The Exploitative Ceiling

In the mechanics of supply and demand, demand represents the exploitative ceiling for producers.

Within the profit motive there are two factors: supply side diversity, and consumer sentiment, serving as the natural checks to consumer exploitation.

Exploitative offers can be mitigated by supply-side competition by providing increased and uncolluded supply sources (supply diversity). But supply diversity only limits exploitative capacity if it can match or outpace demand growth. Goods and services with high supply-side barrier of entry serve advantage to institutional suppliers and stifle competitive diversity. The harder it is to break into a market, the less likely new players are effectively compete, or even survive against existing players. This increases the exploitative capacity of legacy producers, and over time inclines such sectors toward monopolization.

Fortunately, even in these cases exploitative capacity is again checked by consumer sentiment. The greater the expense to the consumer, the lower the demand. Though still- an increase in consumers, or an increase in the valuation of a product or service by the consumers: the greater the demand. The greater the demand- the greater the exploitative capacity of the producers.

These factors together create the value discovery mechanic, and determine the exploitative ceiling for producers in any given market.

In nonessential markets this is all well and good.

But necessities specifically, exclusively, do not respond to this kind of value discovery. Necessities are made no less necessary by exploitive offers. Therefore demand is not checked by consumer sentiment concerning the offers and does not decline unless consumers themselves decline.

Necessities with high supply-side barrier of entry are also unchecked by supply diversity, as new and uncolluded producers struggle to compete with institutional suppliers. Monopolization in these sectors effectively removes the exploitative ceiling for the cornering producer, enabling continual increase the cost of their service or product, unthreatened by competitive diversity, or consumer sentiment.

Consider food, an indisputable necessity. If consumer sentiment were the only factor the exploitative capacity of food producers would be limited only by the lifespan of the consumer if subject to a sole supplier. Fortunately, in the case of food the barrier of entry for new suppliers is relatively low. Anyone can grow food, even monoliths of food production like Monsanto struggle to monopolize it, though they gain ground every year.

Consider housing, an indisputable necessity. However, in the case of housing the barrier of entry is much higher. Not anyone can construct a house, fewer still can construct a house well. To do so takes a wide range of skills and experience in not only construction, but engineering, and regulations. The barrier of entry is so high that far easier to compete in housing via the aftermarket where the few wealthiest take enormous advantage paying outright and avoiding interest.

Consider healthcare. Enormously difficult for new competition to break in, and like the others, indisputably necessary to the consumer. Arguably, higher education (is it a necessity? have they convinced you yet that it isn’t?), renowned fork in the road between poverty and success, is the same.

These markets, unchecked by supply diversity and immune to consumer sentiment are effectively without exploitative ceiling. Markets like this are able to ask any price, even more than the consumer is able to pay in their entire lifetime, and through leverage, they do. Education and housing will sell to you these necessities for everything you have plus labor you’ll do in the future via massive payloads of debt, the impact of which is the burden of interest, which even further exploits the consumer. Healthcare will take all of that and beyond by that when the consumer expires their debt can be used to take their housing. What happens when these markets, leveraged into each other, inevitably cannot realize their gains?

In normal markets consumer sentiment would prevent this overleveraging, but necessities, when subject to the profit-motive result in enormous financial bubbles. The valuation of these bubbles, critically, does not represent unpaid labor or material costs, something only be true in markets where value discovery is subject to healthy supply diversity and consumer sentiment, conditions which aggressively resist this kind of bubbling. These bubbles grow by a function of the monopolization of the market sector, and represent the scale of exploitation within it.

When these markets cannot realize their gains, being leveraged into each other beyond any capacity of the consumer to pay, the bubbles pop. The responsible institutions demand compensation for their unrealized exploitation, under the pretense of equitable return for their services, warning of the threat to the necessity they exploit.

Critically it is irrelevant which flavor of institution is responsible for this mechanic. It is a mechanic borne of the profit motive. Capitalist monopolies, oligarchical governments, or any other institution, the mechanic is the same, they are all the same animal. They are all consolidation of the means of production of necessities. The preventative is to identify necessities and intercept the growth of tumorous monopolies within them, either by price controls, or outright demonopolization of the dominant institutions, the latter of which is messier and a greater threat to supply.

As it appears today, this approach is a bit too hands-on for enough of society that its unlikely to be codified without an absolutely devastating meltdown of the economy, if ever. After all, even when it happens, you have to know what happened, and education has gotten so expensive.