> How is a company dying if it continues to make profit in a changing market?
Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it.
Death takes time, and may not be apparent if you're only looking at profits. The company could be profitable, but less so every year. Or, the company could be growing its profits year by year, but by a smaller factor. In more general terms: your profit may be positive, but if any of its derivatives (first, second, N-th) is negative and you have no way to address it, then you're dying.
>> Growing revenue and profits allows adaption to new competitive threats.
> Adaption to "new competitive threats" is done by humans.
Yes, but having more resources lets those humans invent and execute such adaptations better - in the same way it's easier for individuals and households to adapt to changing life circumstances when they have savings and a stable income source, and the more of these they have, the easier it gets.
“Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it.”
This is circular reasoning: companies must grow because because otherwise they will have their lunch eaten by other companies who are growing because they must grow.
I realize that this is an absolute basic tenet of capitalism that you’re talking about, but this response only explains where we are, not why we’re there.
> I realize that this is an absolute basic tenet of capitalism that you’re talking about, but this response only explains where we are, not why we’re there.
It does both: we are here because it's a self-sustaining negative feedback loop. How exactly we got here has been long lost to history, and the specifics don't matter anyway: what matters is, how hard would it be to break out of this state, whether it's worth doing in the first place, and, if we somehow break the cycle, what's there to stop us from immediately falling back into it.
The driving motivator is just greed, nothing else. Growth is not per se required to run a successful company for a long time, that is just plain myth. Nor is growth a guarantee to survive for a long period of time. It may increase the chances to stay afloat, but that highly depends on the circumstances. Also, as soon as you make growth the main motivator to run a company you are opening yourself up to go bust, inherently so.
> The driving motivator is just greed, nothing else.
In some cases, sure. But I feel it's also a cop-out - it's easier to assume those business men are just driven by greed, than to look at the messy interplay of motivations and incentives that are the actual driver.
Perhaps that's too cynical a take, but I think it's quite common for small companies to focus on growth because... that's How Business Is Done. Many entrepreneurs are not experts in market economy, nor do they have everything figured out - they follow their intuition, what other entrepreneurs and business press says, etc.
> Growth is not per se required to run a successful company for a long time, that is just plain myth.
Define "long time". I believe that with competition and sufficiently long time, it's not a myth, but an inevitability.
> Also, as soon as you make growth the main motivator to run a company you are opening yourself up to go bust, inherently so.
You can always go bust. If you build a non-expanding, sustainable business, it's only a matter of time before change in the market, or competitors, or just plain increase of costs of living / inflation in general will force you to either grow or give up, as some nonzero amount of growth will be required to just maintain your status quo.
Turning this around, and giving another answer to the "driving motivator" question, you can view it through perspective of observer selection: pretty much all companies pursue growth, because those that didn't are no longer operating.
You have to mentally split the "rules" defined by what I call the financial "economy" (which is rooted purely in belief), and the real economy, which is vastly more complex. Something related would be what a company focuses on: Profit/money and using what they are doing as a means to accomplish that, or having a company to actually accomplish a goal and that goal, the idea comes first. Latter opens up the possibility, given that the financial means are there, to even make losses now and then, because you want to invest (more heavily) in change for one reason or another.
Thing is, this "growth before everything else" mantra comes from the financial "economy". If you apply this to real economy, you are in for a surprise, because there are limits everywhere. Such limits don't really exist in the financial "economy". But in return it also means you can operate in the real economy for long periods without growth.
Why "economy"? Economy exists because humans split their time to do all the things to fulfill their needs, you know, survival (food, shelter, ...) etc. Without that you wouldn't have any economy (as in trading goods) to write home about. Note that I wrote "humans split their time"; if you automate all that the need to split their time is rendered pointless, which also drives this economy into the ground, i.e. it is not needed to that extent anymore.
That is different with the financial "economy". The main goal there is money, and the value of that is rooted in belief. Which renders everything else on top of that also belief/speculation. But because of that it can also grow endlessly. The problem with it: It doesn't put food on the table (nor does it provide a new table should it need replacement). This also means all the rules in that space are only valid in there, and may very well not work at all outside of it.
> You have to mentally split the "rules" defined by what I call the financial "economy" (which is rooted purely in belief), and the real economy, which is vastly more complex.
I used to do that in the past, but the more I thought, the harder it got - today, what you call the "financial 'economy'" sounds to me like a natural outgrowth of increasing specialization in the "real economy".
> Something related would be what a company focuses on: Profit/money and using what they are doing as a means to accomplish that, or having a company to actually accomplish a goal and that goal, the idea comes first.
The former are what I used to call "toilet paper companies", as in "this company is doing computers or drugs now, but if it was cheaper to retool, it would be selling toilet paper or whatever else yields better profits this moment". The latter... mostly don't exist, I think. SpaceX is about the only example I can think of.
As much as it pains me, I came to understand that most companies exist primarily to make money for their owners, secondarily to pay salaries to employees, and thirdly (at best) to do something useful - and it can hardly be the other way. Not just because companies focusing on profit beat those focusing on the product/services - but also because that's what the owners and employees want. And it's not driven by greed.
I realized that when I stopped looking at the big corporations and startup unicorns, and instead looked at the local businesses I interact with daily: bakeries, convenience stores, pharmacies, barber shops, dry cleaning, ISPs, etc. None of them are in it for the idea, for the product. All of them are in it for the profit - because that profit is what gets them and their families some semblance of security and stability in this world.
Yes, it's not ideal, it's big part of the reason why every good and service seems to get worse with time, particularly as specific niches get hit by "financialization" trends. But it won't go away as long as everyone has bills to pay, food costs money, healthcare isn't simultaneously free and easily available, etc.
> Latter opens up the possibility, given that the financial means are there, to even make losses now and then, because you want to invest (more heavily) in change for one reason or another.
The "financial 'economy'" has this covered, too. In fact, they have terms and math and virtual products that cover it. That's the reason it exists: because as the "real 'economy'" gets larger, more complex, and more thought is put into it, people want to do more complicated things, and - perhaps most importantly - everyone wants to reduce their personal risks.
Want to build a factory making much-needed goods? You need more money than everyone in your village has put together. Are you a farmer who almost went into deep poverty last year, after most of your crops fell to a disease? You want some kind of safety net. Financial sector provides all that: loans, options, futures, etc.
> The main goal there is money, and the value of that is rooted in belief. Which renders everything else on top of that also belief/speculation. But because of that it can also grow endlessly. The problem with it: It doesn't put food on the table (nor does it provide a new table should it need replacement). This also means all the rules in that space are only valid in there, and may very well not work at all outside of it.
This stars with money itself - as you say, its value is rooted in belief. This by itself is pretty natural to humans - things like "company", "tribe", "government", "society", "money" - but also "family" - are all rooted in belief. Establishing such intersubjective beliefs is arguably humanity's superpower.
As for the rules in the financial space, yes, they're all abstract and virtual. That's the point. Much like money itself is the answer to barter not scaling to support growing population and increasing specialization, a lot of those financial industry inventions are ways to optimize trade by resolving some complexities in this abstract, virtual concept space. Your grain can be traded back and forth, changing its owners 20 times in a quarter, while never physically leaving your silo. Would it be better if it had to be trucked back and forth, just for it to look like "real 'economy'"?
All this is to say: yes, there's plenty of problems and pathology in the financial space, and it does a lot of bad things. But it also does a lot of good things, and it exists not just because of greed, but also because there's real need for it, and without it, the "real 'economy'" wouldn't support its own weight anymore.
Because, for example. their market is being steadily taken away by their competitors, and the company doesn't have a way to stop it.
Death takes time, and may not be apparent if you're only looking at profits. The company could be profitable, but less so every year. Or, the company could be growing its profits year by year, but by a smaller factor. In more general terms: your profit may be positive, but if any of its derivatives (first, second, N-th) is negative and you have no way to address it, then you're dying.
>> Growing revenue and profits allows adaption to new competitive threats.
> Adaption to "new competitive threats" is done by humans.
Yes, but having more resources lets those humans invent and execute such adaptations better - in the same way it's easier for individuals and households to adapt to changing life circumstances when they have savings and a stable income source, and the more of these they have, the easier it gets.