Whether we like it or not, predatory capitalism exists. When it comes to business, there will be an endless supply of businesspeople willing to take advantage of the vulnerable. If capitalism exists, there will always be someone somewhere in the world who takes advantage of the system.
Capitalism is a very flawed system. There are endless negatives to capitalism that even the most enthusiast cannot deny. However, even though it is highly flawed, it is the best economic system that we have. Capitalism drove so many people out of poverty, it’s incredible.
There’s no question capitalism is the best system we have for upward mobility. However, it becomes a problem when capitalism becomes predatory capitalism. Business people are some of the most ruthless people you will ever meet. No matter how much money they have, they will always want more.
It’s human nature. Some people never figured out how to be happy with enough. Some people never figured out how much money they need in order to be successful. This is when it transcends healthy want and opportunism. This is where it goes into greed.
There are no free lunches in the world. Everyone in the world wants your money and are actively working on ways to transfer money from your pocket into theirs. Money was never meant to be used to satisfy greed but rather as a medium of exchanges.
Some businesses and people took that intent way too far.
What is Predatory Capitalism?
Predatory capitalism is when a person or a business takes advantage of another party just because they are in the powerful position. This isn’t exerting power over the other person because it’s the right thing to do. This is when someone abuses their place of power to the point of unfairness.
It’s just not right. Amazon took IMMENSE steps to weaken Quidsi financially before Quidsi gave in and agreed to be bought. Amazon took major losses and offered steep discounts to customers because they had the balance sheet to fund the losses for years on end.
Then when Quidsi’s financials softened, Amazon swooped in like a vulture in order to acquire them. They got what they wanted and was willing to take any measures necessary in order to get it. This action ultimately hurts consumers in the end. In the short-term, the discounts helped consumers.
In the long run, the less producers there are, the less choices consumers have. Then they have no choice but to buy from Amazon in order to enjoy the product. Then Amazon can then up-charge because where is the customer going to go? Nowhere but Amazon’s store.
Predatory capitalism ultimately helps people in power gain more power. It hurts the ones who is really supposed to be in power, like customers and consumers, and helps the ones who isn’t supposed to be in power. Through unfair competition tactics in which customers’ choices get limited.
It’s a real problem but it happens in real life all the time.
6 Examples of Predatory Capitalism
So then what are some concrete and real life examples of predatory capitalism? Predatory capitalism isn’t just a theoretical concept but it happens in the real world. Here are the 6 real life examples below.
1) Buying a Business
Shark Tank is the epitome of American capitalism. I applaud the show because it teaches regular people like myself about business. It inspired so many people to start their own businesses as well. Even children. That’s a wonderful thing. Starting a company is the best way to learn about business.
The founders themselves get great deals in order to move their business forward and live to fight another day. Some became millionaires within months of making a deal. The show actually makes a real life impact to people across the country.
However, there are times when the Sharks take advantage of the situation. For example, Kevin O’Leary offered to purchase 30% of Pinblock at first. Then when the founder chose to wait for other offers, all the sharks dropped out.
Kevin then turned the pressure on to him and changed the offer to 50% of the company.
The founder had no choice but to accept. His back was up against the wall already. That is predatory capitalism of someone using their power to come up with an unfair situation in which the other side has no choice but to accept. It’s an abuse of power.
2) The Poor
The rich get richer the and the poor get poorer. It’s just a fact and this hasn’t changed since humanity created the concept of wealth in the first place. The poor get taken advantage of because whether we like it or not, society thinks the ones with money are important and the ones with money aren’t.
There’s a reason why grocery store specifically target neighborhoods that are wealthy and purposefully avoid the ones that don’t. The poor also are victims of predatory capitalism because they can’t say no. If employers just want the poor gone, they lose their entire livelihood.
Employers make less money as a result of their absence. But the poor literally cannot put food on the table if the employer just lets them go without a minute’s thought. That is a dangerous place to be in. No matter how much we try to change policies in order to cater to the poor, this will never change.
Their labor and time can easily get taken advantage of by someone else. And society won’t do anything about it because they have their own problems to manage. The poor are the highest susceptible to getting abused by others.
3) Employment
This doesn’t pertain to every 9-5 out there. There are great employment opportunities out there. However, some 9-5’s are downright horrible and will destroy your mental health at all cost. Whether we like it or not “manage your bosses” is one of the silent job responsibilities EVERY job requires.
You have to negotiate and stand up for yourself, even against your boss.
Some bosses just make it impossible for you to work without standing up for yourself. They WILL take advantage of you. And upper management will not lift a finger to be on your side. Upper management, in general, will be on the side of your boss. Especially if your boss has been there for 10+ years.
There’s a reason why tech companies love foreign workers on a visa. They know they hold all the power in the world against them. Is the worker on a visa ever going to say no or fight back? Nope. Because the company can easily just send them packing if they want to.
Companies also love to hire bright and smart MBA graduates who have six figure+ worth of student loans with a family. They know these types have so much to lose, they will keep their mouth shut with almost everything. Predatory capitalism exists even in paid employment.
4) Foreclosures
There are many people who bought houses out of the financial crisis in 2007 – 2009 and made an absolute killing. They became wealthy at someone else’s expense who had no choice but to declare bankruptcy and have the bank foreclose on their house.
So the businessmen bought those houses at fire sale prices. Predatory capitalism exists at foreclosure markets where the rich swoop in and take advantage of someone else’s misfortune. It may be a painful sight to see but it happens every single day, and especially during crises.
With the housing market’s inventory numbers skyrocket, it may be happening in 2023 and beyond as well. The foreclosure market is ripe with investors thinking that it’s a great time to buy. They are opportunistic people who are waiting for the right moment to buy houses.
It may just be business but it doesn’t hurt any less to see. There’s always someone out there ready to prey on someone else’s misfortune. The world is an unforgiving place.
5) Estate Sales
People voluntarily hold estate sales because they just need a way to get rid of stuff. That’s a good thing. However, there are some people who absolutely take advantage of the estate sale market. These people know that some estate sales are overly generous with their fire sale prices.
Not because they want to but because the ones holding the estate sale doesn’t know any better. People aren’t going to know what vintage jewelry is worth to a buyer, unless they went through the buying process themselves.
It’s not like someone leaves detailed instructions on the value of objects when they pass away.
Although estate sales are some of the milder forms of predatory capitalism out there because it is held voluntarily, that doesn’t mean there aren’t people who abuse the system. When they see a seller mis-price valuable goods by 95%, there will be people who line up to pocket it.
So that they can go out and resell it in the open market with no shame. It’s one thing for a transaction to occur with both willing and knowledgeable buyers and sellers. It’s another for a transaction to occur when there are willing buyers and sellers with information asymmetry.
6) Divorce
Predatory capitalism happens frequently during divorce. It’s the lawyers who win during divorce, not the divorcees. I mean, I get it. People’s emotions are high during divorce, bringing up things they’ve been pushing down for the longest time throughout their marriage.
Therefore, they are willing to pay whatever the divorce lawyer charges because they want to hurt the other side as much as possible. They don’t understand trying to hurt the other side results in both sides being miserable. When it’s a better situation for an amicable divorce to happen.
It’s even messier and worse when children get involved. Many use children as a bargaining chip and to get the other side to cave. Predatory capitalism happens because the ones who are willing to win at all costs are doing themselves and hurting the people they love or at least used to love.
It just happens. There are entire industries who thrive on people’s inability to control their own emotions. Divorce just happens to be one of them. Even though it’s a necessary business, it’s still a terrible business with real world consequences.
Predatory Capitalism is Everywhere
With capitalism, there are ALWAYS going to be winners and losers within every transaction. It’s unavoidable. That’s where predatory capitalism comes in. People are always going to take advantage of you if 1) it’s legal to and 2) it serves their interests.
There are demanding bosses out there who offer little to no raise to their employees. Even after working them to death, the rewards just aren’t there. The world is a cruel place who doesn’t look out for your interests. Even your parents. Their interests aren’t your best interests.
They will pursue what their best interest is. There are parents out there who downright forbid their children to take on risk. Because they deem the risk to be too much and therefore the child will not be safe. Children’s best interest is not safety. It’s self actualization.
People are willing to do a lot of things to get to self actualization, even take risks that their parents might not be 100% comfortable with. Predatory capitalism exists. You need to find a way to protect yourself because no one else is going to do it for you.
Everyone else is all too busy protecting their own interests that they can’t help you. There are good samaritans out there who will devote their lives to helping people. However, many can’t help others if they don’t help themselves first. It’s the truth of life.
People will try to pull anything and everything they can on you so they can get a leg up in life. Don’t let them.
Six Examples of Predatory Capitalism
- Buying a business
- The poor
- Employment
- Foreclosures
- Estate sales
- Divorce
