Collection of Myths and Fallacies of Laissez-Faire Capitalism

Economics Economics Questions
1

Hello everyone,

I was hoping for you to contribute with every fallacy and myth that you know of as to laissez-faire capitalism. And after this, I was hoping that you could provide a refutation of this fallacy/myth; either via books, essays, videos, podcasts, etc.

It would be valuable to all; not only me.

I feel as if I have been scouting the whole Internet. If a thread or page of these already exists, please feel free to post the link and end this thread.

2

Well, given that this whole forum is devoted to just that… I think your best option is to simply stick around long enough and check out new threads. I am planning on doing something of an Austrian/AnCap FAQ sometime in the future…

3

Some great short videos here: http://www.youtube.com/user/LearnLiberty (price controls, “we are running out of resources,” Broken Window Fallacy, “the poor are getting poorer,” etc.)

4

Keep in mind also that praxeology is basically one big system of myth-busting by forcing people to keep their eye on the ball (the acting agent). Each chapter in Economics in One Lesson (PDF link) is also a myth exploding exercise:

  • The Broken Window
  • The Blessings of Destruction
  • Public Works Mean Taxes
  • Taxes Discourage Production
  • Credit Diverts Production
  • The Curse of Machinery
  • Spread-the-Work Schemes
  • Disbanding Troops and Bureaucrats
  • The Fetish of Full Employment
  • Who’s “Protected” by Tariffs?
  • The Drive for Exports
  • “Parity” Prices
  • Saving the X Industry
  • How the Price System Works
  • “Stabilizing” Commodities
  • Government Price-Fixing
  • What Rent Control Does
  • Minimum Wage Laws
  • Do Unions Really Raise Wages?
  • “Enough to Buy Back the Product”
  • The Function of Profits
  • The Mirage of Inflation
  • The Assault on Savings
5

There’s quite a bit at the Mises Wiki in the form of “argumentation” pages for specific subjects. Those listed might help, but you also might consider starting a new one yourself!

https://wiki.freecapitalists.org/wiki/Category:Argumentation

6

Thomas Sowell: Economic Facts and Fallacies

Here’s a list of falsities and fallacies I recently made in another thread:

  • The free market tends to monopolies
  • The free market always favors “economy of scale”, that is, bigger is always cheaper and more economical than smaller
  • Larger capital value enables a larger business to “bully” a smaller one irrespective of government favors
  • Big businesses can always “undercut” smaller competitors by virtue of their size
  • Big businesses are pro-free market and welcome vigorous competition irrespective of government favors
  • Most new businesses are a good idea and would be profitable but for intereference from large, established competitors
  • Regulatory compliance is a minor burden for small businesses but causes severe consternation among large, established competitors
  • Government is not particularly interested in generating larger absolute tax revenues
  • Government is more worried about pissing off “the people” than about pissing off large, powerful lobbies

Some other big ones include:

  • Taxation can be targeted to primarily affect specific economic groups
  • The richest pay the most in taxes under progressive tax systems
  • Government and big business are generally in contention with one another
  • The “free” in free market is different than the “free” in free speech
  • There are certain classes of goods demanded by consumers which, by their very nature, cannot be produced without government
  • Laws regulating economic activity (most laws) are motivated by concerns about establishing “justice”, not simply to promote the interests of the law’s lobbyists and suppress the interests of outsiders
  • Government regulators are primarily motivated by a concern for the public good

I can’t think of any others off the top of my head. If you want specific reasons for why any particular fallacies are incorrect, just ask.

Clayton -

7

Thanks a lot for your contributions! I appreciate it, and I am glad that so many were willing to help.

The reason as to why I wanted these was due to a new project of mine; making some sort of FAQ/guide to laissez-faire in my native language. I see no one is around and so I wanted to debunk some of these. Once again, many thanks!