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  1. #1
    Alexander the Terrible yenom's Avatar
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    Default Entrepreneurship is experimentation

    The entreprenuer's role is to bear the cost of creating the product, so he is entitled to get the profits of selling the product. There is no guareentee that the product will be accepted by the market and be successfully sold, so the entrepreneur has to deal with this uncertainty. The role of labor is to create the product, but the entrepreneur already pays labor money to create product(which means entrepreneur will lose money eitherway). He is taking the risk of bringing the product to the market, and whether he can make a profit or not remains an uncertainty. But it is certain he will bear loses from labor costs. To say labor is exploited is not entirely accurate, because there remains the possibility the product will be unsold and entrepreneur lose money to laborers.
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

  2. #2
    pathwise dependent FDG's Avatar
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    Most entrepreneurs take loans anyway, rather than risking their own capital.

    Why? Because an larger entity (a venture capitalisit trust fund, for example) will necessarily be less risk averse than a single individual. It might even approach risk neutrality. So they will be able to bear much higher levels of uncertainty.
    ENTj 7-3-8 sx/sp

  3. #3
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by yenom View Post
    The entreprenuer's role is to bear the cost of creating the product, so he is entitled to get the profits of selling the product. There is no guareentee that the product will be accepted by the market and be successfully sold, so the entrepreneur has to deal with this uncertainty. The role of labor is to create the product, but the entrepreneur already pays labor money to create product(which means entrepreneur will lose money eitherway). He is taking the risk of bringing the product to the market, and whether he can make a profit or not remains an uncertainty. But it is certain he will bear loses from labor costs. To say labor is exploited is not entirely accurate, because there remains the possibility the product will be unsold and entrepreneur lose money to laborers.
    Well, an entrepreneur doesn't have to "bring something to market" and doesn't mean he absolutely will "lose money either way", and I don't know what you are responding to regarding labor is "exploited" in this environment...

    But this is why patents and copyrights - state enforced monopolies exist. Otherwise the products an entrepreneur creates can be almost immediately commodified, to the immediate benefit of society but at the cost of innovation.

  4. #4
    Alexander the Terrible yenom's Avatar
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    Quote Originally Posted by ptgatsby View Post
    Well, an entrepreneur doesn't have to "bring something to market"
    I don't understand what you are arguing about. If the entrepreneur does not sell his product in the market, how can he make a profit? The entreprenuer have to bear the uncertainty of the market, and how the market reacts to the product the entrepreneur or his business creates.
    He has to experiment with the product to make it successful.

    doesn't mean he absolutely will "lose money either way"
    No cost running a business?

    Otherwise the products an entrepreneur creates can be almost immediately commodified,
    I agree with this. Once the competitor copies your product, your product becomes commodified.
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

  5. #5
    Alexander the Terrible yenom's Avatar
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    The whole problem with capitalism is that people won't create goods for free. People are motivated by money. Hence I blame the worker more than the capitalist. The capitalist gets his money selling the product from the market, and there is large uncertainty factor to all this. If worker does not demand money in compensation for creating goods and services, than the capitalist does not have to be compelled to make a profit to pay back the workers. After all in the end workers just buy back the same shit he creates.
    The whole irrational drive for profit starts from the worker, not the capitalist. The capitalist just plays along and take advantage of the system.
    The fear of poverty turns people into slaves of money.

    "In this Caesar there are many Mariuses"~Sulla

    Conquer your inner demons first before you conquer the world.

  6. #6
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    Quote Originally Posted by FDG View Post
    Most entrepreneurs take loans anyway, rather than risking their own capital.

    Why? Because an larger entity (a venture capitalisit trust fund, for example) will necessarily be less risk averse than a single individual. It might even approach risk neutrality. So they will be able to bear much higher levels of uncertainty.
    He would often have to put up collateral to get the loan, and also often be expected to invest at least some start up capital. Likewise he will later have to sacrifice consumption paying off the loan + interest (which is often usurious these days)

  7. #7
    pathwise dependent FDG's Avatar
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    Quote Originally Posted by Il Morto Che Parla View Post
    He would often have to put up collateral to get the loan, and also often be expected to invest at least some start up capital. Likewise he will later have to sacrifice consumption paying off the loan + interest (which is often usurious these days)
    Good point about the collateral, but if he's successful the business should pay much more than the interest, shouldn't it? (Not saying that it necessarily will, at all...)
    ENTj 7-3-8 sx/sp

  8. #8
    Senior Member KDude's Avatar
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    I suggest relocating to the wonderful land of Somalia, free of central government, worker's rights or unions, no floor on wages, and where all of your capital and experimentation is left to your own descretion and defense. It's an entrepeneur's wet dream.

  9. #9
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by yenom View Post
    I don't understand what you are arguing about.
    Likewise - I didn't really know what you were getting at so I scatter shot as much as I could.

    If the entrepreneur does not sell his product in the market, how can he make a profit?
    By definition, an entrepreneur operates a business and has ownership (risk). Historically it has also meant speculator (buy low, sell high, middleman, trader, etc.) Colloquially (and primarily in the US) and the way you tend to use it, it means inventor and creator. In any case, depending on your definition and scope, market can be as simple as R&D or financial speculation, or it can be the full creation of a widget to bring to market. It could be a person who owns stock in a company, or a partnership, or a family running a restaurant. The definition is pretty broad and tends to be idealized.

    The entreprenuer have to bear the uncertainty of the market, and how the market reacts to the product the entrepreneur or his business creates. He has to experiment with the product to make it successful.
    Sure, like all businesses. He may bear financial risk, but this concept of a wild west entrepreneur with everyone on the line is very rare (and stupid). Most invest into a corporation or LLC, limiting their exposure. It's true that an unfortunate amount take loans guaranteed by personal assets, but many also get venture funds or other sources of money (giving away equity in the first, often higher commercial loans or government funding in the second). The point being that it is an active choice to take on risk and it scales at a very personal level.

    No cost running a business?
    This is akin to asking if there is "no cost to consume" (ie: to live); you said he would lose money either way, however he is spending money, not losing money. It's important to differentiate "losing" and "spending", just as it is important to differentiate "profit", "earning" and "making".

    I agree with this. Once the competitor copies your product, your product becomes commodified.
    Right, at which point he makes zero economic profit.

    ---

    I'm presuming that the focus of your argument is about entitlement of his profit under a free market. He is, of course, as entitled to his profits as labor is to their labor, or other ventures (personal financial risk being irrelevant) like corporations/LLCs... which is to say, not absolutely. This is because society directly and indirectly supports his ability to profit from his ventures. Under a free market, all creations are quickly commodified* and society decided that patents and copyrights exist to allow him to profit from successful ventures. Likewise, a business is not taxed on income like labor allowing pass through, giving a tax shelter to their enterprises. In most countries, the workers are supported collectively, through education, medical care and safety nets. Governments tend to offer credits for types of development (namely R&D), as well as small enterprise benefits and preferred status. The list is pretty long, including legal structures and contract support.

    The reasons for these is to support entrepreneurs who create value. There are a lot less incentives to repackaging a widget that is already around, but a lot more for innovative or niche items.

    So, for the most part they are allowed to win big, but they also pay a portion of the winnings for the chance to play in a more favorable environment.

    The whole problem with capitalism is that people won't create goods for free.
    That's not a problem, that's a feature. The price mechanism is what moderates the creation (and selection) of goods. The price mechanism requires consumers to have limited resources (income) so that they signal their preferences. Likewise, the income (cost of labor) is a baseline cost of producing a widget (service), allowing allocation of successful production to available labor. If labor was free it would also have to be unlimited not to run into issues... unfortunately, we don't have a lack of scarcity quite yet.

    OTOH, more media is produced on YouTube, for free, than I'll ever be able to watch. Non-monetary incentives can be more powerful than (reasonable) monetary incentives. People do indeed create for free.

    ---

    * Of course there are exceptions, barriers of entry, market space, unstable equilibriums, etc. Apple is a good example; generally technically inferior but occupies a weird part of a market that can't be entrenched on easily because they occupied that space first.

  10. #10
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    Quote Originally Posted by KDude View Post
    I suggest relocating to the wonderful land of Somalia, free of central government, worker's rights or unions, no floor on wages, and where all of your capital and experimentation is left to your own descretion and defense.
    lol, this is what I always say to extreme libertarians and anarchists.

    some people have a good concept, but take it too far beyond what could ever work in practice.


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