Yeah it does. The margin that tends to zero is the profit margin, not the marginal cost of production. That's why the commodities business is so tough: If you make $10 profit pr. ton of CommodityFoo, someone's gonna come along and underbid you $5, unless you bring some value to the game that the new guy can't.
And that's exactly what's happened to the news business: The internet ate the newspapers USP, classifieds, and effectively turned them into commodities. Take away the classifieds and the agency-dispatches, and the rest barely fills an interesting blog.
"unless you bring some value to the game that the new guy can't." yes, like the supply of a scarce resource. This little get out clause renders your argument meaningless.
If there are only 100 tons of gold available per week, (the marginal cost of producing the 101st item is infinite, i.e. non-zero) it does not matter how many competitors there are in the market. If demand is for more than 100 tons, profit margins will not "tend to zero". This scenario illustrates that even in a commodities market a situation may arise where a large number of competitors will not cause margins to tend to zero.
Let alone situations where branding is involved etc. - all factors that we can assume are permissable under the stated condition of an "open market", and all in the category of "some value to the game that the new guy can't". So in other words your comment amounts to "yes it does, except where it doesn't"
No, I contend that it is you who is confused. There is only one type of profit, and I am correct that profit may be derived from demand exceeding supply irrespective of the number of suppliers. This has nothing to do with speculation, it is a basic concept of market economics that holds true in an "open market" as defined by the original commenter.
My understanding of your comment is that open markets means competition. Competitors will compete on price, forcing prices down, with constant production costs margins will "tend to zero"
However this is incorrect. Where demand is greater than supply, prices (and therefore profits) may be stable or rise regardless of the number of competitors. A drought is a scenario of restricted supply where all competitors in the water supply market may increase profits due to demand.
Additionally, competition in markets where there is imperfect knowledge is not always based on price. It may be based on many other factors for example branding etc.
So your statement "In open markets margins should tend to zero" is not true, they will tend towards an equilibrium based on supply and demand, and even then individual suppliers may be differentiated by factors other than price allowing them to make a higher margin than their competitors.
The fact that competition may in some cases reduce margins, does not therefore have any "wider implications on the ability to profit over the long run in a capitalist society."
Note that where the marginal cost of production is zero, we can say that supply is infinite, and so prices cannot be maintained by restricted supply. This is a different case. But I cannot think of any market where the marginal cost of production is zero. Even copying and pasting a news article requires a small investment of time. So this qualifier may be unneccessary since it refers to an absurd situation.
