Perverse, Reverse Marxism: Capitalist Consumers Are Exploiting The Innovators And Producers?

From the WSJ article “Media Moguls and Creative Destruction: Competition Works to the Benefit of Consumers, Not Producers”:

The consumer, not the producer, is the beneficiary of greater competition.

From the NBER paper “Schumpeterian Profits in the American Economy: Theory and Measurement”:

The present study examines the importance of Schumpeterian profits in the United States economy. Schumpeterian profits are defined as those profits that arise when firms are able to appropriate the returns from innovative activity. We first show the underlying equations for Schumpeterian profits and then estimate the value of these profits for the non-farm business economy.

We conclude that only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers. For the entire postwar period and for the nonfarm business sector, innovators are able to capture about 2.2% of the total surplus from innovation.

MP: It almost seems unfair that consumers engage in such blatant exploitation of producers and innovators, doesn’t it? They do all of the entrepreneurial, innovative work, and we get all of the benefit in the form of lower prices, improved products and a higher standard of living. And then after we exploit the producers and innovators as consumers, we turn around and tax them on their minuscule profits with progressive income tax rates…. If only consumer and taxpayer greed wasn’t so rampant…..

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