[lbo-talk] revisiting the FROP and the Brenner hypothesis

[Philip Pilkington]

>
> But wait! Company A starts making only big cars for outdoorsmen and
> assholes. Company B starts making only small cars for emasculated Europeans.
> Company C starts making only hybrid cars for fetid hippies. As long as an
> outdoorsy asshole wouldn't be caught dead in a small car - and a Euro-weenie
> would never drive an SUV - and a hippie would rather die than be seen in a
> gas-fueled car - then these three sets of consumers are no longer facing
> three competing car manufacturers, but rather three separate monopolists,
> each charging monopoly prices. (Technically speaking, the degree of monopoly
> from the producer's point of view is a function of the substitutability of
> the products from the consumers' point of view.)
>
> So monopolistic competition is the rule in capitalism, not the exception.
> This type of profit-boosting imperfect competition is absolutely endemic.
> And it didn't just start in 1970, though it's probably accelerated since the
> postmodern leap. I'd be interested to see if Brenner has addressed this (or
> will).
>

A quick one one this, because I'm on my way out to see a film so I'm quite
literally replying while getting dressed with my dick in my hand - I'll
reply to the rest later - but there's something which sticks out like a sore
thumb here:

These companies are specialising and using marketing techniques to "grab"
various consumers, sure. But why?

Its interesting that you mention the car industry, which in the last few
weeks has shown itself to be in a chronic state of overproduction - indeed
anyone could have seen it coming. One could argue that the car industry
needs to undertake specialisation precisely to sell more cars than are
necessary.

Take BMW who were in serious trouble. They stopped merely producing luxury
sedans and moved into the SUV market (the X-3 and the X-5) as well as the
pansy-handbag car that is the new Mini. Could we not interpret this as an
attempt to expand into an overcrowded and over-supplied market THROUGH
specialisation. Remember at the same time they were doing this they were -
that's right - handing out cheap credit deals to potential punters. So what
happens? Cars become a status thing. You have to have (a) a newish car or
(b) the car that fits your "personality" or (c) all of the above.

I won't go into why, but I have quite good knowledge of the car market in
Ireland. The two first things that were hit here were cars and housing.
Housing due to a property crash obviously; but why cars?

Now we have a highly overinflated 2nd hand car market with high quality cars
being worth almost nothing. A perfectly functioning low-mileage 1997 BMW
5-series, for example, worth about €6500 - €7500 a year and a half ago would
now, if you were lucky fetch maybe €3000 - €4000.

This all makes Brenner's argument look rather appealing to be honest...