Capitalism is not really a theory or proposal for how an economy should work - it is just "what happens" if you let people loose without trying to force them to perform according to your pet political theory.
Over the years it has evolved but in its most primitive form it involves the swapping of goods and services. So I cut your hair and you give me a cake.
Then came money, the joint stock company, banks, stock exchanges, lawyers, accountants, factories, warehouses, trains, ships, lorries, insurance and all the other devices which make the conduct of business easier.
Not to mention fraudsters, conmen, consultants, thieves, robbers and a whole host of unpleasant people who are essentially parasites but who may well masquerade as legitimate business men.
But evil parasites are a feature of any political system. What kind of people live in huge luxurious houses under communism - the workers? Dream on. It is the friends and relatives of the Great Ruler
Because if you are smart you can use capitalism to become rich. And if you are extremely smart, you can use it to become extremely rich. And that pisses off the vast majority of people who are neither smart nor rich.
Even I am guilty of this. When I am in the overtaking lane of the motorway and a black Range Rover hurtles up my arse doing well over the speed limit, I think "fuck off rich bastard". This despite the fact that I have a Lamborghini Huracan parked at home which cost double the Range Rover. Not to mention several other cars which teenage boys typically put on their bedroom walls.
There is also the perception that if you are rich, you must have stolen that money from the workers. And to be fair, there are plenty of people about who have done just that. But read on ...
The easiest way to become rich is by improving the lives of other people. Really? Yes really! You do this by offering them better or cheaper goods and services. The reason this is the easiest way (by far - trust me) is because contrary to what you may think, it is actually quite hard to take money from people. They don't like you taking their money off them. They tell their friends. They never go back if you rip them off, so you have to find a constant stream of new victims.
What is your favourite cafe? Why do you keep going back? Are you forced to go there by the state? Do armed men force you there at gunpoint? Nope. You go back because the food is reasonable value for money. The service is dreadful (this is the UK, after all) but Doris is friendly enough and they know what you like.
If a nearer, better, cheaper cafe opens you will move there. There is no sense of loyalty
But how do you get, filthy, stinking, disgustingly rich? By innovation so that you are not just a bit better or a bit cheaper than the competition but you totally blow them out of the water. The industrialists who built vast factories just down the road from my mansion, reduced the cost of a shirt by a factor of a hundred times - from maybe the equivalent of £1,000 to £10. Prior to that, shirts were made by hand. First you collect the wool, then you card, comb and clean it. Then you turn it into thread, then weave it into cloth then tailor it into a shirt. Weeks of labour just to make one shirt.
A while back I decided I needed a feather duster. Where would you find such a thing? You get on the people's bus and go into town and trudge round for a couple of hours and if you are lucky you find a feather duster but it has taken at least three hours of your time - you had to wait 20 minutes for the people's bus.
Well no - I actually did clickety click on Amazon which took maybe 5 minutes and it arrived the next day. And Jeff Bezos still owns 10% of Amazon which he founded and men in suits reckon his share is worth $90 billion. So who are the victims? Where did this wealth come from? It is new wealth. When a hunter from your tribe goes off and kills an elephant, this is new wealth. And Amazon is an elephant.
You may imagine that you can get rich by investing in the stockmarket, or dealing in commodity futures or foreign exchange ("sell Cable"). Nope! You won't. For the simple reason that these are zero sum games. For you to make a million, one thousand suckers all lose £1,000. To make money in these markets you need to be super, super smart, with nerves of steel. Only a microscopic percentage of people can beat the markets. I have been trying for 50 years with dismal results. It is impossible. Unless you are Warren Buffett. A very nice man. But for Warren to make one hundred billion, a hundred million suckers all lost $1,000. In my case, a lot more! My own fault - nobody forced me. Don't go there.
If only!
I am always reading how firms make "Vast Profits" but what is the reality? Well, let's take a look. When I last looked (five minutes ago) there were 1,990 companies quoted on the London Stockmarket of which 920 made a loss. So 46% of quoted companies lost money last year. Bear in mind that these are multi million pound outfits with structures in place to make "vast profits". But they didn't.
What about the Land of the Free? The USA. Are they all making "vast profits"? Nope. 2,582 out of 5,901 companies lost money - 44%. Slightly better than our 46% - maybe the Americans are better at cooking the books?
So are they cooking the books? Yes, they are. Because if you make a loss you may well get kicked out on your ear. So the true figure is much worse. Typically they make maybe £5m pa profit for 9 years and then a new guy takes over and realises that the books have been cooked. He orders a thorough review and the accountants declare a loss of £50m which is a one off event. Then for the next 9 years they make £5m a year profit followed by the £50m write off.
So in reality they are NOT making any profit - ever. But the accounts show that in 9 years out of 10 they are making a profit.
It is incredibly difficult to make money - there is always some bastard out there with a cheaper, better product. And if you do by some miracle find a way of making "vast profits" people will notice and before you know it, your "vast profits" have evaporated because you need to lower your prices to compete with new entrants to the market.
What about small businesses? Do they make "vast profits"? No. The vast majority are earning practically nothing, they would be much better off working in McDonalds. They carry on because the idea of being ordered around by some jerk in a suit is not something they can even contemplate. We are awkward buggers who don't like being told what to do.
So it's not easy then? No, it is incredibly difficult and chances are you will go under if you try to start a business. When I started, I had read all the books but after 7 years I was teetering on the edge and living on stew. Then I escaped by a miracle and found a gold mine (not literally). But I was very lucky - right place at the right time.
So, if all that does not put you off, start a business doing something you know inside out but with a subtle twist. In the UK you could start a cafe or restaurant where instead of ignoring people hoping they will go away, you welcome them and make sure that when they need something they get it.
Maybe have a hooter on each table or a flashing blue light? Or a special insert into somewhere sensitive that gives the waiters an electric shock when they ignore you? Not fatal, just enough to make their hair stand on end and sparks fly off their noses.
By all means think of ways to lower your costs and improve your product but DO NOT LOWER THE QUALITY. If you do, your customers will desert you and within 6 months you will be history.
Bob Cory
Modified on 31/07/2023 at 12:43:56 by ℗ Bob Cory