Would you please stop posting ideological rants to HN? They're destructive of the thoughtful discussion we're hoping for here, and we ban accounts that use the site primarily for this sort of argument, regardless of ideological flavor.
If "Capitalism in America means as close to monopolization and price gouging as possible." is your definition of capitalism, then you're off. (And I think that may be why you're being disagreed/downvoted on.) If you think that monopolization and price gouging is an emergent property of capitalism in America-- well, then, I wanna see some citations.
My (radical, libertarian) view that a free market would only leads to monopolies when they're _market monopolies_-- meaning they've already providing the best service, and will continue to do so. The really damaging monopolies only ever come from government-granted powers. https://www.youtube.com/watch?v=4Vw6uF2LdZw
> My [...] view [is] that a free market [...] only leads to monopolies when they're already providing the best service
Where does this belief come from? Is it just an article of faith for you? I've never seen any science to that effect, and there would appear to be no shortage of counterexamples.
What would be the incentive to offer the best service once you are a market leader? It seems obvious to me that in many cases it is cheaper to interfere with competitors than it is to match their level of service. I see no reason why that would cease to be true even in a world without government (although government is certainly a frequent collaborator in such interference.)
And I'm not talking about heinous interference, like bombing your competitor's factory. Even misleading advertising can often do the trick. Would you make statements in advertising subject to civil claims? If I can show you made technically factual but misleading statements to the public about the differences between our products I am entitled to recover lost sales from you?
I've always wondered this as well, and it seems to me that most just take it as an accepted article of faith. Even (In my opinion) contrary to current evidence.
Unless a market has low barriers to entry (startup costs, materials availability, skills availability) it will trend towards monopoly or oligopoly. The economies of scale gained as a market leader grows ensures this.
I don't want to believe that it's an article of faith for me :) I've heard convincing arguments for it, and the arguments against market monopolies haven't ever been satisfying. But, I also haven't taken a survey of all monopolies or wannabe-monopolies in history. Yeah, my view on monopolies comes from the base assumption that: "It's never cost-effective to try to interfere with the competition by either buying them out or by a price war." The awesome American example of it is from Dow Chemical vs. Bromkonvention (short description: http://www.investopedia.com/ask/answers/09/dow-chemical-brom... ) and this is a longwinded account in favor of Standard Oil (and to be honest, I'm jumping around in the article as I'm reading it): https://www.theobjectivestandard.com/issues/2008-summer/stan...
For "buying out the competition", the idea is that: If company A with market dominance wants to maintain market dominance by buying out the competition, it'll always come at a bad deal. People who are starting new companies that do the same thing will be able to hold out for a price that makes selling worth it, which probably means that it's a bad deal for company A.
At the same time, the person running the upstart company B can stay in business if they're willing to take fewer profits. Company A should be making lots of profits, if they have economies of scale. But if Company A takes any more profit than the difference in the benefit of having an economy of scale, then there is an opening to a competitor. If we start with Profit=Revenue-Cost / P = R - C, then if (Pa - Pb) > CostReductionFromHavingAnEconomyOfScale, then there is space for a small competitor to come in and make some profit.
Sorry for going on that tangent--- I know that wasn't your main objection, but I wanted to back up my assumptions.
The "misleading advertising" is a new angle I haven't thought of too much, but I would hope that consumers and organizations like Consumer Reports would be able to cut through the bullshit and get the product that's actually the best value. And I feel like, with the pervasiveness of aggressive advertising/marketing, most people, especially people who guide purchasing decisions in households & businesses, are able to look at it with a sharper eye. Not always an accurate eye, but sharp enough to be somewhat guided towards the direction of better value. The way that this applies to the recent election is that I think the effect of "fake news" is pretty overblown.
I think that a lot of it is based on the general premise that market actors are nearly perfectly rational (which is the general premise in a lot of libertarian economic analysis, and, more broadly speaking, the Austrian school), which just doesn't hold up to practical observations.
> What Austrians and their fellow travelers can argue is that it’s not the rationality of market participants that matters, but the institutional context within which they act. In other words, rationality is not a feature of the individual choosers but of the market as a whole. Even if people make “mistakes” by not acting as the strict model would suggest, they will receive feedback from the competitive marketplace that will demonstrate their errors and give them the incentive and knowledge to correct them. Those who can recognize their biases and correct for them will do better than those who can’t, and markets enable us to do that when they are genuinely free and competitive. This is what Nobel laureate Vernon Smith calls “ecological rationality.” Even if individuals are irrational, the system as a whole produces rational outcomes.
IMO that is also not consistent with observations of real-world markets. Part of the reason, perhaps, is that such feedback would only exist if a relatively small part of the market is irrational, while the rest of it is - then the irrational part is, in a sense, "punished" by the rational part for deviation. But if the entirety of it is irrational, then it's not at all a given that acting irrationally would actually produce a worse result for that particular actor - it may well produce a better result due to irrational behavior of other actors.
It could be argued that so long as someone in the market is worse off, they would "correct" their behavior, and that would cause a cascade of punishment/correction for other actors in the chain. The problem with that is that it's not an instant process, and the time scales on which it works - especially when the actors that get the short end of the stick also have relatively little market power individually (and so often would need to organize to effect any meaningful pushback), and so this process is simply too slow - it doesn't actually produce an observable result on a scale on which individual humans feel it, and so it's insufficient to affect their behavior. And by the time it does happen, other irrationalities may well be introduced that may often mask the effect, or simply make it irrelevant.
(FWIW, I'm generally very suspicious of the Austrian school precisely because it actively rejects empiricism in economics, and substitutes hacks like "praxeology" in its place.)
>The really damaging monopolies only ever come from government-granted powers.
All private property in the Western world (and much of the rest of the world) is government-granted.
Unless you happen to be a local warlord with your own private army, it's likely anything you think of as "yours" right now is only so because a government exists to either grant you the rights to it or to protect you from its theft. (Of course, Proudhoun would argue that all property is theft. I would too, but only after a couple of beers.).
What we tend to see in modern capitalism is convergence on duopoly. AT&T and Comcast. Google and Facebook. It seems to take about four competitors before there's real price competition. EU antitrust policy recognizes this, but the US does not.
There's a theory of duopolies.[1][2] Both parties don't have to form a cartel. Each party's optimal strategy is not full competition. It's a variation on the prisoner's dilemma.
beef, chicken, and pork are all highly prevalent, but chicken is king. there are other meats produced as well but in much lower quantities. turkey is getting a lot more popular though.
That may have been true 50 years ago, but it wasn't true 80 years ago, and I have my doubts about before that. Unfortunately I haven't known too many people old enough to have been keen observers of eating habits a century ago...
