The Free Market

[Tommy4ever]

''The freer the market the freer the people''.

This is the oft quoted mantra of the libertarian. But what does is actually mean? I've been trying to figure out what they are trying to say here, but I'm still not entirely sure.

I imagine that when the capitalist sprouts this line he imagines some sort of utopia in which a market free of all government legislation produces everything at the optimum efficiency, satisfies everyone's wants and ensures the up most competition.

Yet if we assume that the free marketer wants to remove all government controls on the market then the realities of this are very different.

Given absolute freedom the market shall quickly become dominated by monopolistic and oligopolistic firms. These firms tend not to produce efficiently, they have little need to, and tend to charge inflated prices. They also swallow up any up and coming competition in order to secure their dominance. So we can safely assume that this is not the vision of the libertarian when he rants about free markets.

So what is?

A market that is heavily saturated in government legislation to ensure no firm can become dominant? Surely not.

So what is the vision of the libertarian when he talks of the free market?

[ComradeMan]

The trouble with free markets and the whole free trade thing is that it's not actually very free at all. The use of the word free dupes people into believing the idea that it is freedom in the commonly held sense of the word- for everyone and all that, but in reality all it means is that it's free for certain sections of business (not for others).

[RGacky3]

''The freer the market the freer the Really Rich people to exploit, oppress, control and profit from everyone else''.

Fixed.

[trivas7]

Given absolute freedom the market shall quickly become dominated by monopolistic and oligopolistic firms.
This is a common notion that many lefters believe that is totally false. Historically monopolies have existed solely through state intervention; just the opposite of what you say is true.

[Tommy4ever]

This is a common notion that many lefters believe that is totally false. Historically monopolies have existed solely through state intervention; just the opposite of what you say is true.

This is not true.

Historically, aside from things like the Royal Mail, monoplies emerge on their own. A monopoly is a firm that own 40% or more of an industry. These are not uncommon, particularily in parts of the world where there is little state intervention.

Meanwhile oligopolists dominate many industries throughout the world even with state intervention - although the problems they cause tend to be more severe in states with less regulation.

I'm not sure what makes you think that a free market discourages monopolistic behavior. Could you explain to me why you think this and perhaps give a few examples to back up your claims?

[RGacky3]

This is a common notion that many lefters believe that is totally false. Historically monopolies have existed solely through state intervention; just the opposite of what you say is true.

So places and time with less public control of the economy should have less monopolies, how does that work in the real world?

[trivas7]

T
I'm not sure what makes you think that a free market discourages monopolistic behavior. Could you explain to me why you think this and perhaps give a few examples to back up your claims?
By monopoly I mean a coercive monopoly, i.e., exclusive control of a given field of production which is closed to and exempt from competition. In the entire history of capitalism, no one has been able to establish a coercive monopoly by means of competition in a free market; it can result only from the abrogation of laissez-faire and from the introduction of the opposite principle -- statism.

A non-coercive monopoly, OTOH, is not independent of the wider market in which it operates and its prices and production policies are fully bound by the law of supply and demand.

Perhaps you need to do the research.

[Dimentio]

By monopoly I mean a coercive monopoly, i.e., exclusive control of a given field of production which is closed to and exempt from competition. In the entire history of capitalism, no one has been able to establish a coercive monopoly by means of competition in a free market; it can result only from the abrogation of laissez-faire and from the introduction of the opposite principle -- statism.

A non-coercive monopoly, OTOH, is not independent of the wider market in which it operates and its prices and production policies are fully bound by the law of supply and demand.

Perhaps you need to do the research.

With that definition, nothing else than legally upheld monopolies could be called monopolies.

If I am a private capitalist and dominates 95% of one market, am I a monopolist?

[Tommy4ever]

trivas I know plenty about economic and am indeed currently studying it. Perhaps you need to understand that a monopolist (or 'non-coercive monopolist' if you want to call it that) does not have to act in the same way as a firm that has to deal with a greater amount of competition. These monopolists do not produce at full efficiency.

I really don't see what makes you think that the free market necessarily creates highly efficient and competitive markets. It doesn't.

Now enough of the strange and dismissive statements. OK?

[trivas7]

If I am a private capitalist and dominates 95% of one market, am I a monopolist?
Which private capitalist has ever dominated 95% of a free market?

[ExUnoDisceOmnes]

Free?

[Tommy4ever]

With that definition, nothing else than legally upheld monopolies could be called monopolies.

If I am a private capitalist and dominates 95% of one market, am I a monopolist?

IIRC the official definition of a monopolist is a firm that own 20% (or it might have been 25%) of a particular industry. In the UK the competition commission begins to investigate a firm when it owns 40% or more of a particular industry.

So yeah. That's a monopolist.

[trivas7]

[...] Perhaps you need to understand that a monopolist (or 'non-coercive monopolist' if you want to call it that) does not have to act in the same way as a firm that has to deal with a greater amount of competition.
OTC, in a free market non-coercive monopolies have to act exactly like any other firm that has to deal with greater competition. In a free society there will always be new and old rivals to challenge its dominant position.

[Tommy4ever]

OTC, in a free market non-coercive monopolies have to act exactly like any other firm that has to deal with greater competition. In a free society there will always be new and old rivals to challenge its dominant position.

Have you ever heard of barriers to entry and exit?

[trivas7]

Have you ever heard of barriers to entry and exit?
And your point is what exactly?

[Tommy4ever]

And your point is what exactly?

Do you not understand how this limits competition and can lead to inefficiencies?

[trivas7]

Do you not understand how this limits competition and can lead to inefficiencies?
And your point is what exactly?

[Dean]

This is a common notion that many lefters believe that is totally false. Historically monopolies have existed solely through state intervention; just the opposite of what you say is true.

No, more correctly putting it would be: states always follow the money, since taxing the money is how they earn their keep. So when monopolies form, the state will already be an interested party instrumental in the workings of both organizations, as well as the monopoly that forms.

That states often coincide and cause monopolies is merely the reflection of the fact that aggregated economic power of any form is critical to the formation of a monopoly. The state certainly holds this power, as well as every fortune 500 company. Measuring the relative power of each* could provide some rough estimate of who causes monopolization, at what rate.

*particularly as their power relate to the consolidation of economic power which precedes monopolization

[trivas7]

No, more correctly putting it would be: states always follow the money, since taxing the money is how they earn their keep. So when monopolies form, the state will already be an interested party instrumental in the workings of both organizations, as well as the monopoly that forms.

I'll infer from this agreement with me, Dean.

[Dean]

I'll infer from this agreement with me, Dean.

No, states are not the only actors whose aggregated economic power can drive monopolization. That was the point. Standard Oil was a mixture of powers, and there was nothing unique about the state intervention that made it more responsible for the consolidation than, say, Rockefeller. I would imagine that the private actions of Rockefeller were far more important, and I doubt you'd find many that would honestly disagree with me.

Likewise, the relevant power and the drive to consolidate power among the top oil organizations which formed the series of mergers in Standard Oil's history were probably a lot more important than any state action.

[PoliticalNightmare]

Historically monopolies have existed solely through state intervention.

This isn't necesarily an argument that goes against socialism (or at least not the libertarian strands) because the laissez-faire ideologists argue for a system of free market trade based on rotten foundations of historic state intervention and corporatism.

The thought that once the state is abolished (or reduced) with the basic capitalist infrastructure left in tact (i.e. private property) is left intact, the presently existing monopolies built on force will build there own state goes without saying. You can't have a free system of trade based around capitalism because oligarchical monopolies will form their own restraints and restrictions on the market if they have their own influence over private protection agencies (assuming "anarcho"-capitalism) and with a "reduced" state in place (assuming minarchism), there will be no reduced government because such corporations will always have a massive impact on government through bribery, capital flight and other tactics. (As Dean explains, monopolies can also have a coercive influence on the market - even a "free" market - and restrain competition as well - I can go into more detail if you want).

Furthermore slavery, feudalism and wage labour were all enforced by state intervention. The former two were a direct result of state endorsed violence and coercion which forced people into ties to their masters or land lords from birth (generally speaking, with slavery, the slaves were from foreign colonialised made into slaves by foreign state intervention, e.g. the Roman empire and its various constituencies, including the colonisation of Greece). The latter, wage labour, was enforced through taxation and violent expropriation of the ordinary workers from the means of life (namely the land). Also there was a plundering of gold, slaves and other forms of wealth from colonised nations such as Africa. All of this opened up the road to monopoly corporations, and combined with the poverty of the ordinary US citizens (due to taxation/expropriation), people were forced to go down the route of selling their wage labour to private individuals.

This has massive relevance to the present state of wage labour because before hand citizens worked peacefully and voluntary, either as self-employed individuals or as part of communal production, though admittedly trading their goods and services with a possible medium of exchange such as commodity money. They didn't all just magically flock over one day to work for some big oil tycoon or entrepeneur and voluntarily allow individuals to extract a profit from their labour.

The laissez-faire argument is that we shouldn't punish the present day entrepeneurs for the mistakes of the past but the fact is that the argument goes way deeper than income equalities; it hits at the core of the problem, namely private property and wage labour.

So, all in all, libertarian capitalism is a massive oxymoron and the argument that state intervention was historically used to generate corporate wealth, even if it is true, is not antithetical to libertarian socialism at all. Basically, the only way to begin a free society is by using fresh new, solid foundations that don't include wage labour and private property (or commodity exchange for that matter, since there are deep problems with market transactions as well, such as the distortion of the price value by extraneous costs).

[Dean]

OTC, in a free market non-coercive monopolies have to act exactly like any other firm that has to deal with greater competition. In a free society there will always be new and old rivals to challenge its dominant position.

Nope. A lot of economic "sniping" occurs among organizations. Notably, predatory pricing serves to target specific entities, and is totally within the NAP's "moral" limits. http://en.wikipedia.org/wiki/Predatory_pricing

[Dean]

Furthermore slavery, feudalism and wage labour were all enforced by state intervention. The former two were a direct result of state endorsed violence and coercion which forced people into ties to their masters or land lords from birth (generally speaking, with slavery, the slaves were from foreign colonialised made into slaves by foreign state intervention, e.g. the Roman empire and its various constituencies, including the colonisation of Greece). The latter, wage labour, was enforced through taxation and violent expropriation of the ordinary workers from the means of life (namely the land).

This is important because it shows that capitalists want to maintain the consolidation of economic interests which drives coercive state intervention. As anyone can see, abolishing the symptom without abolishing the cause will only get you back where you started.

[PoliticalNightmare]

And [his] point is what exactly?

His point is that monopolies can find various ways to dominate and manipulate the market through both indirect and direct means, even under a "free" market system. Benjamin Tucker was a huge critic of this and described the "true" free market system as being a system of producer owned (and managed) firms competing and trading their goods and services on an open market. Classical liberal economists like Adam Smith criticised state intervention before there was a significant redistributive welfare state system and while wage labour was on the rise. He would likely have been a socialist given the modern system of wage labour and private capital. The meaning of the early classical liberals is so misunderstood by the western schools of "libertarianism" who vigorously adopt an entirely false stance of "free trade" and "small government" whilst actively proposing the totally non-libertarian system of capitalism and then have the cheek to tell us that libertarian socialism is an oxymoron (whilst simultaneously ignoring the historical connections of the word and even not fully understanding the history of classical liberalism).

[trivas7]

No, states are not the only actors whose aggregated economic power can drive monopolization. That was the point.
Your point perhaps, not mine. Coercive monopolies cannot happen in a free market.

[PoliticalNightmare]

Coercive monopolies cannot happen in a free market.

Evidence?

[trivas7]

capitalists want to maintain the consolidation of economic interests which drives coercive state intervention.
Nonsense. In a dynamic economy there are always upstarts that fight to lower the barrier of entry. An economy has not only one good, and the capital structure of an economy is a complex of arrangements that is disruptive to mere consolidation.

[Dean]

Your point perhaps, not mine. Coercive monopolies cannot happen in a free market.
I guess we'll just have to take your word for it since you refuse to offer any reason why this might be the case. Or was the following an attempt?


Nonsense. In a dynamic economy there are always upstarts that fight to lower the barrier of entry.
Really? I haven't seen any competitors to Dominion Power recently, and that market is certainly dynamic. Its pretty clear that "dynamic" is here just another fancy word for "how I wish the market worked."


An economy has not only one good, and the capital structure of an economy is a complex of arrangements that is disruptive to mere consolidation.
That could be why organizations which consolidate do not focus on "mere consolidation." Like most empowered economic actors, they (shock!) cover their bases, i.e., make sure that their consolidation will be sustainable and profitable.

I hope that wasn't your argument as to how/why companies are somehow incapable of / discouraged from consolidation under a free market, because it was nothing but simple-minded hyperbole. You might try actually explaining what characteristics of capitalism (or the free market) disincentivize consolidation. I'm sure the potential for cornering the market will be high on your list, as well as expansion of profits, because history has sure proven how non-lucrative it is to own various stages of the industrial process as well as key, limited resources. And I'm sure COMCASTNBCU would agree.

[Misanthrope]

This is a common notion that many lefters believe that is totally false. Historically monopolies have existed solely through state intervention; just the opposite of what you say is true.

Whenever there is capitalism there will be a state. Whenever there is a state there will be market intervention beneficial to the capitalists and detrimental to the working class. Anarcho-capitalism will drivel into a privatized state society ruled by monopolies. Why? Because it is a society entirely ruled by capitalists. The state's main function is to protect and serve the capitalists. Implying that capitalists would want the state to wither away is laughable.

Okay, let's hear your made up axioms and theories, Ludwig.

[trivas7]

I
I hope that wasn't your argument as to how/why companies are somehow incapable of / discouraged from consolidation under a free market, because it was nothing but simple-minded hyperbole. You might try actually explaining what characteristics of capitalism (or the free market) disincentivize consolidation. I'm sure the potential for cornering the market will be high on your list, as well as expansion of profits, because history has sure proven how non-lucrative it is to own various stages of the industrial process as well as key, limited resources. And I'm sure COMCASTNBCU would agree.
I never argued that free markets disincentive consolidation; I've argued only that monopolies have existed as the result of state intervention historically, in the real world. You like to think that capitalism can be explained as a system that is teleologically bound to certain outcomes, but the real world is not so simple.

[Dean]

I never argued that free markets disincentive consolidation; I've argued only that monopolies have existed as the result of state intervention historically, in the real world.
Capitalism and free markets have also existed as the result of state intervention. I guess we are to assume that only the state causes those, as well.

And are you seriously claiming that all monopolization is the result of state interference? What a childish, clearly wrong supposition. Like any complex system of power, just about everyone with power has their hand in it. Your childish obsession with the state must be augmented with proof that the self-interest of Rockefeller and other non-state actors weren't factors in the consolidation of Standard Oil for it to be taken seriously.

Without that fact, which you wont find, you're acquitting the capitalist system with absolutely no basis.

If free markets don't disincentivize consolidation than there is no reason to believe your argument:

Coercive monopolies cannot happen in a free market.
Unless you think one of the following:
-Markets don't work via incentives
or
-Monopolies can exist without being coercive


You like to think that capitalism can be explained as a system that is teleologically bound to certain outcomes, but the real world is not so simple.
But we can trust you in your assertions, of course. Makes perfect sense.

[Dean]

Really, you're only trying to beat around the bush. You've offered no reason as to why you think a free market won't encourage monopolization or consolidation, and you don't even apparently think it will be discouraged by the conditions of the free market. So it's nothing but a naked assertion of yours at this point.

[trivas7]

And are you seriously claiming that all monopolization is the result of state interference? What a childish, clearly wrong supposition. Like any complex system of power, just about everyone with power has their hand in it. Your childish obsession with the state must be augmented with proof that the self-interest of Rockefeller and other non-state actors weren't factors in the consolidation of Standard Oil for it to be taken seriously.

I know you think little of it, Dean, but the historical record is that all coercive monopolies have been accompanied by state intervention -- pound your head against it as you will. The consolidation of Standard Oil has nothing to do it.

[Dean]

I know you think little of it, Dean, but the historical record is that all coercive monopolies have been accompanied by state intervention -- pound your head against it as you will. The consolidation of Standard Oil has nothing to do it.
All coercive monopolies have been accompanied by capitalist intervention. History proves this, too, of course.

So we agree that both the state and capitalism must be abolished. Good.

As to your free market fetishism - I guess capitalist intervention won't occur in the free market? Makes perfect sense.

[Kiev Communard]

The consolidation of Standard Oil has nothing to do it.

Really? What about the numerous facts of state subsidies and support in union bustings from the U.S. state to all large corporations up to "Progressive Era"? Do you think they could have been consolidated if they hadn't been looked favourably at by the government and couldn't have used lobbyists' support?

[Kotze]

I bet you guys didn't know that only bacteria exist in real nature and all bigger animals are the result of government intervention :P

[Dean]

I bet you guys didn't know that only bacteria exist in real nature and all bigger animals are the result of government intervention :P
Good analogy.

Consolidation of resources is a pretty standard tactic in competitive systems - biology works much more slowly, though, and isn't prone to the large mergers we see in the financial field.

If anything, capitalism is far more prone to spontaneous, continual trends of consolidation than other competitive systems.

[RGacky3]

I know you think little of it, Dean, but the historical record is that all coercive monopolies have been accompanied by state intervention -- pound your head against it as you will. The consolidation of Standard Oil has nothing to do it.

All this historical record of CAPITALISM has been accompanied by state intervention, which is because Capitalism is a STATE CONSTRUCT.

[Skooma Addict]

Capitalism evolved over centuries. Saying it is a state construct is misleading.

[Dean]

Capitalism evolved over centuries. Saying it is a state construct is misleading.
Its no more misleading than is saying that monopolies are state constructs. This has been my point all along - state and private collaboration to monopolize exist in every (or nearly) instance of capitalist consolidation. Moreover, the capitalist incentive to valorize property is a consistent theme for said consolidation.

You may not understand it, but your point that the presence of the state is a circumstantial, rather than driving fact of capitalism (in my case, monopolization), only serves to solidify mine. Why you only chose to speak up now is clear: you are prejudiced toward the centralized, capitalist mode of production.

[Dean]

Its not clear why trivas7 thinks that private, non-state entities can't consolidate power on monopolistic terms. No unique characteristic of state intervention has been presented which would lead anyone to think that, upon abolition of the state, we will cease to see power consolidation in the forms discussed herein.

It is clear that to accept that private firms tend toward consolidation of power is anathema to trivas7. I've merely pointed out that both systems do the same thing - trivas7 has claimed that one doesn't. No evidence has been given for this viewpoint, but he has claimed that:

You like to think that capitalism can be explained as a system that is teleologically bound to certain outcomes, but the real world is not so simple.
...as his apparent defense of the unfounded notion that states monopolize whilst capitalist firms cannot. It's a bizarre attempt at obfuscation and retreat.

[trivas7]

All coercive monopolies have been accompanied by capitalist intervention. History proves this, too, of course.

What else do you mean by "capitalist intervention" except state intervention? By what power do corporations effect coercive monopolization?

[RGacky3]

Capitalism evolved over centuries. Saying it is a state construct is misleading.

Yup, and it developed along with the State, that defended privat property laws. It is a state construct.

[Dean]

What else do you mean by "capitalist intervention" except state intervention? By what power do corporations effect coercive monopolization?
The aggregation of economic power itself, predatory pricing, etc. You know, the things mentioned before that you chose to ignore.

[Dimentio]

The aggregation of economic power itself, predatory pricing, etc. You know, the things mentioned before that you chose to ignore.

But don't you understand, you ignorant socialist :rolleyes:, that if a company ever in a FREE MARKET engaged in such behaviour, the consumers would buy products from other companies? All wrongs have to depend on the state. :lol:

[RGacky3]

Because consumers are clearly responsible in a market situation (obviously those with more money are MORE responsible) but people in a real democratic situation are CLEARLY irresponsible and crazy.

[Hoipolloi Cassidy]

Hey, guys, everybody's spot on! There's a number of left historians who argue that "Free Market" is how Mercantilism changes its spots in the late eighteenth century - in other terms, they're both tied in with the rise of European colonialism. William Appleman Williams is good on this.

There's a hilarious letter from Adam Smith to the Earl of Carlisle in which Smith is troubled that the Irish are asking for the removal of protective tariffs against them in England. Of course, Adam Smith thinks he should be in favor, but he's unhappy with the thought of English products being swamped. Fortunately, he concludes, it will be okay, because the Irish are so "naturally" given to religious strife they'll never be able to compete...

[Dean]

Hey, guys, everybody's spot on! There's a number of left historians who argue that "Free Market" is how Mercantilism changes its spots in the late eighteenth century - in other terms, they're both tied in with the rise of European colonialism. William Appleman Williams is good on this.

I've felt this way for awhile, but I wasn't aware that others had developed the idea at all. I'll look into it - thanks for mentioning it.

[Hoipolloi Cassidy]

It gets interesting once you throw Balibar (on colonialism) into the soup, along with fairly stodgy historians of American corporations. Surprise, surprise, the three pieces, State, Trade and Colonialism fit together like Berlusconi and a pile of whores.

[Revolution starts with U]

This is a common notion that many lefters believe that is totally false. Historically monopolies have existed solely through state intervention; just the opposite of what you say is true.

State intervention only develops through already pre-existing monopolization. Only one with the power and wealth to support protectionism can engage in protectionism. I am sure you understand the nature of Rothbardian meta-physical definitions of "capitalism" (sic). That should be apparent to you. Projects, of which statism is one, go nowhere without the capital to back them up.


By monopoly I mean a coercive monopoly, i.e., exclusive control of a given field of production which is closed to and exempt from competition.
Do you mean "closed to..." legally, effectively, philisophically, or all of the above?
What is the difference between legal monopoly and effective monopoly? If they exist in one and it's a problem, it's a problem in the other as well (if we are assuming a utilitarian argument).

In the entire history of capitalism, no one has been able to establish a coercive monopoly by means of competition in a free market; it can result only from the abrogation of laissez-faire and from the introduction of the opposite principle -- statism.
"In the entire history of capitalism (seems like you're well researched on that topic :drool:) no one has been... in a free market"

^fixed that for you.



Which private capitalist has ever dominated 95% of a free market?
The King of (insert nation here)


Your point perhaps, not mine. Coercive monopolies cannot happen in a free market.
You are absolutely right on this one Triv...
Free markets cannot happen, so obviously, they couldn't produce coercive monopolies either :lol:
(as Dean has pointed out to you, people want to protect themselves, capitalists are no different. The one thing that seperates them is that they have large amounts of sway/power and can have their protectionist dreams realized. You should familiarize yourself w Bastiat.)


I know you think little of it, Dean, but the historical record is that all coercive monopolies have been accompanied by state intervention -- pound your head against it as you will. The consolidation of Standard Oil has nothing to do it.
I know you won't listen to this, Triv, but the historical record is that all capitalism has been accompanied by state intervention -- feel mistakenly proud as you will. The consolidation of Standard Oil has everthing to with it.
You are ascribing cause to what is properly an outcome.


Capitalism evolved over centuries. Saying it is a state construct is misleading.

True. But feudalism evolved over centuries as well. I conflate it w statism as much as I do capitalism... both are outcomes of economics.

[trivas7]

Free markets cannot happen[...]
Then what is it you as a revolutionary leftist are trying to abolish?

[Dean]

Then what is it you as a revolutionary leftist are trying to abolish?
We want to establish a free society. We want to abolish the conditions which work against freedom, such as economic exploitation.

Do you ever plan on responding the the point that corporations use methods like predatory pricing to eliminate competition? As noted before, the collusion by capitalist entities can exacerbate this problem:



What else do you mean by "capitalist intervention" except state intervention? By what power do corporations effect coercive monopolization?
The aggregation of economic power itself, predatory pricing, etc. You know, the things mentioned before that you chose to ignore.

[Kiev Communard]

Then what is it you as a revolutionary leftist are trying to abolish?

Real-life capitalism and the state structures protecting it?

[RGacky3]

Quote:
Originally Posted by Revolution starts with U http://www.revleft.com/vb/revleft/buttons/viewpost.gif (http://www.revleft.com/vb/showthread.php?p=2002627#post2002627)
Free markets cannot happen[...]
Then what is it you as a revolutionary leftist are trying to abolish?


This exchange, if looked at carefully, speaks volumes about how this guy thinks.

[Revolution starts with U]

I'm trying to abolish capitalism. It amazes me how you (dishonest with yourself, and therefore everyone else) capitalists can say "the US is the pinnacle of capitalism" in one sentence, and then "the US is not capitalism" in another.
You're so fake.