Production to offer vs production to demand, who will win? Round 1

LAW OF OFFER AND DEMAND:

The model is based on the relationship between the price of goods and sales of the same and assumes that in a perfectly competitive market, price is set at one point, balance point, in which there is a depletion of the market, this is, everything produced is sold and there is no unmet demand.

The postulate of offer and demand involves three features:

I. - When, at current price P, D demand exceeds offer the price tends to increase. When offer exceeds demand, the price tends to decrease.

II .- An increase in price tends to decrease demand and increase offer. A decrease in price tends to increase demand and reduce supply.

III: The price tends to a level whrt demand equals offer.

The market is the place where goods are exchanged, for money or not.

The law is fulfilled if there is fair competition.

The not sold offering is the stock or assets accumulated or stored.

PRODUCTION FOR THE OFFER.

The current production system. Those bids, which have not necessarily be the producers, try to create demand through advertising and and generate dependencies of secondary needs, generating consumism and speculation. The sellers in competition, resulting in the overproduction. Only an awareness of savings and knowledge of the true personal needs can slow, not stop, this tendency. The system moves around concepts that are circulary interrelated, unable to know the cause and affect or what is the most important. The system walks alone.

...>superproduction> competition> consumism> speculation> superproduction> ...

OVERPRODUCTION (superproduction): occurs to compete producting much more quantity and cheaper, so it results in the accumulation of goods. From the raw material just the part that brings greater economic benefits in the short term is use, all the rest is waste. In addition a degradation of stocks happend, increasing the residues. What leads to environmental degradation and consumption of nonrenewable natural resources. Leads to unemployment becouse the accumulation of stocks, stored goods waiting to be revalued and the inducted expiry or programated obsolescence of products to increase consumption. So that is created the concept of fashion or trend.

COMPETITION: in its strict sense, implies that if companies produce goods for money the success of one harm the rest. Theorically serves to reduce the fare for the complainant, but once a company dominates the market becomes monopoly or trust, increasing prices virtually without limit. Companies design products to make them more consumed, not to be more efficient or better quality, this is secondary. Implies a loss of quantity and quality of both raw materials and wages to reduce costs. Leads to aggressive and misleading advertising. Decreases the exchange of information, so there is industrial espionage. Creations are protected by laws of a copy right. Competition produces cartel cases -the companies stablish prices and distribute the territory- and self-competition -the company is divided into several brands that compete each other as they were different ones-. They try to diversify and find new applications for their products, occuping more niches. For example we find sindicates that offer turistic tours. Because the hypothesis of continuous increased of profits, a company is viable only if grows a percentage each year. The competition reaches the level of aggression, as in the wars for resources, oil, opium, diamonds, and business of arms.

CONSUMISM, CONSUMPTIONISM is the accumulation of unnecessary products, superfluous, produced by the acquisition of individual secondary needs. The individual assumes that society creates, but really are created by the advertising, in which its spends an enormous amount of resources through a constant bombing and omnipresence. This adds displays a set of social values that the individual feels natural and normal. It creates the concept of fashion and trend to justify sales. What makes people accept that these are ephemeral, so the product does not have to endure. Expiration is accepted and produced with an induced expiration. Some ignorance is need about the product to consume, so significant data about this product are hide.

SPECULATION that buyers purchase items, to be revalued, and sold. Buyer becomes offerer and beneficing from the difference. This leads to periodically increase of price of a product according to a cycle, for 6 to 10 years, until its price is unaffordable and collapses quickly, within 1 year for more or less, consumption and prices, causing loss or crisis.

Influence the trends, as invest in companies. Com in 90's, or currently construction, food and metals.

Another effect is the stock exchage markets, where it is invests in gambling companies that are believed to be more profitable and insurance companies, in which it is given s value to the risk.

ARE THERE ALTERNATIVES REGARDING THE MODEL OF PRODUCTION IN THE CAPITALIST SYSTEM?

Capitalism is the social order resulting from democratic politics, private property and unregulated economy, which allows the existence of markets and accumulation.

There is no alternative becouse by definition produces who has the means of production. They are producers, market intermediaries and banks, which control the production through property, investments and loans, controling the economy. Change the model means change hole the system.

OTHER MODELS OF PRODUCTION, PRODUCTION FOR THE CLAIM.

A more rational system would be the production-for-demand, in which goods are produced what is request, eliminating overproduction.

Imply that eliminating the market? see.

In theory prevents the accumulation of stocks in the producer, but could be acummulation on the “buyer”, to again become offerer, that is, to speculate. As the offerer is “buyer” we enter into a loop. Competition and overproduction continue. Production-for-demand is necessary but not sufficient.

NOMINAL OR PERSONAL PRODUCTION.

If there is nominal or personal production there is no accumulation in the consumer, to form a stock that becomes offerer. Now we remove the marking, exchange, becouse there is no sense to exchange one thing for another if you order it new.

Must be satisfied that:

a-producer is known and can not make or store more than requested by the consumer.

b-the consumer is known and can not sue or store more than they will consume.

c-a person or company can be a producer and consumer if don't accumulate.

It is lose anonymity at the exchange, ie exchange public, which is capable of being controlled at any point of production, transmission, distribution and consumption.

How to access services? Upon request, and take away or home delivery, which can create queues and waiting and a market of products and services for immediate consumption or unique objects. It could be solve increasing the production or services.

CHANGING CONCEPTS IN THE NOMINAL PRODUCTION:

Overproduction or superproduction- only can be given if allowed to accumulate assets. If it is eliminated the concept of planned obsolescence, fashion and trend it is loose. It would increase the durability of the products. To reduce the consumption and demand increase the quality and satisfaction with the product. SATISFACTION or complacency is the key to avoid overproduction. As it is not necessary to overproduce could only diminish the quality of products to supply a large demand on time. This is true PRODUCTION AS CAPACITY.

Increasing yield and profit of raw material decreasing the residues. To save,  production for the offer does not processed raw materials to the end, taking just the most valuable or easily processed, discarding the rest and creating a residue that is wasted.

Increasing the yield of raw materials increases the cost of personnel, equipment and facilities, or energy, but reduces waste and demand for this and other raw materials, which lowers the overall cost. 
Could be a unsatisfactory product wich could be reject. It could be discarded. If it is not neccesary nothing would happend. If it is neccesary the satisfactory sustitute product could create expectatives and so that speculation till the most part of population acces to it.

Competition, if it streamlines offer and comsum does not make sense that a person earn money exchanged for goods or property. It is only going to deliver what is need, and will be nominally. So private property would be eliminated. Companies does not obtein benefit but they continue to produce for the demand. The company must self adapt to this condition worrying only cover the demand. If no one compete nothing impede COLLABORATION and join forces.

Who owns the company? The whole of society, communal property, and its workers their operators. The company only grows when demand grows, which in final terms is when population grows, so there is a pasive growing .

- The company that offers a lower quality can request help for their adjustment to consum or gradually disappear.

- It should be favoritism to access unique goods or services. Is solved by increasing production or services.

- Should be the effect of loss of quality to satisfice the demand. It is solved by increasing the capacity of the company (either for labor, equipment, raw materials or facilities).

- It can be an imbalance of work load between companies, whose products are most popular. This requires knowing what they are most sought after redistributing work and accommodate companies to the new requirements

- It can be distribution of workload within the company, increasing favoritism. Investing is partly a solution, by increasing staff and equipment.

Consumerism: When competition is deleted advertising disappear. By eliminating the market avoids speculation. Social values change. There will always be the man his natural feelings of selfishness, envy and need for accumulation, but far from fashion, trend and market-imposed expiration. It remains only CONSUMPTION BY THE NEEDS:

-It should be an excess of demand or slow down that precludes access to a resource, with cases of accumulation of stock exchanges. To prevent this we must know what is demand, increase production and rationalize consumption: first to those most in need. Should be pursued to the accumulators of property.

-It could be a marginal market for used or unique products, but not new.

-It could be a difference between utilitarian products, necessary, and unnecessary products, superfluous. This last, to not disappear and be acepted, should be converted into useful, if not no one will demad them.

Speculation-only can be if allowed to accumulate assets. It could be a marginal speculation in the exchange of unique products.

CONCLUSIONS:

The law of offer and demand is not met, directs.

Production direct for the offer is logical but not rational, becouse does not adjust to the needs and circumstances of reality.

Competition, consumerism, speculation and overproduction are necessarily linked and you can't influence one without changing the others.

Production to demand by itself is not enough to change the mode of production, the system reverts to towards production for the offer.

The nominal, individual or personal production controls the offer and demand and avoids most of the drawbacks of both. Obviously not all.

Procurement of goods produced by application and taking away or delivery.

Private property is replaced by the individual and communal property, thus avoiding competition, consumerism, speculation and overproduction.

The values of competition, consumerism, speculation and overproduction contradict those of collaboration, consumption as need, and production as capacities.

In the article "Is capitalsim in crisis? long life to capitalism!!!" We deeply look into the private property and the political system, democracy, the causes of this kind of production.
http://tarcoteca.blogspot.com/2011/06/is-capitalism-in-crisis-there-are.html 

In the next article will look at how the institutions would be in this production system.