From: Technotranscendence (neptune@mars.superlink.net)
Date: Sat Jun 09 2001 - 01:36:40 MDT
free marketsOn Friday, June 08, 2001 7:03 PM Smigrodzki, Rafal
SmigrodzkiR@MSX.UPMC.EDU wrote:
> I find many persons extolling the virtues of free markets and
> nonexistent governments. While I do believe that a true, free
> market is the pinnacle of justice, and I don't like bullies,
> including the ultimate ones, huge governments, I have doubts
> that you can have one without the other.
That's almost like arguing you can't have food without poison, so we might
as well mixed the two together and deal with it.:) But enough hyperbole...
> According to what little I know about free markets, a free market
> is a very metastable system. As soon as one (or a small number)
> of participants gains some advantage (by hard work or by luck),
> it improves it's ability do survive and grow - it can weather
> downturns better, spend more money on research, kill or buy the
> competitors. It can become a monopoly and without a bigger bully
In other words, a bigger monopoly!
> to keep it in check, hardly anything can stop it.
Typically what happens is this. People use governments to enrich
themselves. Surely, they might have made their initial wealth by hard work
and being alert to opportunities, but many, once they have it, use all sorts
of legal power to protect their position. In other words, the go against
the free market.
As for the rest of your post... I disagree with most of what you say. The
term "monopoly" is much abused. It's problematic, since the conventional
definition of controlling a market can make anything as it currently exists
into a monopoly. For example, I control my labor, ergo I have a monopoly on
my labor. A guy who owns a house with an acre of land has a monopoly on
that. I have a monopoly on my CD collection. Etc.
Your idea about taxation is flawed for several reasons. One, a lot of large
financial entities are made of small units even individuals working
together. Mutual funds are an example of such. What you would be doing, in
effect, is keeping these smaller units from working together. The largest
corporations are, after all, made up of individuals being funded by other
individuals. (This is not to say all corporations are somehow good and
beneficial, just to state a fact.)
Also, preventing the growth of larger units would seem to be a destabilizing
thing. Sometimes a larger unit is better suited to weather storms and
invest in economies of scale and scope. Sometimes coordination on that
level is needed and this would _not_ happen between smaller sized units.
(See, e.g., Frederic Sautet's _An Entrepreneurial Theory of the Firm_.) In
essence, your notion would prevent that type of coordination by taxing it
out of existence. By disallowing certain things or making them more costly,
your create more problems...
Then the smaller units would be less stable and would run to the government
for more aid. The system would eventually evolve into a bloated welfare
state. The funny thing is this has often happened historically. In the US,
e.g., in many states branch banking was outlawed or curtailed making for
small banks that failed often and easily. Instead of lifting the branch
banking laws, things like deposit insurance and bank holidays were often
legislated. (See Kevin Dowd's _Laissez-Faire Banking_ for more on this,
especially chapters 8 and 9 -- "US banking in the 'free banking' period" and
"Money and banking: the American experience." Also, see his section on
banking in Australia, which did, for the most part, allow branch banking and
had a much stabler system.)
Back to problem creation. You seem to smuggle in the notion that the free
market, which is merely all the minds on it coordinating their activities,
is arbitrary, while a tax or a government is not. Why? If the individual
participants want to coordinate in a way you find reprehensible, trying to
force them to behave otherwise seems even more arbitrary to me. By what
standard do you judge your goals or policies any less so?
Finally, why not apply your reasoning to government? If preventing large
units from forming in the market is bad, what about in politics? Are you
willing to go all the way here? Toward secession or anarchism? Or does
your principle only apply to markets and not to governments? And if so, why
only to the former and not the latter?
Cheers!
Daniel Ust
http://uweb.superlink.net/neptune/
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