Once upon a time, dafties who studied "economics" (a "science" one down the list from astrology) went on about the "invisible hand" of the market that supposedly auto-sets the balance between demand and supply and thus the prices of everything. The notion has been debunked continuously for about 250 years but neolibs love this dogma and quote it still, as they justify their various exploitations and general spivery.
These days, we have the now ubiquitous AI, which employs binary logics - uninterested in C18th dogmas about price setting - to employ more effective methods. More effective at serving the greed of the sellers, that is; not the desires of the buyers.
An article in New Statesman magazine (for which you will need to register for two free articles a month, as I recall).
https://www.newstatesman.com/business/economics/2023/07/algorithms-stoki...
A quote to give a flavour of it's main point, that prices are now set by virtual cabals embodied in the machinations of algorithms employed by most of today's greedybastid businesses:
"...what if one of the apple sellers, Seller A, takes downs her “four apples for £1” sign and replaces it with a mirror that simply reflects the other seller’s sign? Now, any time Seller B reduces their prices, Seller A does too, at the speed of light. Seller B can’t undercut Seller A any more. There isn’t a morning or afternoon or even a few minutes when customers in the market will see that one stall is selling apples more cheaply than the other. There’s also, as a result, no incentive to cut prices any more".
This fundamental price-comparison capability, across all sellers of the same goods, at the same time, has many other similar effects, all of which end up with sellers charging more and buyers inveigled into paying more. You like a certain brand? The price to you shown by the Cybershop will be greater than that shown to those buying similar items of other brands.
Are they doing it with bicycles and bike bits, the vast majority of which now seem to be bought from organisations likely employing these algos? Is the recent rapid inflation of bike and bike-bit prices subject to these same greedflation policies and techniques as are the prices of petrol and every other "staple" of modern life?
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22 comments
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The Apple example misses the point.
It assumes that both sellers have the exact same costs.
In reality different sellers have different costs, whilst one may be able to cut the price of their apples to £x and maintain a profit others will not.
This forces the less efficient sellers to either get more efficient or compete on a different metric.
Being able to instantly match your competitors price isn't an advantage unless you can also match their costs.
The apple examples isn't good - there are so many vendors, options and alternatives. With many sellers, someone is likely to be a disrupter (as J Bezos said, "your margin is my opportunity"); you could buy fewer apples or different apples (or perhaps bulk buy for a lower unit prices); or something other than apples. Or nothing at all, particularly in the case of durable goods (your existing bike is perfectly good!!).
I can see how these algorithmic models could work for things where there are fewer suppliers or alternative choices - but it's just one in a number of competing tactics.
Not many people think perfect markets exist - some are better than others - but the article appears to be making a bit of a strawman argument IMO.
But seller A will have confusing backwards mirror writing!?..
Ultimately, it's down to the consumer to decide if they are prepared to pay for the goods at the price specified. Competition is often broken in markets as there's nearly always a benefit to being the biggest player and information is often hidden from customers, so the idea of a "free market" is somewhat of a myth.
I had hoped that 3d printing technology would democratise the production of physical goods in a similar fashion to how open source software took over the world, but it's much cheaper for a factory to produce goods using more or less traditional methods than for people to get designs 3d printed.
In my childhood, I remember plastic toys being rendered useless because one tiny piece had snapped. A friend of mine uses his 3D printer to make replacements for those kinds of broken pieces.
I firmly believe that if we reduce our usage, prices will come down. We reduce by either using less, or using what we have for longer.
We consumers do, in a fashion, decide to buy or not to. However, the nature of this decision doesn't seem to be the "acting in my best & rational interests" sort of decision that neolibs love to imagine but rather an impulse from the deep unconscious serving some inchoate lust induced in us by the psycho-tricks of advertsing, fashion, peer-pressure and all those other things affecting buys that tend to the irrational.
People will pay the most ridiculous prices for things they momentarily lust for, even when their other usual habit of sticking it in a cupboard with the other 67 examples of a near identical thing revolves them rapidly from "satisfied consumer" to "once more avid seeker of the next consuming thrill".
As to the notion of "a free market", this is indeed a complete myth, as you say. Markets are highly refined and very particular sets of law and enforcements that tend to favour one small class over all the others. Sometimes "the others" are duped into thinking they're free in these markets by the minimal dollops of goods and services allowed them by the aristocracy who own everything, including the law-makers. .......
Often, the dollops of good and services are shrunk, as the aristocrats wax greedy and tweak the market to award themselves more whilst forcing the market to a zero-sum game as a punishment upon "the undeserving poor" who the aristos like to employ as a fine excuse for being greedy themselves. ("I deserve more because I'm successful and I'm successful because I can 'earn' more" - The Protestant Ethic for capitalists).
Good lunch was it?
I'm going to have to spend my lunch looking up the meaning of words/phrases in Cugel's reply....
Yis. I had kedgereeee with fresh tumeric and coriander in it; and a piece of pear & ginger cake just out the ladywife's oven. Also a large cup of freshly ground and filtered Pensivito coffee.
The grog-supping you imply is not required as I'm already drunk on the sound of me own typing.
That cake sounds nice
The ladywife is a cake-pusher. She also grows her own. I yam not the only addict hereabouts, neever.
The cakes are good post-bikeride. However, if they're regarded as pre- the next bike ride, they are not good as I am not as svelte, narrow or gossamer-like as I might otherwise be. And this in the land of West Wales, where there is only 500 yards of flat road (the sum of all the little bits at the top of hills and at the bottoms between the hills).
Fifteen minutes grinding up a hill, say; what seems like 30 seconds to go down to the bottom of the next 'un.
I would carry cake with me on the bike but there's no point as I'd only get it out and eat it after about 50 yards cycling. Why waste time wrapping it up and stowing it away just to unwrap it a minute later?
Actually we were in Aberystwyth last week - by golly it's just one hill after another! And the roads are so windy as well. I was going to hire a bike but didn't get round to it. Don't know if I could have coped with those hills, so much respect to anyone who does.
Before moving to West Wales, I cycled all about the lovely landscapes around Lancaster - Lakes, Dales, Bowland Fells, Howgills, Pennines ..... But despite the many and often savage hills of that district there was also the pan-flat Fylde as well as many routes going up essentially flat roads following river valleys.
In West Wales there is never any respite from hills. Even the river valley roads undulate constantly with some serious pitches. In our now many wanderings down every back road in a 25km radius from the Welsh abode, we've only discovered one truly flat stretch of road in the Cothi valley going NE out of Llansawel .... for a whole 2km before it begins to rear up & doon again.
After three years of grovelling & suffering on the ladywife's e-bike back wheel, I sucumbed and got one meself. I tries reet-hard not to switch the motor on but when she sails off up a black arrow, I can have a bit of e to avoid death-by-brain-blott in attempting to keep up with the rascal.
Out by myself, it's the un-e'd bike still. .... Unless I fancy a seriously hilly route. (There are many possibilities of 1000M ascent per 50km). Having an e-bike means no road-hill is forbidden me, even at 3/4 of a century old.
Hmm... maybe you're younger than I thought?
''Your talk is surely the handiwork of wisdom because not one word of it do I understand''
Well think on, lad.
ahhh FFS. Just managed to look up all the words and you've added a load more.
I'm in a lookup-spiral. Going to have to pull my chute.
I must admit to having a cupboard full of film cameras which all look alike, although I didn't pay ridiculous prices for them. I just pay ridiculous prices for film and developing.
That would depend upon the elasticity of demand for the particular product. I recently paid a small fortune for a new chain, because that is obviously inelastic.
Yes, because "chain stretch" is a misnomer!