My ideas on pure Lassaiz-faire Capitalsim

Discussion in 'Current Events' started by Bern80, Feb 27, 2007.

  1. Bern80
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    Bern80 Gold Member

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    Basically works, until monopolies spring up. In which case I don't have a problem with a little government involvement. But, our government has gone far beyond this in terms of sticking its nose in private business.
     
  2. Little-Acorn
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    Little-Acorn Gold Member

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    Monopolies cannot "spring up" under laissez-faire capitalism. They require either active government support, or govenment turning a blind eye to their lawbreaking (goons breaking kneecaps of people who have businesses undercutting the monopoly, etc.).

    Laissez-faire capitalism is a redundant term. Capitalism is simply business transacted without government controls or interference, except for contract enforcement and the enforcement of rights that is a free government's basic job.

    Pure capitalism is practically nonexistent. Government being made of people as it is, and flesh being weak, there is almost always either illegitimate govt control, or corruption that prevents govt from adequately enforcing honesty and protecting rights. Though the U.S. comes closer to the ideal than virtually any other country, we have plenty of both failings. There isn't one country on earth that has neither.
     
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  3. Bry
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    Bry Member

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    I'm confused little. There being laws against monopolies IS a form of government intervention, isn't it? Without which, as Bern said, monopolies would form. Or are you suggesting that monopolies do not naturally form?

    My impression is that Capitalism cannot be pure because companies generally do everything they think they can get away with (which in a true Laissez-Faire system is everything because there is no government intervention, i.e. laws) in order to increase their profit margins, which sooner or later leads to behaviors which violate the "rules" of capitalism. I take it as given that some government intervention is required in order for the system to function, though I'd be happy to entertain the contrary is someone really wants to explore it. The question is how much intervention is good.

    Let's imagine a brand new country with no laws. Assuming that the form of the government is provided for, with a structure generally conforming to that found in the US, what's the first order of business for the government?
     
  4. LOki
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    LOki The Yaweh of Mischief

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    It's not so much that monopolies cannot form under free-market capitialism, but that without government complicity, monopolies cannot be coercive under free-market capitalism.

    For instance, a farmer may corner the market on potatos, drive up the price thinking that he has no competetitors, then the buyers choose carrots instead. Now this potato monopolist must lower his prices to compete against every other vegetable market out there.

    The government, however, can close the market to competition by fixing prices, or granting subsidies favoring this monopolists coercive market strategy; but attempts to do so without government complicity will break him.

    Without government assistance, companies can only "get away" with what the free-market will bear.


    Laws prohibiting force and/or fraud in the marketplace.

    Recognize the rights of the individual, including property rights.
     
  5. Little-Acorn
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    Little-Acorn Gold Member

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    Correct. And monopolies MUST be able to coerce people against their will, to maintain an abusive position in an otherwise-free society.

    Exactly. Or a carrot farmer might realize that he can make quite a lot of money by planting potatoes instead, and selling them for a little less than the monopoly guy. There's nothing the monopoly guy can do to stop him, except use force. And it's government's job to make sure he doesn't.

    I said something wrong earlier: a monopoly CAN spring up in the middle of pure capitalism... but it cannot last. A large farmer with a lot of money, can lower his prices to the point where he's losing money, and keep them there, knowing his smaller competitors cannot possible match his prices without going broke. And they'll go broke sooner than he will, which is what he wants. Then he buys their farms at fire-sale prices, so that he no longer has ANY competition. Consumers who have been enjoying all the low prices, soon get a shock as he raises prices way high. But they can go nowhere else - he owns ALL the farms, and is setting all the prices for potatoes.

    But other farmers who don't appreciate that kind of economic war, can get large loans and start planting potatoes anyway. The big guy might try the same thing again, but if the others have enough financial backing, this time the big guy is the one who goes under. Unless he relents and sets his prices for a normal, modest profit margin, one that the others can match but are uncomfortable undercutting.

    A monopoly cannot last under pure capitalism, unless the monopolist has a way to go arround poisoning his competitors' crops, or breaking kneecaps, or spreading rumors about poor quality of the competitors' products etc. And those are all flat violations of their rights, which it IS govenment's job to seek out, prosecute, and punish.

    Most monopolies in American history, have either had government backing, or have had government looking the other way while kneecaps got broken, coal trucks got sabotaged, cattle got run over cliffs, etc.

    Monopolies require government complicity to last. But if government stays out of the way of business, while at the same time enforcing honesty statues (contract enforcement, truth in advertising etc.) and otherwise sticking to its job of protectting people's fundamental rights, no monopoly can live long.
     
  6. Bern80
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    Bern80 Gold Member

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    I wouldn't say it's a certainty and would happen across the board, but monopolies of specific goods or services would probably be attempted by some.

    In a free market the people would decide what can or can not be gotten away with. If the provider of said good or service refuses to reduce his price regardless of what people are willing to pay then the economic concepts of substitutes comes into play.

    First order of business. this will be vague but if starting from scratch the first thing gov't should do is figure out what gov't should do. Meaning where is gov't really neccessary.
     
  7. JeffWartman
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    JeffWartman Senior Member

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    Certain industries have such high barriers to entry that it is absolutely possible for monopolies to form without government intervention in strict Laissez-Faire capitalism.
     
  8. LOki
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    LOki The Yaweh of Mischief

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    Produce examples of such industries. Exclude those where the high barrier to entry was created by the governement--they don't count.
     
  9. Gurdari
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    Gurdari Egaliterra

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    How is the US government implicit in the microsoft monopoly?
     
  10. Little-Acorn
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    Little-Acorn Gold Member

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    The government made all those laws forbidding everybody from buying Macs and Netscape, of course. Haven't you seen them? That's why no Macs and Netscape browsers were sold last year or this year.
     

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