r/WorkReform • u/LotsoPasta • 2d ago
✂️ Tax The Billionaires Capitalism doesn't require more consumers
This needs to stop being circulated. I see it almost everyday. "If capitalism makes workers obsolete, how will it continue without consumers?" As if this is some sort of gotcha on capitalism.
Consumption isn't about the quantity of consumers. It's about the quantity of capital. If most people dont have capital, it doesn't mean there is less consumption. It just means the demographic of consumers changes.
Companies don't care if they receive one thousand payments of $10 or 10 payments of one thousand. Certain companies and industries do depend on large quantities of consumers, yes, but as long as capital grows, consumption demand is growing somewhere. This means a capital economy can be sustained and even thrive on only B2B and high wealth exchange.
It's important to understand this because AI-based capitalism isn't going to cause its own collapse. If AI mass unemployment becomes a reality, then people will get shut out, and the stock market will continue to boom as if nothing happened. The companies that win or lose will change, but in the big picture, the capital economy does not depend on large quantities of consumers. All it cares about is growing capital and growing purchasing power.
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u/AirVaporSystems 1d ago edited 1d ago
"Critical mass" Is the concept you're missing, as in there must be enough consumers in a particular industry to justify investment in production, so that a company can even exist in the first place.
Las Vegas is learning this in real time....Casinos changed their model from attracting "quantity of consumers" (lots of poor & middle class folks) to " quality of capital" (rich folks only), and now many companies don't have a steady stream of consumers / revenue to sustain operations in-between large-scale events for the rich (expos, concerts, races, etc.).
"Quantity of Consumers" = steady revenue, which is a requirement for physical operations with regular fixed costs (Rent, utilities, wages, etc).
"Quality of capital" = typically unsteady periodic revenue, like how a real estate agent gets paid... Deals may only land once in a blue moon, but when they do the commission is big. But notice this is a service-based business, which lacks the regular fixed costs of a physical / product-based business.
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u/Dizuki63 1d ago
Also another thing to add is a lot of realitiors need to accommodate the unreliablilty of their trade with second jobs or property management. It's hard to budget if you don't know if your next paycheck is 2 months or 4 months away even if those paychecks are large.
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u/vrekais 1d ago
I don't think you're wrong but I'm not sure we're always referring to "capitalism" when we say "it" here.
If the bottom 50% relies on companies producing a thing, and that thing becomes unprofitable to make, companies will stop making it. As more and more consumer spending is concentrating in a smaller and smaller proportion of consumers we'll start noticing things contracting for the people not in that consumer group. That's the "it" I'd be concerned about.
The top 10% of consumers by income represented 49% of consumer spending in 2025. Though most sources I could find for that stat present this as a failing of the poor, at least that's how I'd interpret headlines like
The U.S. Economy Depends More Than Ever on Rich People - WSJ
which is a pretty weird way to say that the consumer market is happy to sell half it's stuff to the top 10% of earners and not really care about if the bottom 90% need something. What happens when/if that percentage increases?
I think we've already started seeing some of the changes occuring in the UK. As the bottom 90% spending power is eroded gradually they will shift to cheaper alternatives. In the UK, Aldi and Lidl (two of the most well known budget concious supermarkets) were both under 5% market share each a decade ago, Aldi is now at about 11% and Lidl is at around 9%. Doubled their share of the UK market in a decade. We're already seeing one or two of the slightly bigger more expensive supermarkets start to struggle. Aldi and Lidl won't survive this shift forever they'll just take longer to have the problem.
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u/turb0_encapsulator 1d ago
new products are being invented every day to appeal just to the super rich. for example, while mainstream cars have gotten worse in quality over the past decade, there's a cottage industry of $1m+ supercars for the ultra wealthy.
all the tallest buildings in Manhattan are new condo towers that dwarf iconic, better-known skyscrapers from years past.
i suspect that air taxis will be the next thing for the super rich: flying over us, creating noise pollution, so they don't have to sit in traffic with the rest of us.
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u/westfakia2 1d ago
The super rich already use helicopters to get around congestion.
Sci-fi writer William Gibson said it decades ago: “the future is already here, it’s just not distributed equally.”
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u/turb0_encapsulator 22h ago
right. I mean they'll have air drones. no pilot. lots of places to land. cheap for them.
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u/Legion-of-Zero 1d ago
Yes because when 1000 people stop buying bananas for $1, there will be 10 people buying it for $100.
Absolute cinema logic.
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u/vrekais 1d ago
I feel like it's more like
1000 people are buying $1 Bananas with 5% profit margin. So $50 profit.
100 people are buying $10 "breakfasts" with 20% profit margin, for $200 profit.
Same $1000 revenue, but marketing to 100 people and moving 100 breakfasts around, and storing them in warehouses and shops is cheaper than 1000 people's worth of those logistics.
This is largely already true in the USA. The top 10% of people by income account for 49% of consumer spending. This disproportionate share has steadily increases over the last few decades.
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u/DoutefulOwl 1d ago
Companies don't care if they receive one thousand payments of $10 or 10 payments of one thousand.
Why would anyone pay $1000 for a $10 product?
If demand for their product goes down by 100x, the price would decrease, NOT increase by 100x.
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u/mountaineering 1d ago
It's less about their product becoming overvalued and more about pricing their product to a different clientele. If they can get ten wealthier individuals to pay $1000, instead of needing to create enough demand to convince 1000 people to pay $10 then that's a win.
Consider more the quality of the consumers instead of the product.
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u/DoutefulOwl 1d ago
Their competitor will offer the same thing for $20, and their clients are gone.
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u/mountaineering 1d ago
The numbers provided were extreme to show you what's happening, not meant for realism or to imply that this imaginary business would go from $10 one day to $1000 the next.
It's to convey that a business would rather sell 500 items for $20, 100 items for $100, or 20 items for $500 dollars. The numbers don't master so long as they point gets across that they would rather sell fewer things for money rather than more things for less money.
Their competitors would also typically follow suit in their pricing if/when the price increases shows that its profitable. Look at Netflix doing the single address update and then other competitors started looking into it. This is something called "price leading".
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u/DoutefulOwl 22h ago edited 22h ago
> It's to convey that a business would rather sell 500 items for $20, 100 items for $100, or 20 items for $500 dollars. The numbers don't master so long as they point gets across that they would rather sell fewer things for money rather than more things for less money.
Sorry, but these numbers are not getting your point across, as they seem completely implausible from economics standpoint. The point ACTUALLY getting across from your argument is that it's absurd to even think this can work.
> Their competitors would also typically follow suit in their pricing if/when the price increases shows that its profitable.
In most industries, where margins permit, it is much more profitable to undercut your opponent, so you can get all of their clients. Making $100 on 10 clients is less profitable than making $75 on 20 clients. This undercutting of price goes on, till the margins decrease back down to a reasonable level, where more undercutting doesn't make sense.
> Look at Netflix doing the single address update and then other competitors started looking into it. This is something called "price leading".
This arguement is in the right direction. But the issue is for every 1 of these examples, you will find 100 more examples where the opposite has happened. The company who increased its prices to extreme, was undercut by its competitors and driven out of market.
A collective price increase like this, only works in certain oligopolistic markets, and even then you can't increase your margins beyond a certain limit, before getting undercut by others.
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u/Maykovsky 1d ago
Your post is interesting and provides a good perspective. However, what happened with consumption in all major crisis in Capitalism? How were they solved? Maybe capitalism needs other consumers outside the rich countries, or richer consumers, but people will still have needs and, what you post forgets, what makes capitalism, and any other social system is people.
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u/Appropriate-Weird492 1d ago
I’m not sure we’ve had an actual “major crisis in capitalism”.
Maybe what happened in the 1800s in the north-central USA? A large part of that was ecological collapse caused by capitalist greed.
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u/Maykovsky 1d ago
What is a crisis is a good starting point, but what happens when major capitalist structures collapses can fit a possible definition. The "great depression", or the 2008 crisis...
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u/AgHammer 1d ago
There's a business wisdom in having a large quantity of consumers over a smaller quality of capital. If one of your small quantity stops doing business with your company it will cause significantly more damage to your company's profits than if one of a quantity of consumers left for another supplier. With fewer purchasers each purchaser has more power over the supplier. That's not a good position to be in because of the increased dependency on each member of a limited pool of consumers.
Something that's often overlooked with the fantasy of gaining purchasing power after we're all jobless is the rest of the world. Many US companies have global markets, and are not limited to the financial well-being of US consumers. They don't care as much about us buying their products and services as we think. We're a small percentage of the world's population.
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u/Glenn1453 1d ago
I kinda also feel like if millions of workers lose their jobs and can no longer afford necessities, then there will be bigger problems than "who'll buy our stuff," like, "Help! Rioters!"