favour taking a loss to further other goals.
It's a lot harder to threaten a country with sanctions if they make all your cars.
Add to this the fact that modern vehicles collect a frightening amount of data and you've also got espionage possibilities as well.
@StryderNotavi Granted on the data security aspect. Of all contemporary vehicles, not just China’s.
But on the rest, China’s capitalism — long on competition, light on profits — is the most successful, and therefore should be taken as the normative form of contemporary capitalism, rather than as some aberration from true Western rentier capitalism.
Sure, state-imposed incentives shape it. All capitalisms are embedded in states. China has simply stumbled upon a superior approach.
@interfluidity A market economy can't work under perfect competition. Manufacturing combines a large number of inputs to make one product. If one input is missing, production shuts down. But conditions are always fluctuating, so if prices are set to exactly match demand & supply, some inputs will always be missing. The price of intermediate goods must, on average, appreciably exceed the zero-profit price. https://www.jstor.org/stable/40720489
@BenRossTransit Or, alternatively, fixed capital can be subsidized, all costs can be rendered variable, enabling firms to remain solvent even under a close approximation of perfect competition. https://drafts.interfluidity.com/2024/09/04/income-driven-repayment-of-fixed-capital/index.html
@interfluidity "competetive" meaning what exactly? I somehow doubt that the carmakers are competing with each other in any meaningful way, otherwise the needs of the customers would be met by at least one.
Got that here in germany too, they ALL make expensive cars for people that have less and less money.
@admitsWrongIfProven China sells EVs for lower than the cost of the cheapest internal-combustion-based vehicles available in the West. Tens of firms actively compete. BYD is biggest and best known, but had nowhere near the dominance marquis firms from Germany or the US have relative to their markets. 1/
@admitsWrongIfProven There’s a broader critique about car culture generally (and I think China has made a terrible mistake by following in Western footsteps and embracing it). But conditional on that, China’s EV market is as competitive, including on price, as any automobile market except perhaps the very early, preconsolidation, days of Western industry.
@interfluidity Heh, also: "planned economy" versus "dedicated to not having a plan economy"
@interfluidity The point is they see the price as relevant and try something.
Can't speak for the US, but it is pretty clear our carmakers 1) do not try to achieve a low price and 2) do get subsidies too, even if maybe indirectly (through favourable conditions)
@admitsWrongIfProven yes. all manufacturing industries get subsidies one way or another, whether by more direct programs or government tolerance / encouragement of consolidation and market power.
china has found a form of subsidy that is often terrible in many respects (make bad loans and pretend they are good pretty indefinitely), but encourages rather than limits competition.
the US like Germany subsidizes in ways that do not encourage competition. i argue we should reform that. 1/
@interfluidity What frightens me most is that the openly authoritarian regime is doing better.
If feels like the side effect will be declared the cure soon, implementing more open authoritarianism while continuing to fail.
@admitsWrongIfProven Yes. That’s a real danger. Ultimately countries that develop power and prosperity and provide for lives and cultures that seem attractive will be emulated. In the 1990s, everyone emulated the US. Going forward, countries will increasingly emulate China — including its authoritarian aspects — unless and until more liberal societies become more competitive at offering an aspirational model.
@agocke @StryderNotavi Gack! Fixed! My whole project here is to say yes, that’s the status quo, but we can learn from China’s experience and innovate on top of it to develop a form of capitalism that is structurally both more resistant to monopoly power and more resilient to vigorous competition. See also https://drafts.interfluidity.com/2024/09/04/income-driven-repayment-of-fixed-capital/index.html
@agocke @StryderNotavi (Thanks for pointing out the broken link!)
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@interfluidity Hmm, but does your argument include compelling reasons for decision makers to swivel from short-sighted self-interest to the long term public good?
I think the rest of us need little convincing.
@Hyolobrika @interfluidity I was apprehensive tooting this because it's a bad analogy.
The authoritarianism is unconnected to their less wrong approach, and it's also not black and white with authoritarianism, which exists here too.
Maybe it should be more like "the unrelated factor declared the cure", but that's not very catchy.
@interfluidity These are two different reasons that perfect competition doesn't work. One says that you need excess production capacity, the other that you need to produce a quantity that exceeds demand.
@BenRossTransit I’ll see when I’m at a computer if my jstor account gets me access to your piece!
But the main inconsistency I see is just perfect competition doesn’t recoup fixed costs, so renders firms liable to bankruptcy, and (as you pointed out previously) supply chains that grow increasingly brittle with depth.
I think excess production capacity is desirable, but not prerequisite to competition. I don’t think there’s any reason (in general) to produce in excess of demand.