Hamstringing the Dominant Firm

mandeville,

Evidently you've decided to ignore or dismiss what I pointed out.

Capitalism perhaps was the first tool man invented, predating even flint chips or fire.

You can define monopoly anyway you want, loose or specific, and it makes no difference. Captialism has been used by man from before man was man.

I would also suggest you revise your view or morality as being created by rulers to control the people. I believe that some honest intellectual analysis of your own anthropological knowledge you would see that morals is another tool quite likely invented by man long before the concept of ruler, or even "Chief".

Stop and think, mandeville, mankind has had an extremely long existence before even rudimentary government was invented; as a matter of fact I would venture that in terms of time, man has been ungoverned and unruled by external forces for the majority of his evolution. Those prehumans and even the cro-magnons did not go around murdering and stealing from one another in uncontrolled self absorbed fashion. The idea that human history of evolution was one of wild savage man against man existence for 2.5 or 3 million years and nothing stayed their hands until government was invented some 18 or so thousand years ago is just nonsense

Your posts above were interesting but did not contain much of you in them.

Why would you respond without even in the slighest mentioning or refuting my statement that capitalism is quite likely the first tool invented by man and as such predates any sort of monoploy by probably million years or more?

That statement is essential to any discussion on capitalism and monopoly, at least if I am to participate farther.

Vidyohs,

I think I used the term 'monopoly' in a looser way then you liked.

If you want to look at the matter from an anthropological perspective, consider the classic "The State" by Franz Oppenheimer. In it he outlines the genesis of the state as one of conquest, enslavement, and economic exploitation. Every state in history evolved this way. Slave labor preceded free labor just as monopolistic markets preceded free markets.

Martin,

You wrote,

"Must everything once declared "property" forever after be declared "property"? I do have a problem with that."

Who doesn't?

There are two different questions, the legal question and the economic question. Though legal theory changes, the market must must still make do with the legal theory of the moment. The economic question then: given the current legal definitions of the market, property, and voluntary exchange, what are the economic consequences of interfering with it.

And, if we see a problem arising from the interference, is the solution more of the same or less of it, if not none at all?

Vidyohs,

Chapter after chapter in the Rothbard book discuss how monopolies were rampant in the past. The goverments had their hands in everything. Interventionism destoyed entire competitive industries.

If we look at Medieval guilds, for example, I would make the argument that they were monopolistic, yet one begging to differ could point out their capitalistic qualities and make a counter argument. However, why don't they exist today? They would return if political power became more concentrated, or as concentrated as it was in past centuries. It was in this perspective that I made the statement that monoploy preceded capitalism in history but is slowly being replaced by it.

Even today as political power is consolidated within one party, we immediately see the economy moving away from capitalism toward monopoly.

Vidyohs,

On Nietzsche, I have my differences with him but they're not on this subject. On this topic, he couldn't be more right, and since my opinions on this weren't based upon his thought, I don't think we need to include him from this point on.

One can always make an exception to a general rule by pointing to instances that deviate from it, but those instances don't invalidate the rule.

The fact is that in ancient times man's ideology was based more upon a conception of group morality vis-a-vis individual morality, and the reason for this was becase the concentration of power was held in fewer hands then as opposed to now. The concept of "group morality" is a device that rulers use to subordinate the individual to the group, or in reality, to the wishes of the ruling class. As power became diffused and shared through social, economic, and political competition, the ideologies changed to reflect the changes in the distribution of power. This is a general rule and an historical fact despite the fact that individual justice existed in the past and that social justice (group morality) still exists today. Pointing out these cases do not invalidate the historical evolution going on.

Based on the evolution of morality as I describe above, there has to be a corresponding economic evolution along side of it. Strictly speaking, I don't disagree with many things you said, but again they don't invalidate the general point of my earlier post that monopoly preceded capitalism. The greater the concentration of power, the greater the level of market intervention by that power will exist, so it's only logical that capitalism would emerge with democracies as the concentration of power became dimished over time.

The fact that a market economy existed in ancient times doesn't invalidate the historical fact that interventionism by the powerful has slowly diminished over thousands of years as the concentrations of power have been diffused.

No other economy has ever existed in society other than a market based one. What we refer to as socialism has never come close to existence. It is impossible for socialism to exist; it would lead to immediate chaos. What exists is market intervention. When intervention is extensive, monopololies are ubiquitous.

Murray Rothbard's two volume book "An Austrian Perspective on the History of Economic Thought" clearly demonstrates that markets became more free over time and that what existed in ancient times hardly resembled what we think of as capitalism today.

If my earlier posts led you to think that in ancient times man did not accumulate savings and invest them, or that conventions of private property did not exist, I am sorry. I was writing of those societies from a macro perspective.

If I declare your claim on some property (a patent for example) null and void, have I interfered with the market? Must everything once declared "property" forever after be declared "property"? I do have a problem with that.

I'll agree that withdrawing a "property right" often is more useful than declaring another "property right" to offset the authority vested in existing proprietors.

For example, to address the equity grievances of gay couples, we might withdraw various rights of "marriage" from childless heterosexual couples. We don't call these rights "property" anymore, but we have in the past, i.e. wives traditionally were "property" of their husbands and vice versa.

How we label these rights seems less consequential than how we enforce them.

Martin,

To get to the point, can we just agree that, if interference with the market is causing a problem, the solution is not more but less interference, if not none at all?

But we're not all saying that life must be put on hold until we can answer your question to your complete satisfaction.

Are any of us saying it?

mandeville,

Not everyone believes Nietzsche was actually that good and I think your quote above shows that he really needed more anthoropology in his ideas. Tribalism was/is available for study even onto this day in remote areas of the world, and the facts are contra to what you say Nietzsche claims.

There is today, and has always been, private ownership of goods in tribal societies.

Ancient peoples were not dummies though their technology was primitive in comparison to ours today, and, intelligence developed well before technology.

One of the odd ways knowledge of the concept of privately owned goods comes to us is in the fact that the concept of theft was created in the same antiquity as the concept of private ownership. If everything belonged to everyone around and was freely avaible for anyone's use, then there could be no concept of theft.

Were there tyrants in ancient family groups or tribes? Of course, but even there Og's axe belonged to Og and even if taken by the tyrant it still was theft and I am sure resented and recognized as such.

Now as to capitalism being preceded by monopoly I don't think so. I think a careful, open, and honest examination of known data and reasonable conclusions will show that man invented capitalism before he even gathered in what would be called a tribe.

But let's look for some help here:

Capital: 1 a (1): a stock of accumulated goods esp. at a specified time and in contrast to income received during a specified period: also: the value of these accumulated goods (2) accumulated goods devoted to the production of other goods (3) accumulated possessions calculated to bring in income b (1) : net worth (2) : capital stock c : persons holding capital d : advantage, gain (Simply stated, in reality, capital is the accumulated value of profits or surpluses.)

Capitalism: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision rather than by state control, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market {What allows someone to get to the point where he has an excess of capital goods to invest by private decision? Where does it start, what are the roots of the process?}

mandeville,

Do you see anything in those two definitions that depend on monopoly? Do you see anything in the definitions that make stock markets or investment firms necessary?

When farmer Brown has an excess of wheat and he stores it in his silo, he has privately owned capital goods. He can save the capital goods, sell them immediately, or hold them hoping for a future market where the value is even greater.

In his drive for greater profit on his efforts than simply storing fat against the hard times coming, Og learned to carry home quantities of fruit in a animal skin, he had capital goods available to invest in an immediate market. Og had in effect invented capitalism.

When he learned to dry the fruit, did so, and stored the dried fruit in skins placed in a dry cool spot, he was no different than farmer Brown.

None of Og's actions required a monopoly and all of it was done from the base point of private ownership of capital goods.

In Og's world there was a plethora of ways for Og to practice capitalism and increase his profit on the effort required to gather and dry his fruit.

No, he did not have nor could he enforce a monopoly on the fruit tree and said monopoly was unnecessary as not everyone, even prehumans, will work equally as hard at the same identical pursuit.

Another way to show that Nietzsche was wrong is to understand that were the world full of nothing but tyrants exercising monoplolistic control over materials, goods, services, and profits, mankind would never have flourished as it did because even ancient prehumans had individuality in ambition, drive, talent, hopes, and intelligence.

We recognize how devastating it is to innovation, inventiveness, ambition, and drive to have modern day tyrants like Lennin, Stalin, Mao, et.al. claiming all in the name of the people; why would we imagine it was less so in the past?

Capitalism may be the very first thing invented by man, and it derived from man's natural drive to profit from his efforts.

Martin,

But we're not all saying that life must be put on hold until we can answer your question to your complete satisfaction.

We're all slicing the same salami here.

You don't think the democrats are supporting their weaker rivals right now?

Give it a little more time.

Martin,

To go on living in a market society, we must have a definition of property that we adhere to, whether we like it or not. That isn't to say that we cannot change it, but that we must still go on living while you're slicing philosophical salami.

Everything must be subordinated to the fuhrer, the fuhrer is the state. The state is the people.

Hiel Obama!

What is usually called regulation is no such thing.

A state "regulation" is some rule enforced by a state.

The market regulates itself, and the interference with it that we call regulation is actually anti-regulation.

The market is a group of people entitled to trade things. A myriad of regulations determine what, specifically, they are entitled to trade.

The market, its property rights, and real regulation are never the problem. The only problem is interference with them.

Specific problems involve specific "property rights". Practically any statutory regulation can be repackaged as a "property right".

The correct response to interference with the market that is causing a problem...is to remove the interference...not add a new layer of it.

Any quarrel with that?

No. I have no quarrel with it, but it simply begs the Proudhonist question. What is property? Is property theft, as Proudhon suggested? Or is property freedom, as Proudhon also suggested? The answer depends upon what, precisely, we mean by "property".

If property means only "anything you and I may exchange", then human chattel can be property and entitlement to tax revenue can property, even the king's crown, and all authority pertaining thereto, can be property.

When I hear the talking heads on the radio trashing Obummer and talking up Reagan, all I can do is scratch my head.

These people refer to Reagan as a fiscal conservative, yet wasn't he a classic Keynesian?


The guy borrowed and spent like a madman, and now the pundits are trashing Obummer for doing the same thing.


I don't get it.


I mean, if Reagan was so wonderful, shouldn't I be paying my mortgage with a credit card?

*sigh*

I miss President Clinton. President Obama makes him look like Dr. Friedman in retrospect. I hate to say it, but it is possible that Bill Clinton was more of a free-market president than George W. Bush was in practice.

Further...

You can't have capitalism without adequate property law. That was a late development in history. Feudalism and mercantilism were monopolistic in character.(the rulers controlled everything to their private advantages)

Vidyohs,

It's social evolution from tribalism (group rights) to individualism (Nietzsche wrote much on this), or the diffusion of power from the few to the many in both the political and economic orders. Early tribalism was totalitarian--similar to the way a family is run. Tribes then traded and property rights evolved along with the division of labor and laws that secured property and addressed individual rights.

Human competition for empowerment diffuses societal power. Pure capitalism exists only when power is shared equally, or under a rule of law protecting property regardless of who owns it, etc. The further you go back in history, the less equally power was shared and the more prevalent were monopolistic arrangements. Economic competition was limited if not illegal.

Globalization is evidence of the continuing evolution from tribalism to individualism. Inter-nation competition forces countries (tribes) to abondon protectionism (economic bigotry)and to slowly replace them with a more libertarian rule of law.

Of course, it's not a linear process as our tribe is lost and heading back to the days of mercantilism for the time being.

Regards,

Martin,

The problem is semantics.

What is usually called regulation is no such thing. The market regulates itself, and the interference with it that we call regulation is actually anti-regulation.

The market, its property rights, and real regulation are never the problem. The only problem is interference with them.

Understanding that, let's revisit the passage you referred to, and restate it correctly.

"The correct response to regulation that is causing a problem (e.g., creating a monopolist in some market) is to remove the regulation that is causing the problem, not to add a new layer of regulations."

Let's state it this way.

The correct response to interference with the market that is causing a problem...is to remove the interference...not add a new layer of it.

Any quarrel with that?

The correct response to regulation that is causing a problem (e.g., creating a monopolist in some market) is to remove the regulation that is causing the problem, not to add a new layer of regulations.

Sure. But if the regulation is called a "property right", then the correct response is withdrawing the property right.

"As an aside, monopoly preceded capitalism in history,"

Posted by: mandeville | Jun 2, 2009 7:30:03 PM"

I'd be enlightened if you'd present some good thought for this proposition.

I stand corrected. I wasn't sure.

I am not Canyon.

Mandevill (Canyon?),

You wrote,

"They're only against the natural monopolies that don't actually harm the consumers, and in most cases benefit them."

Slight correction: in ALL cases, benefit them.

As an aside, monopoly preceded capitalism in history, but is now being replaced by it. The 'corporate charter' was nothing more than a grant of monopoly with kick back fees to government. The merchants who owned the country also set up the corporate law to limit their liability, or a more honest description would have been "transferred liability".

I don't think we'll ever see the repeal of anti-trust law unless mankind repeals his nature to envy and fear envy. The unintended consequences of these virtues far outway the negative effects such as come with bad laws.

Sarcasm noted. One must never forget that government is not against monopolies of their own making. They're only against the natural monopolies that don't actually harm the consumers, and in most cases benefit them. For political purposes, in tearing down powerful corporations, they are really posturing to the masses as representing their interests, and in turn their own. I have seen that it doesn't matter which party is in power as they all try to sink the biggest companies when they reach a certain dominance.

What is often forgotten is the aspect of competition whereby every product and/or service competes with every other one. There doesn't have to be like products for there to be competition.

@Martin Brock

The correct response to regulation that is causing a problem (e.g., creating a monopolist in some market) is to remove the regulation that is causing the problem, not to add a new layer of regulations. That way lies new and more interesting unintended consequences.

What if the "dominant" entity is dominant because the state has encouraged its dominance? After all, the state is a monopoly itself definitively. Why wouldn't it encourage other monopolies? Should I expect the monopoly of forcible propriety to detests all other monopoly, or should I expect it to favor other monopolies?

How do I know that a dominant competitor's strength derives from its superior service to a free market rather than a stronger position within a statutory system of forcible propriety? If I suspect that a dominant player's position is a product of excessive force in one direction or another, how do I address this problem without being accused of interfering with "proper" competition?

In truth though, they never really left Keynesian thinking at all.

Put it this way: we've experimented a lot more with Keynes While Hayek doesn't really lend itself to experimentation. To quote Jerry Seinfeld "It's not easy doing nothing".

"It didn't work before"

YEAH. TELL THEM THAT

Do I detect a little sarcasm? Not that I disagree mind you. :-) But what worries me more is the seeming resurrection of Keynesian economic policy, coupled with FDR type spending. It didn't work before, is there a chance that it can now?

Thoughts?