Your point about capitalists aiming to preserve their wealth by ensuring their return on capital exceeds inflation makes sense. Although would this not generally require them to also beat the average?
I think we need to distinguish between individuals and firms. They’re entirely different, and CasP focuses on firms (“dominant capital”), not individuals. As among individuals, some people just want to preserve capital and play it safe, some want to “beat the average,” and others try to balance between the two. The Capital Asset Pricing Model (“CAPM”), which is the basis of CasP’s insight regarding beating the average, was developed to provide a way for individual investors with different goals to understand which investment opportunities best suit their investment goals, which is often called a “risk profile.”
If Jonathan Nitzan, Shimshon Bichler, and Blair Fix (e.g. https://economicsfromthetopdown.com/2021/11/24/the-truth-about-inflation/) are correct that inflation is driven by power struggles within dominant capital to raise prices faster than their peers, then doesn’t it follow that those whose accumulation exceeds this (average) rate of inflation will also beat the average in terms of differential earnings and capitalization? Cheers, Adam
I think the assessment that inflation is driven by the desire to raise prices faster than peers is overly simplistic and incorrect. We need to think in terms of things like supply chains (or value chains) instead of just the prices end consumers see. Vendors, especially vendors to dominant capital, are generally loathe to raise their prices for fear of getting locked out of the next opportunity. That’s why prices are “sticky” or “inelastic.” To me, inflation like we are seeing today is combination of supply chain problems and the confidence of entire supply chains that their customers will have no issue absorbing the increased costs and passing them on (with additional markup) to the end customer.
An important lesson I learned at Intel was everybody in the supply chain for consumer product, e.g., a personal computer, is competing for its share of the total profit margin, and their relative power determines their share. Consumer products get priced based on what the marketing folks determine consumers will pay. One of the projects I worked on as an IP attorney for Intel was the Intel Web Pad, which was basically the iPad a decade before Apple launched it (but nowhere as cool or full featured). Intel scrapped the Web Pad because LCDs were too expensive at the time for any Web Pad maker from getting the profit margin needed to justify making the product. To be clear, Intel did not want to make and sell Web Pads itself; it wanted other companies to use its reference design and buy Intel chips to stuff them with. As a sophisticated end customer in its own right (Intel plays rough with its vendors), Intel realized it could not get the margins it wanted and leave enough for the maker of the Web Pad, and so the Web Pad was never commercialized.