• Funderpants @lemmy.ca
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    1 year ago

    This is one of those sayings that took a long time to sink in for me, despite my undergrad economics minor.

    It feels like it shouldn’t be true but that’s only if you don’t really understand that business exists to maximize profits, not maximize goods and services provided. Next, that profits can increase even if units sold decreases. In a for profit company the number of units sold or services provided will be the number where profit is the most, not the number where the units/services are the most (unless they happen to be the same).

    Think of this old trades saying, if you double your price, but only lose half your customers, you still make the same profits. Data driven business knows this, especially in oligopolistic fields like food production, and it’s likely the reason inflation on food is so bad. They can double the price of a loaf, and half as many people buy, so profits go up , they literally don’t care if you eat, they generate scarcity by producing below their maximum output. They trade production for profit.

    That’s just my long ass way of saying “Capitalism must create scarcity to justify its existence.”