Western individualism model vs collectivism model

[u/CombinationVivid7543]

In the West, profit margins are often maximised by the logic of capitalism. Businesses and individuals are encouraged to sell for as much as the market will bear. During a crisis, instead of limiting prices, consumption, or profits so that everyone shares the burden, prices can rise dramatically as market participants try to maximise their returns.

For example, when there is a shortage of housing, rents can keep rising. This does not solve the shortage; instead, it makes the situation even worse for renters, who have to devote more of their income to housing. This reflects a fundamental feature of the Western market system: when demand is high and supply is limited, those with market power can increase their margins at the expense of those with less bargaining power.

China historically operated quite differently. Under the traditional state-controlled commercial system, the government regulated prices and often specified the permitted mark-up, wholesale-retail spread, or profit margin for different goods. Margins were generally relatively low—often around 10% for many ordinary goods—reflecting the principle of 薄利多销 (low profit margin, high turnover). The objective was not simply to extract the maximum possible profit from consumers, but to keep goods affordable while allowing businesses to operate.

So the difference is not merely about competition. It reflects two different approaches to pricing: the Western system tends to let the market push prices and margins upward when demand allows it, whereas the traditional Chinese system placed much greater emphasis on controlled prices, modest margins, and affordability.

It may reflect an interaction between economic systems and cultural values: individualistic cultures can place greater emphasis on maximising individual returns, while more collectivist traditions may place greater weight on keeping prices reasonable and sharing the burden across society.

Western model: higher individual maximisation → potentially higher consumption and margins → greater pressure on resources and inequality.

Traditional Chinese model: lower margins + 薄利多销 + stronger collective considerations → potentially lower consumption pressure and greater social sharing.

[u/draggin_balls]

So stupid, when margins are high competition is incentivised meaning an increase in supply and a lowering of prices.

You need to understand the concept of “economic profit”

[u/InterestingVoice6632]

Ai slop

[u/PhilRubdiez]

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