Cloral wrote:Without consumers, the company would go out of business.
And without the company, you wouldn't get anything at all.
Cloral wrote:Therefore, there must be an inequality in the transaction.
No, there needn't be inequality. Can you prove why there must be? If I am hungry, and McDonalds offers to sell me a hamburger for 99 cents, and I decide that a hamburger is worth at least that much to me and pay it, how have I been disadvantaged? I have exchanged a value for another value that I consider to be at least equal. No matter how aggrivated I am at the expense, I would not have paid if I didn't think, on some level, that it was worth it.
Cloral wrote: Besides, if all things were equal, why would the company spend so much money on advertising?
A company and a consumer both benefit from a transaction. Therefore, a company will benefit from having the most transactions possible. Advertising is the logical extension of a company's desire to gain more benefits (profits) for itself. Greater desire to produce profits on the part of companies leads to greater opportunities for customers to make value exchanges that allow them to benefit in ways they might not have otherwise.
Riverman wrote:I could be wrong, here, but isn't it the case that if a company sold a product for an amount of money that was completely equal to its value, then that company would not receive any profit in the transaction?
A thing does not have a universal objective value. It has a different value to everyone. A box of tampons has absolutely no value to me, but it is worth money to a woman on her period. Let's examine a situation of a company making a profit.
I purchased a videogame for $50 a few months ago. To me, that game was worth $50. I bought something at precisely its value, and yet the company made a profit. How is this possible?
It is possible because of the secret ingredient that people who believe in a zero-sum economy cannot grasp. That ingredient is human effort and ingenuity. Before I bought the video game, it existed only in the mind of someone who wished to create it. He used money to acquire the raw materials necessary to creat a game (computers, software, employees with skills) and they used their intellect and effort to design and create something. This caused the raw materials which had a value of X to now have a value of X + TheValueOfTheGame. So a new value was added to the economy. These people greated value out of nothing but their minds! It is the magical process of human creative production that added value.
The raw materials are now worth more to me than they were before. I did not want to buy a compiler or a 3D modelling tool. But I am more than willing to buy a videogame.
I paid $50 for a videogame because it was worth $50 to me. If it was only worth $10 to me, I would not have bought it. I paid exactly what it was worth and the company made a profit.
I want to repost your statement again and respond to it a different way.
Riverman wrote: isn't it the case that if a company sold a product for an amount of money that was completely equal to its value, then that company would not receive any profit in the transaction?
Let's say all a company does is get things and bring them to the store. They don't create anything.
I want to buy some chicken. If this company did not exist, I would have to drive to a farm that raised chickens. This would likely be horribly inconvenient, because I would have to drive all over the state (possible the nation) to buy enough food to make dinner. Instead, I am willing to pay much more for chicken than the company that hauls chicken. This company might go to a farm and pay $1 a chicken and buy 1000 chickens and take them all to the store. Then they sell the chickens for $5. They make tons of money! And I pay $5 for a chicken that's only worth $1 to someone else? Why would I do this?
Because the company used it's motive energy to affect that state of the chicken; it's geography. By making the chicken more convenient, they have added tangible value to it (from my perspective) so I am willing to pay more. I am not doing that company a favor by purchasing a chicken. I could argue that they are doing me a favor by bringing it to the store. But that's wrong too, because I'm compensating them for hauling it.
It is a completely equal transaction in which the company profits and I don't.
I hope you can appreciate the beauty of this situation because it is what led to so many (if not all) of the wonderful luxuries we enjoy as semi-modern humans.
Riverman wrote:Hi, Beldaran. Nice to see you.
Hi! 😊