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Understanding arguments against capitalism

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One of the most common arguments I hear against laissez-faire capitalism is that it by definition supports the creation and preservation of so-called intrinsically evil monopolies, and that the only way to keep these monopolies in check is through government regulation. Why is this wrong? Is the Gilded Age a good example of monopolies running wild? I ask these questions knowing I probably sound like a moron, but I am young and new to objectivism. So when people make these arguments, I genuinely have no idea how to refute them. Thanks in advance for your help. :)

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The Phantom Called 'Monopoly'

Is the Mars monopoly on Snickers so bad?

If monopolies are so bad, why has the government created monopolies like the USPS, Fannie Mae and Freddie Mac?

Cause they control them and they get to be inefficient by law and in the case of USPS...by Constitutional delegated power!

Funny how the images are always businessmen and never bureaucrats when it comes to that term...

monopoly1.jpg

The ultimate bureaucrat and marxist...

ObamaMonopoly.jpg

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One of the most common arguments I hear against laissez-faire capitalism is that it by definition supports the creation and preservation of so-called intrinsically evil monopolies, and that the only way to keep these monopolies in check is through government regulation. Why is this wrong?

Fox (what a cool name! :smile: ),

Monopolies are not created by businesses. They are created by businesses in collusion with government. The regulations are merely glue that helps hold them together.

Crony capitalism (big business + government setting the rules for the market) creates monopolies. Unregulated businesses have to compete with anyone and everyone who wants to invest their brain-power and efforts.

Then there is innovation, which always leads to a concept called "creative destruction." For a really obvious example, do you think any company would benefit today from owning a horse-and-buggy monopoly? Suppose there was such a monopoly before cars came along. What would that monopoly look like now?

:smile:

Businesses can (and will) try to get away with monkeyshines. That's true. Why? Because people always do--they tend to be tribal and vain in their weaker moments--and businesses are made by and for people. But without the government to erect insurmountable obstacles enforced by guns, no business can keep a monopoly going and competitors frozen out. There are too many variables. And the more people there are, the more variables there are.

Government regulations are a con. They work like this.

1. Government (often motivated by good intentions) passes regulations and tells businesses they have to comply.

2. Some businesses figure out loopholes.

3. Government makes more regulations to close the loopholes.

4. Some businesses figure out more loopholes.

And so on.

Pretty soon you have an enormous body of regulations that cost a small fortune to comply with just to set up a new business. How can a new business just starting out enter that market? Without deep pockets to start with, it can't.

For an extreme example, just to get a new drug on the market, it costs hundreds of millions of dollars. Why? All the government regulations.

The really big companies like this. And they go deeper. With their teams of high-powered lawyers and accountant firms, they go to the government and say they are suffering from an unbearable burden caused by the regulations. To help, the government should please give them some government contracts. That would make things a little better.

And that's just one concession they get from the government. There are plenty more (like, for instance, health insurance companies making statewide monopolies out of thin air--and enforced by government regulations.)

All throughout this process, bribery happens.

Why?

Because humans run businesses and they run the government. Many humans in their weaker moments like bribes.

:smile:

But then, you need a smokescreen to hide what is really happening. Once people find out about actual instances of corruption, they tend to get pissed and God knows what they will do. So insider big businesses and the government officials, all of whom are gaining oodles of cash from tainted money, need a villain with an easy-to-swallow story to sell to the public to keep the eye off of them.

Voila! Enter the story of laissez-faire capitalism run by greedy bastards.

It's a helluva great story. There's one problem, though. It doesn't show who the real villain is.

The real villain is the crony capitalist (business + government) who wants unearned profits and power--and wants to freeze out competitors from its racket.

Michael

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The real villain is the crony capitalist (business + government) who wants unearned profits and power--and wants to freeze out competitors from its racket.

Michael

You write really well Michael.

Mark Levin has tried to re-brand the phrase "crony capitalism" as "Crony Corporatism" which works very well with your story line above.

I have been using it for months.

It works well.

It is a variation on the Sandler pattern interruption concept.

A...

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Wow, you guys are really cool. Thanks :smile:

Ayn Rand's Capitalism: The Unknown Ideal has a chapter or two addressing your question.

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Wow, you guys are really cool. Thanks :smile:

You are most welcome, Fox.

And welcome to OL.

Are you a student, worker, business man?

Monopoly

The alleged purpose of the Antitrust laws was to protect competition; that purpose was based on the socialistic fallacy that a free, unregulated market will inevitably lead to the establishment of coercive monopolies. But, in fact, no coercive monopoly has ever been or ever can be established by means of free trade on a free market. Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action. (For a full demonstration of this fact, I refer you to the works of the best economists.)

The Objectivist Newsletter

“Antitrust: The Rule of Unreason,”

The Objectivist Newsletter, Feb. 1952, 5

A “coercive monopoly” is a business concern that can set its prices and production policies independent of the market, with immunity from competition, from the law of supply and demand. An economy dominated by such monopolies would be rigid and stagnant.

The necessary precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field. This can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises. Without government assistance, it is impossible for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. For if he attempted to set his prices and production at a level that would yield profits to new entrants significantly above those available in other fields, competitors would be sure to invade his industry.

Capitalism: The Unknown Ideal

“Antitrust,”

Capitalism: The Unknown Ideal, 68

See also: Antitrust Laws;

Competition; Economic Power vs. Political Power; Free Market; Interventionism (economic).

This is from the Ayn Rand Lexicon which is a good generic starting point to look up concepts/definitions/etc.

It is Orthodox Objectivism.

http://aynrandlexicon.com/lexicon/monopoly.html

Finally, what have you read by Ayn?

A...

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A monopoly is not necessarily a bad thing. I have a monopoly on the use of my computer. A farmer has a monopoly on the use of his farm. Copyrights and patents are monopolies, Objectivists approve, some anarchists might disapprove. Monopoly is even implied by Ayn Rand's definition of capitalism, social system based on recognition of rights including property rights. The part about property rights implies monopoly. You have a monopoly on your property.

Seems to me the problem arises when a monopoly is granted that is not based on property (prior to the monopoly, if monopoly implies property). Is this correct?

Let us imagine all the world needs petroleum and let us imagine all the petroleum in the world is in one spot and let us imagine you own that spot. Now you are set up to become a zillionaire. Let's imagine you charge sky high prices and nobody can get any petroleum products unless they pay your prices. What is the best way to handle this? There is the capitalist way and there are a bunch of anticapitalist ways.

Under capitalism your sky high prices are a signal to businessmen. The signal is: you can get 'filthy' rich if you find an alternative petroleum spot, maybe by drilling deeper. Or to another person the signal is: you can get 'filthy' rich by developing an alternative to petroleum, maybe solar or wind or nuclear or ocean waves or ocean tides or volcanic heat or zero point or whatever. Another person reads the signal: you can get 'fithy' rich by developing aerogel insulation so houses don't need so much energy to keep warm. Another reads it: you can get 'filthy' rich by developing LED lights that use less electricity and produce better light. All this and more happens under capitalism, I assume more because a free market consists of a multitude of brilliant minds working together in synergy. Synergy means the whole is greater than the sum of the parts. There is no way my own one little imagination can compete with that.

What would happen under socialism? Under socialism you wouldn't be allowed to charge 'filthy' high prices and none of the above stuff would happen.

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Catpop writes:

One of the most common arguments I hear against laissez-faire capitalism is that it by definition supports the creation and preservation of so-called intrinsically evil monopolies, and that the only way to keep these monopolies in check is through government regulation. Why is this wrong?

...because the premise is wrong.

Monopolies can only persist by government decree. Businesses are free to merge, and when they get too large, natural economic forces come into play to destroy them...

...except the government's too big to fail policy saves them from self destruction.

In my opinion, none of this has anything to do with Capitalism, because Capitalism can only exist within an ethical framework.

NO ETHICS = NO CAPITALISM

Greg

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Jerry writes:

Under capitalism your sky high prices are a signal to businessmen. The signal is: you can get 'filthy' rich if you find an alternative petroleum spot, maybe by drilling deeper. Or to another person the signal is: you can get 'filthy' rich by developing an alternative to petroleum, maybe solar or wind or nuclear or ocean waves or ocean tides or volcanic heat or zero point or whatever. Another person reads the signal: you can get 'fithy' rich by developing aerogel insulation so houses don't need so much energy to keep warm. Another reads it: you can get 'filthy' rich by developing LED lights that use less electricity and produce better light. All this and more happens under capitalism, I assume more because a free market consists of a multitude of brilliant minds working together in synergy. Synergy means the whole is greater than the sum of the parts. There is no way my own one little imagination can compete with that.

Fucking brilliant, Jerry. nodder.gif

I have a monopoly on my business. I developed a niche in the economy where I have no competition because no one else operates with my unique business model. I turn down work right and left and am still booked almost a month in advance. While I'm not "filthy rich" I can buy anything I want...

...and American Capitalism makes all of this possible.

Greg

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Are you a student, worker, business man?

Finally, what have you read by Ayn?

A...

I'm a student and a sequential artist, I first came across Objectivism through the popular video game "Bioshock". I'm currenty reading " The Fountainhead".

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Just take note that The Fountainhead has little to do with Objectivism which as a philosophy is based on Galt's speech in Atlas Shrugged and then elaborated on in Rand's non-fiction essays plus Nathaniel Branden teaching it in the late 1950s through the late 1960s. Also: Objectivism, commonly taken and understood, is The Philosophy of Ayn Rand and if you try to make that philosophy yours as such you'll end up in second-hander land, not necessarily psychologically but waste-your-time philosophy. Rand had two philosophies. One primarily artistic, as in the novel you are reading, which we can label "Randian." The other philosophical starting and reflected greatly in her magnum opus--her next, greatest novel--as a shift from the psychological to a cornucopia of ideas.

It's all much more complicated than this, of course.

A mature perspective is everyone who embraces Objectivism has his or her own take on it through natural human uniqueness and autonomy while non-contradictorily embracing the basics common to man--as in the concept man--and those are, briefly, reality plus reason plus rational self-interest plus freedom as expressed through the invention and application of individual rights out of the Lockean tradition (upon which this country was founded).

What unites these basics in vertical integration from top to bottom or vice versa is the individualism of the single thinking brain. The social aspects of human existence work off that but cannot be primary. That's because you have to have a person before you have the interactive person. This is neither Adam and Eve nor the chicken or egg first riddle, which would make my statement arbitrary. It's the baby, just born, now with a social existence as a primary but must develop off his previous primary biological existence. As a dependent being he must develop into an autonomous being--an adult--guided by his rationality and critical thinking and all knowledge fortunately acquired thereby and through life circumstance.

Everybody has a philosophy, even all who never gave philosophy as such a single thought. That's why most people's philosophies--the operating software of the mind--are screwed up by a hodepodge of conflicting, contradictory structures and content endlessly repeated making mental highways hard to displace. Education is so important. Right education.

Finally, I digress from my digressions: philosophy and psychology are two different thoughts and systems and subjects and are so studied if not professionally used. However, both are integrated inside the brain biased one way or the other depending on nature and nurture creating the appropriate ratio if not dominance, sometimes with freakish results.

--Brant

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invention and application of individual rights out of the Lockean tradition (upon which this country was founded)

That's not what happened in colonial America or in ratification of the U.S. Constitution.

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Just take note that The Fountainhead has little to do with Objectivism which as a philosophy is based on Galt's speech in Atlas Shrugged and then elaborated on in Rand's non-fiction essays plus Nathaniel Branden teaching it in the late 1950s through the late 1960s. Also: Objectivism, commonly taken and understood, is The Philosophy of Ayn Rand and if you try to make that philosophy yours as such you'll end up in second-hander land, not necessarily psychologically but waste-your-time philosophy. Rand had two philosophies. One primarily artistic, as in the novel you are reading, which we can label "Randian." The other philosophical starting and reflected greatly in her magnum opus--her next, greatest novel--as a shift from the psychological to a cornucopia of ideas.

It's all much more complicated than this, of course.

A mature perspective is everyone who embraces Objectivism has his or her own take on it through natural human uniqueness and autonomy while non-contradictorily embracing the basics common to man--as in the concept man--and those are, briefly, reality plus reason plus rational self-interest plus freedom as expressed through the invention and application of individual rights out of the Lockean tradition (upon which this country was founded).

What unites these basics in vertical integration from top to bottom or vice versa is the individualism of the single thinking brain. The social aspects of human existence work off that but cannot be primary. That's because you have to have a person before you have the interactive person. This is neither Adam and Eve nor the chicken or egg first riddle, which would make my statement arbitrary. It's the baby, just born, now with a social existence as a primary but must develop off his previous primary biological existence. As a dependent being he must develop into an autonomous being--an adult--guided by his rationality and critical thinking and all knowledge fortunately acquired thereby and through life circumstance.

Everybody has a philosophy, even all who never gave philosophy as such a single thought. That's why most people's philosophies--the operating software of the mind--are screwed up by a hodepodge of conflicting, contradictory structures and content endlessly repeated making mental highways hard to displace. Education is so important. Right education.

Finally, I digress from my digressions: philosophy and psychology are two different thoughts and systems and subjects and are so studied if not professionally used. However, both are integrated inside the brain biased one way or the other depending on nature and nurture creating the appropriate ratio if not dominance, sometimes with freakish results.

--Brant

As far as my phisophy goes being born and raised Catholic, I must admit to having some trouble letting go of curtain beliefs, such as the belief in an afterlife. However after listening to some lectures from the Ayn Rand Institute and interviews with Ayn Rand herself, I've come to understand and accept objectivism as the most the reasonable and therefore beneficial phisophy one can have. Despite this I still have a lot to learn, again thank you guys for the helpful comments.

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I'm sorry -- it's really terrible -- but every time I see your user name, I think it says ... uh, nevermind.

Why does a litter box jump into my consciousness right now?

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"Catpope", you're welcome

And I learned all about O'ism years ago and felt I understood it well enough, it was awesome, mindblowing and so obvious on so many levels. Then I found this place :)

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invention and application of individual rights out of the Lockean tradition (upon which this country was founded)

That's not what happened in colonial America or in ratification of the U.S. Constitution.

True.

--Brant

The Bill of Rights notwithstanding

the country was founded on The Declaration of Independence (then started going downhill, slowly at first, to the catastrophe of the Civil War)

statism marches on--it's a form of inevitable begging for entropy, or worse

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Wolf:

Please give me the bullet points on what you believe "...happened in colonial America or in ratification of the U.S. Constitution."

Thanks.

A...

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Wolf:

Please give me the bullet points on what you believe "...happened in colonial America or in ratification of the U.S. Constitution."

Thanks.

A...

Ok. Give me a couple minutes.

Take as much time as you want, just do not know your writings yet. I was interested when I first joined and then you vanished.

I know myself and a few others were quite concerned about you.

And then you reappeared, so now I have to play catch up.

A...

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