Re Nicky's [5476]: > It is impossible for the monopolistic firm to > set *any* old price, at least if we assume > they are profit maximisers. Am I > wrong about this? Hi Nicky. I hope your back is feeling better today. Monopolistic firms are relatively rare today in advanced capitalist nations and when they exist they are often created through the assistance of the state and are controlled by state agencies and could therefore be said to constitute quasi-monopolies. What is commonplace --indeed, what has become the predominant form of market structure in late capitalism -- is oligopolistic markets where a few large firms dominate a market. Price is determined differently in an oligopolistic market than in a classically competitive market. It is to a large degree determined arbitrarily through such schemes as price leadership and cost-plus price determination (and sometimes, but rarely, includes collusion). It is true, as you suggest, that there _can_ be limits to the degree to which oligopolies can increase price as a means of increasing profit margins. Putting aside the role of the state (in the U.S., anti-trust policy is rarely directed at oligopolies), it depends on (as you suggest) the price and income elasticity of demand for the commodity (and here I think Steve is wrong to simply dismiss these concepts) *AND* the degree and success of product differentiation strategy by the oligopolies. If, through advertising and marketing, a firm can create sufficient brand loyalty that consumers change the nature of their demand so that it is exclusive to a particular firm's commodity, then that oligopoly can with confidence know that a price change will not lead consumers to substitute lower-price goods produced by rival oligopolies. Thus, the success of the product differentiation strategy allows these oligopolies to set prices _as if_ they were monopolies. Now we get to the issue at hand: is this, as Jurriaan suggested, a counteracting factor to the LTGRPD? Most Marxists (including those on this list, I think) would say ... No. The reason offered is that what oligopolies gain is at the expense of other capitalist firms, i.e. that the result in the aggregate is only a redistribution of surplus value rather than an increase in its mass or rate. I am not convinced by that argument, especially when one considers the commodities produced by oligopolies destined for working-class consumption. Suppose that an oligopoly, as a result of advertising and marketing, is able to charge working-class consumers a market price three times greater than the value of those commodities. Conventional Marxist theory would assert that other firms pay for the success of these oligopolies through a loss in the share of surplus value that they appropriate. Yet, who pays the higher prices? It is, in this instance, working-class consumers, of course. Thus, I think that a better explanation of what is happening is that the working-class are the losers in this process rather than merely other business firms. What is changed necessarily , then, is not merely the distribution of surplus value among capitalists. What this can represent is, rather, a *redistribution of income and wealth from the working-class to one segment of the capitalist class through exchange*. I.e. by selling workers commodities which are significantly and persistently priced greater than value, these capitalists have effectively "ripped-off" the working-class in the marketplace. This, of course, does not deny the exploitation of the working-class that occurs in the production process but it suggests that *in addition* to exploitation, workers can (and are) ripped-off *again* in the marketplace. This redistribution of income and wealth from the working class to the capitalist class could perhaps be seen as a counteracting factor (although, it was certainly not considered so by Marx ... but then, he lived in a different epoch of capitalist history, didn't he?). If anyone doesn't think that this is an empirically significant trend then we can consider the bundle of goods that workers purchase today, who produces them, and what the prices are. In solidarity, Jerry
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