Forwarded message:
Date: Sun, 11 Jan 1998 11:40:33 -0800 From: Bill Stewart <bill.stewart@pobox.com> Subject: Re: A further thought on free markets & anarchy...
If you begin by assuming that a free market will automagically acquire someone with monopoly control who can prevent all competitors from acting, you've got a rather different view of free markets than I do,
First, it isn't magic. It is the realization that any market is limited by several factors (eg number of customers, limited raw resources, startup costs) and that even a small superiority in one businesses ability to produce their service or product over time will provide them with an increased share of those limited resources and the share in profits that acrue as a result. As their share, and hence their control over, those resources increases the competitors are faced with the prospect of having to go to the competitor to get what they need in order to compete. It is *not* a part of any free market theory that I am aware of that pre-supposes that a given business entity will, for whatever reason, of its own free will guarantee the continued existance of competition. If anything the long term goal of any business is to reduce competition. If we accept the commen view of free markets and the one you seem to be saying is the reality, we shouldn't worry about Microsoft. One morning they'll all wake and realize that if they don't keep HP, Sun, IBM, Apple in business they won't have competition. As a consequence of that realization they will in fact provide contracts or other forms of renumeration to their competitors to keep them in business and hence able to take potential sales away from Microsoft. What I am saying is given the environment and goals of operating a for-profit firm the supposition that a free market will somehow prevent monopolization is incorrect. I am saying that a free market economy when operating without outside 3rd party guidance or some form of economic bill of rights will by its very nature monopolize and reduce competition due to nothing more than minute superiorities of individual business models and the efficiency those businesses acrue over time as a result.
and you're basically assuming that anarchy is unmaintainable in economies, from which the obvious conclusion is "so don't even try."
But the free market model as currently understood is an anarchy, at least at the beginning. The reason that it falls into this category is that there is no governing body or bill of rights. Each business is left to its own ends and the consequences thereof. There are no externaly enforced limitations on business practices in this model. Further, regulation of unfair (whatever that means in a free market - personaly I thinks its a spin doctorism equivalent to saying you can have an anarchy without inherent use of violence) practices is completely abandoned other than the assumption that eventualy competitors and consumers will learn of those practicies and quite dealing with that business. The problem with that assumption is that by the time such practices become known there may be no competitors and the consumers only option might be to simply have to do without the item completely. In the case of a life sustaining resource this is no option at all.
There are people who believe the same about political anarchy.
The point I am making is that the arguments that support political models of social activity are not mappable to the economic ones in a simple one-to-one method as the free market model (and many others) assume in a axiomatic manner. That in fact, because of the inherent limitations of a market which is not one-to-one mappable to the range of human expression (the field of social systems) which has no inherent limitations in resources or means such comparisons are flawed by this axiomatic assumption.
However, I don't see you presenting any reasoning for the belief that a free market will become non-free and acquire a head.
The history of economics is filled with examples of markets without regulation becoming monopolized. There was the example yesterday or the day before regarding some rail baron and how they cornered the oil market because they realized the efficiency advantage of using rail based oil carriers. Look at Microsoft, the airlines prior to federal regulation. The the long-haul trucking industry, the teamsters, etc., etc.
Rather the opposite appears to have been the case in most environments where the economic actors don't have political actors supporting their bids for monopoly.
Microsoft certainly didn't have political supperiorty? And how can you in good faith sneak in this concept of 'political superiority' into a discussion of free markets which a priori and in an axiomatic manner require that such regulation and their inherent regulatory bodies do *not* exist and most certainly do not inhibit or otherwise limit the options available to a commerical enterprise in that market. Smacks of changing the rules in the middle of the game. ____________________________________________________________________ | | | Those who make peaceful revolution impossible will make | | violent revolution inevitable. | | | | John F. Kennedy | | | | | | _____ The Armadillo Group | | ,::////;::-. Austin, Tx. USA | | /:'///// ``::>/|/ http://www.ssz.com/ | | .', |||| `/( e\ | | -====~~mm-'`-```-mm --'- Jim Choate | | ravage@ssz.com | | 512-451-7087 | |____________________________________________________________________|