The idea is to retain the good qualities of capitalism which is self-optimization and market-based decision making. The bootmaker and the nailmakers would be autonomous agents making decisions in their best interests. The bootmakers can buy nails from whoever they want, but if the market then rejects their boots because of shoddy nails, they will have to adapt.
Also worth pointing out that in a specialized economy, most companies cooperate instead of competing with each other. The bootmakers likely need nails specifically designed for their boots so buying generic ones from China isn't an option. Instead they need to source a local supplier and tell them how the nails for their boots models need to be made. They enter a symbiotic relationship in which both benefit.
Liberals like to see capitalism as a marathon where the runners compete with each other and the best ones win. But the system works more like the cells in a human body. Companies need to specialize and work together to be successful.
"Liberals like to see capitalism as a marathon where the runners compete with each other and the best ones win. But the system works more like the cells in a human body. Companies need to specialize and work together to be successful."
Be careful of painting with too broad a brush. Different industries operate in vastly different ways to very different outcomes in the long term.
"The bootmakers likely need nails specifically designed for their boots so buying generic ones from China isn't an option. Instead they need to source a local supplier and tell them how the nails for their boots models need to be made"
That's beautifully conceived, but you conveniently ruled out an option that sly bootmakers could get their hands on a Chinese dictionary and instruct these cheap Chinese suppliers (rather than the supplier next door) on what type of nails exactly they would like to have made for them ;)
Yes, sure. No one said that the nail makers would be guaranteed a market for their nails. However it might be better for the boot makers to renegotiate their contract? And what is the cost of screwing over your local supplier? Maybe local public services will prefer boots entirely made in $your-country? Economy is way more complicated than always chasing after the biggest short term profits.
Of course - maybe they will :) and maybe they won't. Which is way less certain than saying "they [the shoemakers] NEED to source a local supplier", as you wrote.
The key thing here is that if I buy boots cheaper by 1/4 (thanks to partial outsourcing), I will spend the 1/4 I saved by going to a barber. Or a local restaurant. Or by buying doughnuts at a local bakery. So - speaking of economy to which there's more than meets the eye - these are local suppliers too, indirectly benefiting from the fact that local shoemaker imported nails.
My understanding was that the supply chain and infrastructure to produce the smart phone simply wasn't available in the US. America had decimated its manufacturing capabilities to the point that there was no other option beside bankrolling an entire industry from scratch.
Also worth pointing out that in a specialized economy, most companies cooperate instead of competing with each other. The bootmakers likely need nails specifically designed for their boots so buying generic ones from China isn't an option. Instead they need to source a local supplier and tell them how the nails for their boots models need to be made. They enter a symbiotic relationship in which both benefit.
Liberals like to see capitalism as a marathon where the runners compete with each other and the best ones win. But the system works more like the cells in a human body. Companies need to specialize and work together to be successful.