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Corona Capitalism:

Sell at Cost

By Shlomo Maital

 

My friend Tran Luong Son, an MIT graduate and entrepreneur/software expert, calls me and asks about how to saving businesses, rapidly going bankrupt.

Here is a small simple suggestion. Amend capitalism. Shift from “produce for profit” (Pharma – take note!) to “produce and sell at cost”. And for governments? For those businesses valiantly applying the new capitalist compassion, producing at cost, to save businesses and keep the economy at float – lend at cost – i.e. zero. (Some countries, including my own, are initiating credit for small businesses, at 0.1% interest, with long repayment paeriods).

Produce and sell at cost. Why at cost? If at less than cost, you need subsidies, and government budgets are strapped.   At cost – you can do this forever. Not quite forever – profits generate investment. So in the short run investment will dry up (it will anyway). But in the long run, Keynes said, we are all dead… (figuratively…).  

So, let’s build an emergence strategy, based on asking every business to produce a business plan, for producing X units, employing Y people, paying lower but livable wages, producing at prices that reflect accurately costs…, variable costs, because fixed costs are ‘sunk costs’….

Can capitalism reinvent itself as compassionate capitalism? Coronavirus capitalism.

   It can. Let’s hope it happens. And big companies? You get on board too…

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

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