I often hear that without government intervention in the free market, our lives would be controlled by monopolies as corporations would be free to exploit their workers. Can you explain to me why that isn’t true? I’ve argued against that many times myself but I think I need better ammo. Hope someone here can help.
only ‘monopolies’ could ‘exploit’ workers since, companies in competition would loose staff to their non-exploitative competitors (or through the staff striking out as entrepreneurs on their own) . i.e. the profit motive leads entrepreneurs to offer their workers economically viable working conditions that they demand given the other factors that impact on the potential employees decision of how to employ their labour.
Here’s another interesting article on the subject:
Just ask your opponents for an example of monopolies, then look up the industry here on mises.org. It turns out there are no historic examples of free market monopolies causing any problems for consumers.
(Note that Stephen King has a monopoly on writing stephen king books…)
Define monopoly, the define the government. Note that the definitions are the same. All they are really saying is that one monopoly is better than the other.
Chrispy, thanks for the link. It made a good point on historians failing to recognize the difference between a market entrepreneur and a political entrepreneur.
I’ll have to research each monopoly by the numbers to get a better understanding how governments rather than free markets made them possible.
The example I used in the past was my fathers company… In the 1990’s he worked as an ATM technician and befriended two of the top salesmen in the company. Believing that they could do a better job and that the only person that will ever pay you what you’re worth is yourself, they split off and formed their own company. About a decade later they not only put their former boss out of business but created more jobs in the process. I think they have upwards of 80 employees now and were/are hiring all through the recession.
Would it be safe to say that monopolies aren’t a characteristic of free markets as the underground economy (serving as an extreme example of a market without regulation) has never had a problem with monopolies? I hate to use drug cartels or arms traders as an example but there seems to be too much greed for everyone to be content with working for one warlord. There’s just too many chiefs in the world for us to belong to one tribe. Thoughts?
Thanks for everyones help though… definitely pointed me in the right direction. Oh and I’m completely open to criticism. My background is primarily warfare but years of being on the ass end of US foreign policy has forced me to question virtually everything I’ve ever been taught. I’ll probably lay down my weapons soon and take up economics in college but I reckon I’ll be a minority in thought. I’ll need “all yalls” expertise from time to time for sure. haha
Drew, there cannot BE a monopoly in a free market as its definition becomes irrelevant. Whenever a business gets so much better than the competition to drive them all out of the market, it still has to maintain such high level of performance (providing high quality product/service at low prices) or relinquish market share to:
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potential new competition always lurking in the bushes to offer better and cheaper versions of the SAME product/service
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consumers seeking ALTERNATIVES for the overpriced/less-useful monopoly product (switch to OJ from Coca-Cola)
The above forces ensure that even when occasionally someone jumps far ahead of the competition, it is always for the benefit of the consumers and the market in general. Only the monopolies subsidized by government regulation (corporatism, fascism) are the “sick” ones hurting (exploiting) consumers and markets.
Thanks Z1235.
And forgive my ignorance but how is corporatism incompatible with the free market? A lot of people confuse the two, most notably MIchael Moore when making a movie on “capitalism” which if he had his facts straight, it should have been called “corporatism, a love story.” Where am I right/wrong?
Corporatism is incompatible with the free market to the extent that the government (laws, regulation) favor one agent (or segment of the economy) over another. The bigger such government intrusion is, the more blatant the wealth/opportunity redistribution in the economy, and the higher likelihood that vested interests fester into “sick” monopolies. The legislated barrier from competition makes them fat, lazy, and rich enough to keep feeding the legislation that keeps giving back laws that ensure the status quo. Btw, Moore is a babbling collectivist idiot for whom economy, scarcity, and markets are as “evil” as malaria.