Deconstructing Mega-Corporations vs the Real world

[King Green]

...Have any of you noticed even during this mass panic corps like Disney and Walmart are in slow production yet still refuse to shutdown their businesses unless killed by another powerful corporation? How does corporate value become the peak evolution of financial value?
I don't know what shit is happening in the money wars but this type of world control isn't going to be what the head honchos are imagining, mainly with majority of people having the choice to end their pay-sevice to the company by physically LEAVING. Like how folks in the US will leave this place if congress or the president/senator decides to fuck up REALLY bad.
Plus personally, I hate it now bigwig companies like EA are making bad paywall mobile games that openly mock the player after tutorial.

How would you lot perceive the future of corporate world-conquest?

[CharlesPhipps]

I grew up in Appallachia.

The thing is that cyberpunk postulates a future where I already live and have lived. The companies own the local towns and dictate to local authorities. When someone steps out of line, they get replaced. You go into the museum and education and its all about how they built this place and teaching you where you go into their big plan.

[BridgeConsoleMasher]

Corporate hegemony comes about because corporations are often integral to an economy. It's not ideal obviously given lack of oversight of both public and private affairs, but when you have inefficiencies (substantiating hell an insufficiency) in a complete network of exchange then you need a system that can account for the population, thus you get money supply and wage equilibriums. The crucial fact is that economies of scale increase overall value by lowering cost output per unit. That value concentration isn't necessarily being sucked out of the workers btw the corporation is just reaching a fluent supply operation to match consumer demand, and functions so due to a system of specialization that optimizes productive capacity with particular jobs to particular people in spite of everybody not having skills to survive on their own without wages.

[GreyICE]

Marginal cost declines only to a point, if you remember Econ 101. Most large corporations are larger than the point of declining marginal cost - most of them are large and bureaucratic enough that smaller companies can do what they do cheaper.

What the smaller companies can't do is lobby, manipulate regulations, and bully the market the way megacorps can.

Megacorps do not benefit from declining marginal costs. They're too large. Instead they benefit from behaving like oligarchs, controlling entire segments of the market and elbowing out possible competition.

[BridgeConsoleMasher]

Marginal cost declines only to a point, if you remember Econ 101. Most large corporations are larger than the point of declining marginal cost - most of them are large and bureaucratic enough that smaller companies can do what they do cheaper.

What the smaller companies can't do is lobby, manipulate regulations, and bully the market the way megacorps can.

Megacorps do not benefit from declining marginal costs. They're too large. Instead they benefit from behaving like oligarchs, controlling entire segments of the market and elbowing out possible competition.

That's a little above your course level I'm afraid. Marginal cost is just a differential to determine quantity output where it meets marginal revenue. It's not minimized at that point, it's just a matter of bringing in more money then you're putting out at that nth unit.

Influence on government is a problem like I said but larger scale business is utterly more efficient as far as production capacity.

[GreyICE]

Marginal cost declines only to a point, if you remember Econ 101. Most large corporations are larger than the point of declining marginal cost - most of them are large and bureaucratic enough that smaller companies can do what they do cheaper.

What the smaller companies can't do is lobby, manipulate regulations, and bully the market the way megacorps can.

Megacorps do not benefit from declining marginal costs. They're too large. Instead they benefit from behaving like oligarchs, controlling entire segments of the market and elbowing out possible competition.

That's a little above your course level I'm afraid. Marginal cost is just a differential to determine quantity output where it meets marginal revenue. It's not minimized at that point, it's just a matter of bringing in more money then you're putting out at that nth unit.

Influence on government is a problem like I said but larger scale business is utterly more efficient as far as production capacity.

Your definitions are almost completely wrong. Marginal cost is the cost to produce an additional unit of whatever you're manufacturing. It's the difference between making 5,000 of X, and making 5,001 of X.

Typically it declines initially, as economies of scale mean it's cheaper to make 20 of something than 2 on a per unit basis. However, as size continues to grow, structural inefficiencies mean that marginal cost starts to climb again. At that point, unit 5,001 costs less than unit 5,002. And unit 5,002 costs less than 5,003.

In that case, two companies that each make 5,000 units can manufacture for less cost than one company making 10,000 units (assume fixed costs are low, but high fixed costs that prevent this lead to something called a "natural monopoly". So for this, it'll be a low fixed cost service). Which we typically see with smaller companies being leaner, more responsive, and able to undercut the giants.

Megacorps are far past the marginal cost increase, meaning they have to leverage their size to stop competitors from undercutting them.

[BridgeConsoleMasher]

That's right, it's... a differential. It indicates more efficiency at larger businesses than smaller businesses. Though you are right and I am wrong about it being the focus in economies of scale.

Bigger companies tend to excel at specialization and production capacity. This isn't really negated by economies of scale slowing down and stopping at some point. That's the point of most efficiency either way.

Smaller businesses don't take advantage of economies of scale at all. They're better at filling cracks in consumer markets or going ahead and competing just within their own regional market whereas bigger companies get the most product to the most amount of people wherever.

It's a lot more practical to get coca cola to every city than it is for every city to have its own coca cola or depend on one from a neighbor.

[clearspira]

It's funny though. People who think that the illuminati and the new world order exist always seem to miss that the power above the power isn't secret, hidden or covert. Its corporations.

And that is why democracy is a lie. Money influences your government, not your vote.

[GreyICE]

That's right, it's... a differential. It indicates more efficiency at larger businesses than smaller businesses. Though you are right and I am wrong about it being the focus in economies of scale.

Bigger companies tend to excel at specialization and production capacity. This isn't really negated by economies of scale slowing down and stopping at some point. That's the point of most efficiency either way.

Smaller businesses don't take advantage of economies of scale at all. They're better at filling cracks in consumer markets or going ahead and competing just within their own regional market whereas bigger companies get the most product to the most amount of people wherever.

It's a lot more practical to get coca cola to every city than it is for every city to have its own coca cola or depend on one from a neighbor.

So here's an interesting one. Coke is mostly water. Transporting water over long distances isn't efficient. High marginal cost in trucking around a substance that's literally everywhere humans are. On the other hand, there's a lot of centralized manufacture efficiencies here. Want to see something fascinating? Here's a 2L and 20 oz bottle before they go in a mold: https://imgur.com/RQptB9o

Yup, a lot of coke is a syrup that's produced centrally, bottles that are produced centrally, with water added and the bottle mold formed much closer to the actual point of sale! Restaurants can actually buy that syrup wholesale, and mix it with carbonated water in their restaurants.

Coke is a great example of a corporation that's long past its efficiencies of scale. It's cheaper to locally make the syrup at the bottle plant, and bottle it on location. There's no actual efficiency gains in making 5,000 gallons a day vs. 500,000 gallons a day in one central location that aren't erased by the transport costs. Have you ever noted that there's cheaper generics in the supermarket? That's right, a bottling plant can actually make their own syrup and bottle it locally, benefiting from lower costs!

What the megacorporation Coca-Cola offers, along with its 500 subsidiary brands (including Smart Water, Minute Made, and Nestea), is centralized marketing and enormous political and social influence. It's past the point where any of its products are efficient to produce, but it doesn't matter because it can control the market through means other than having the lowest price for its product.

That's the true fun of a cyberpunk megacorporation, because it's the true fun of our megacorporations! They have alternatives to being efficient. In fact they're not really efficient at all, on any level, but they can manipulate the market to win anyway. If we had "Pacific Northwest coke" and "California Coke" and "Northern New England Coke" and "Tri-city area Coke" etc. etc. etc. then they'd all actually cost less than Coca-Cola. But people don't want "Tri-city Coke" they want Coca-Cola, because advertising.

To manipulate this, Coke and Pepsi both form huge regional contracts with restaurants. In point of fact, restaurant "coke" (or Pepsi) is basically an advertising cost. Have you ever noticed how restaurants have one or the other brand (and will usually correct you on which is which)? It's because they are receiving the syrup at or below cost. The megacorporation is using the restaurants to give the illusion of prestige to their product, that "this is what's served at fine dining". At one point, Pepsi gave up on controlling the New England area because they realized they were actually losing too much money giving cheap syrup to restaurants below cost to gain vast regional exclusivity. How is that for a cyberpunk thing? Megacorporations literally manipulating local restaurants behind the scenes to wage a covert war for people's regard!

[BridgeConsoleMasher]

You're comparing one macrosized operation with one microsized operation. We're talking about an economy here that's going to consist of a multitude of microsized operations that need to be set up individually and eventually cater to the entire market.

The megacorporations get there through economies of scale because it's tremendously distinctive and essential to a business getting bigger. There's a lot going on that smaller businesses aren't able to take advantage of ranging from generic operating parameters like production efficiency to more transformative ones like learning and growth economies that requires much more time for a smaller business to develop. Ford vs Ferrari is a popular example (with obviously symbolic in nature overlays when comparing the identity of the cars).

In fact in an ugly sense you can equate political lobbying as just another form determinant of economies of scale. Just swallows it up whole by systemic means rather than systematic and is much more efficient.