The Myth of Profit-Profit Economics

Warning: Anti-Establishment rant approaching.

Okay.

I haven't been blogging for a while now because most of the time I have an idea that I really want to write about, it isn't one of those simpler and free-roaming ideas or experiences but rather a complex idea that I know will put many readers off and that I have less knowledge of in whole. I'm gonna try to attempt to explain one idea today (keeping the other ideas as isolated from each other as much as I can to prevent confusion) as much as I can by being relevant, yet thoughtful. I'm not an economist by training, so if you see any flaw in my thoughts, please point them out as I am still a learning man.

Let's start with a strong premise:

There is no such thing as absolute profit-profit transactions between two parties in the economy.

When I say this, I mean every single business transaction, investment plan, sales and purchasing of product or service, is always a profit-loss scenario where one party has more to gain than the other.

The most frequent argument against this idea that people have been saying to me is that both parties have come to an agreement and has gotten something they want in exchange for what they give in return, and since both parties now have what they want, they are then satisfied and thus both parties profit. I believe that this can be true if and only if both parties are completely happy with the exchange which has to be objectively (ideally) of the same value.

The truth is that in almost most scenarios today, both parties will both think that they are losing out and had to compromise to the others' demands. Even in scenarios where both parties are "completely happy" (where a rich businessman buys an expensive car because he likes it and ends up happy with the purchase and the salesman is obviously happy too), the businessman (assuming he is financially smart) would have wanted the car to be cheaper and the salesman would have wanted to sell it for higher. Or in rarer cases, some people would have lost out for selling something for so much cheaper because there is no knowledge of how much it should be priced (or in reality the market prices of commodities are terrible absolutes in general).

Crap. I think my argument is going in circles. I think I better start from the fundamental of where profit started.

Back in the days where bartering was a method of economic transaction and there was no currency to represent value, people had to barter goods based on an exchange which both parties deem as equal. Yes, even at that point of time, someone was bound to profit more than the other. However, as the market wasn't as open as today and there was less capitalism at work, people had the power to objectively price goods based on overall time, labor and resource required and standardise it across all transactions. So, yes there is already a profit-loss transaction happening, but it wasn't as apparent.

Then as currency became a means to represent value and product markets remained local while labour markets open up globally, the world

Ugh, I'm just not making my point! Just go and read: Understanding Capitalism Part II: Personal Property, Money and Finance...

This is why I hate blogging these days.