Aldi And Lidl – Why Free Markets Tame Capitalism

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Just a little note really underlining the point that when we talk about capitalism and markets it’s the second which are the bit that tames the first. The competition to be able to exploit you is what ends up with you not being exploited at all that is:

Aldi and Lidl reduced prices on bags of festive vegetables to just 15p to lure shoppers through their doors in the run-up to Christmas. Over the past decade, the expansion of the discounters squeezed the big four supermarkets’ profitability by about 40%. Aldi and Lidl are still opening about 100 stores a year between them.

That middle sentence there.

Sure, the capitalists would sell your granny back to you if they thought they could make a profit out of it. They’re both greedy and lazy. So, if they can exploit you they will.

But there’s more than one capitalist out there which means there’s competition to gain those profits from your exploitation. That, often enough, becoming immanent by the promise – or even the action – of exploiting you just a little less so that the new rapacious bastard gets 99% only of what the old one did. Rinse and repeat and we find that said greedy pigs end up getting around and about the cost of capital for their efforts.

Which is why the whole system works. Sure capitalism involves people trying to get one over on you. Free markets are what temper their ability to do so. The alternative systems – socialism, government – don’t have that inbuilt limiter on how much you can be ripped off. Which is why the results are always worse for you and me.

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Jim
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Jim

It depends who is paying for the 15p bags of veg though doesn’t it? It very well may be the poor old farmer, who is told that if he wants to keep his contract to supply the supermarket all year round he’ll have to supply X amount at 15p/bag for Christmas so that the entire cost of the promotion is borne by the supplier, not the supermarket itself. This is a well known supermarket trick – make your suppliers pay for your own promotions. There’s a very big disparity of market power between half a dozen or so large supermarket… Read more »

Spike
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Spike

Of course, they can sell to another supermarket, can’t they? There is no monopoly on either side, so what ultimately matters is whether you want that business more than your competitors do.

By the way, the common thing here is not just that vendors kick in to pay for the promotions, but provide the personnel to arrange goods on the supermarket’s shelves.

Jim
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Jim

“Of course, they can sell to another supermarket, can’t they?”

Thats a bit like saying ‘So what if your employer beats you? You can always go and work for another one (who’ll also beat you as well, but hey that’s the free market!)’

Surely some sorts of behaviour should be illegal, not allowed just because one party is bigger than the other?

Spike
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Spike

Assault by a business partner is illegal, so offering you unsatisfactory terms should be illegal too (precisely because one party is bigger than the other and it is felt necessary to compensate for the size)? Your analogy fails. In fact, an alternate purchaser might not “assault you” (might offer you terms you find satisfactory). By the way, if we let the state intervene in the free market, the big guy will undoubtably do a better job of lobbying it, and get his way that way.

Jim
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Jim

We very much do intervene in the ‘free market’ – what do you think all employment law is about? Its about making sure that individual employees have rights that if we left it to the market they would not, because there is a disparity of power between Joe Public and Global MegaCorps Inc. We tell GlobalMegaCorps that if he employs Joe then he must do x,y and z and not do a,b and c. How is what I’m suggesting any different? There is a massive disparity of power between Tesco (a multi-billion dollar corporation) and the veg producer (who is… Read more »

Andrew Carey
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Andrew Carey

So we have got a poor old farm land owner, and we have a centralised policy of subsidising both him and the competing land owners who have large amount of land on which veg is produced. But what of the labourer who works for the old farm land owner you mention? Unemployment is low. He’s a mug for staying on working for his subsidised boss with his cheap red diesel, VED exemptions. IHT exemption, marketing from the EU’s ‘rural support’ programme and those CAP hand outs who is competing against others with similar subsidies. Why does any labourer do it.… Read more »

Jim
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Jim

That’s no comparison at all. It would only make sense if the worker lived somewhere where there was only a handful of employers, all farms, who all paid the same and had the same (poor) working conditions and pay. Then the labourer would be stuck. Which isn’t the case in reality at all – farms are in a competitive labour market with the entire rest of the economy, and if they don’t pay reasonable pay rates and provide as good conditions as other local employers then they won’t get labour, simple as that. Farm workers have options to work elsewhere.… Read more »

Pcar
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Pcar

@Jim

I do have sympathy for farmers, it’s a tough 24/7 job especially when growing livestock

However, solution is not Gov’t intervention, it’s fewer marginally profitable producers.

If you want more negotiating power, form a Co-Op like Kent(?) grain farmers did

or diversify https://swanston.co.uk/the-farm/ – owner’s son was on MBA
“…diversifying from arable and livestock…”
https://www.blackdownshepherdhuts.co.uk/project/the-scottish-shepherd-self-build/
https://www.google.com/search?q=McClung+Potatoes+swanston+edinburgh

Jim
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Jim

It makes no difference when the supermarkets can import what they like anyway, usually from places that can use chemicals and production methods that are banned in the UK. The only way that farmers could gain some market power would be if there were as many large UK producer co-ops (or marketing outlets) as there are supermarkets. Then the playing field might be a bit more equal. But as it is its private individuals trying to take on multi-billion pound corporations. Its entirely one sided. The people we buy our inputs from are international corporations, and the people we sell… Read more »

Pcar
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Pcar

@Jim

Yes, we know that.

Shame Co-Ops skated over, although USA Milk shows they can be contentious

Diversify ignored, why?

https://swanston.co.uk/pentland-trail-centre/

Pcar
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Pcar

Guess where our Christmas food came from:

Aldi Veg 15p
Tesco Veg 19p
Morrisons Veg 3 for £1 or 34p

Aldi supplied Turkey, Veg, Fish…

Good response by Tesco

Overall, Christmas meat & veg cheaper in 2019 than 2018

PS Tesco 6 Mince Pies were 21p yesterday, Choc tubs £2.50

Pcar
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Pcar

PS Within 1 mile/5min walk/drive we have:

Aldi, Costcutter, Co-Op, Morrisons, Premier, Tesco and some smaller symbols