Ixtellor, I have a fundamental question for one of your ilk: If I am not mistaken, J. M. Keynes believed that markets were inherently unstable and would, given free rein, fail.
Do you agree or disagree with this statement?
In the realm of social sciences, it is impossible to isolate a control sample for an experiments due to the fact that there are ust such a manifold of facotrs influencing society thus this method is all but impossible/
I also have a few questions.
Have you read Keynes - “The General Theory of Employment, Interest, and Money”? How was it, easy to understand?
Are there any Austrian books you’ve read?
And I assume you support the “bailouts”? (aka ‘nationalization’)
Cheers
That is all the worse for testing. What matters is for there to be a method of correcting potentially false theories, and that can be through the revision of various concepts/axioms the theory relies upon (perhaps adding some or through clarifications) or at the deductive stage of arguments. You could say a theory that consistently fails to explain something is false in one or both of those two ways, provided you could demonstrate how.
I agree with the statement. An unchecked/regulated market will ultimately lead to monopolies. I think the real debate should be on what level of governance is required to prevent the collapse. I am not clear on how AnCaps would feel about bare minimum government regulation or if you yourself are that extreme. (being extreme does not = bad). I think an argument could be made, and perhaps it already has, on the Mexican phone market and its devolution to the point of near 100% market control by Carlos “slim”, and how that market might ultimately collapse. Another current example might be Russian gas and oil exports, where swaths of Europe were left with none after the Russian oil monopoly cut off supplies.
Anyway, its a long debate an my answer is “yes”.
(I may be misremembering, didn’t even Hayek argue for a level of ‘social safety’ protections? to prevent such a thing)
Ixtellor
P.S. I still can’t find a way to multiquote and am working on it, so forgive the multiple = spam posting.
Yes, Hayek was in fact lukewarm to his support of the freemarket.
There is no multi-quote function. Quoting on Community Server is per post, as your replies are meant to be referenced back to a specific post.
It takes some adjustment.
My degree is old, hence my reading of the ‘classics’ is old as well. I recall all my Keynesian readings being ‘easy’ but that might be due to the fact I read them in college with a professor leading/explaining the way.
If you consider “road to serfdom” an Austrian book, then yes. If not, then I am not sure, but I have read MANY articles from mises over the years. Usually as a research tool. Particularly when I was consumed with a question I now forget, but it had something to do with the elasticity of interest rates and how the argument of Keynes and Friedman might boil down to the single slope on a single graph. (One of the PhD economists at Rice Univeristy was working on it)
Do I support the bailout? I am totally undecided at this point. As they stand in current fashion, I am against them. I think it is full of far to much pork and politics with little evidence that much of the money will stimulate demand. Had the money been directed at the “shovel ready” infrastucture type spending, that they initially claimed and mixed with tax cuts, then I would probably support it. I don’t see that as true of the package as it stands today.
I have an idea of what should have been done and I guess I will start a new post in a more appropriate forum. (I am still trying to figure out the board etiquette here, I am more than happy to have my ‘introduction’ thread go off on 500 off topic tangets, or start/contribute to other threads){perhaps I need an “Ask the Keynesian” Thread. - but would probably get pummeled with technical expertise questions I couldn’t answer ((see Herfindahl-Hirschman Index))
Ixtellor
P.S. If I write to much or too much is off-topic just let me know.
I assume this was in response to my question as to whether markets are inherently unstable and prone to failure. However, the above is not an answer. The question was not do unregulated markets lead to monopolies, but to failure. Before the two are equated, however, let me point out that there appear to be two separate types of monopolistic phenomena:
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Monopolies arising out of a government privilege (i.e., a nationalized money supply given to a central bank)
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Monopolies arising out of an inability of the market to manifest enough competition to a single firm’s operations.
Of the two, (1) exists due to government fiat, while (2) exists due to consumer demand. I know that in Neo Classical circles, monopoly = evil, but I think you’ll find many here who have no problem with monopolies voluntarily supported by the market. Also, it would be a logical fallacy to state that any monopoly (state-bestowed or not) will always lead to a market failure.
Not to be a pest, but I’m going to rephrase my question slightly. The issue of monopolies aside, do you agree with Keynes’ view that an unregulated market is inherently unstable and will ultimately fail?
Yes I am still learning this un-user friendly forum.
Apologies, I should have finished the thought. Yes unregulated markets will fail with monopolies being the reason.
I just typed out a long reply but then realized it is relative based on if you consider violent mob engaging in anarchy and coercing a business into giving up resources at gun point a free market. For example if a water company had a monopoly and decided to charge $600/gallon for water, with the understanding millions would perish, but that profits would rise, would you consider those millions of people taking up arms and ‘coercing’ the water company to give them water, would that be a free market?
Or… in an unregulated market, someone could decide to sell nuclear weapons. If nuclear weapons were available to anyone willing to pay the price I am confident catastrophy would insue.
I think you left out monopolies that occur because of lack of information and monopolies that exist because of lack of choice.(technological monopolies come to mind). It is possible to get a monopoly simple because there are alternatives/substitutes, but no one is aware of them. In an unregulated market, Company X could pay off or coerce media outlets to not advertise for their competitors. (An example that comes to mind is the Presidential debates, where minor party candidates were excluded)
I wasn’t trying to say that. I mean that unregulated markets lead to market failures not that monopolies do. (there are numerous examples of working monopolies with energy grids and water grids being examples)
Why would it logically get to that point? If humans act in their own self-interest, which you agreed to in another thread why wouldn’t it be in the self interest of some other water company to charge less? Is there only one lake left in the world? No only has ever had the kind of monopoly you are speaking of. Rockefeller had tons of smaller competitors, much smaller. Eventually, they became able to compete with him and his market share decreased like a rock long before the “monopoly” trial. $600 for a gallon of water is a logical impossible situation.
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As far as technological monopolies go, that’s due to state-granted intellectual property laws. That’s not the result of a free-market and would not exist in one. See Kinsella, Against Intellectual Monopoly. And the book Jeff Tucker is blogging about at MisesBlog.
If company X paid media outlets not to advertise for company Y, it would raise his costs and increase consumers independent search for some other alternative. Coercion could be protected against either by PDAs, as supported by Rothbard, Hoppe and Block, or the minarchist states supported by Mises, Schiff and Paul.
I’m afraid this is unadmitable evidence against the free market, old sport. These monopolies are propped up by government in numerous ways. Most water and electric companies in my neck of the woods ARE either flat-out government run or run by “Public Authorities” or the government sets a huge barrier to entry by charging the company for the right to operate on there turf. Not exactly Laisse-Farie, unlesss there some counter-example of a truly private monopoly in the energy grid that’s eluding me. If so I plead ignorance.
Why would it logically get to that point? If humans act in their own self-interest, which you agreed to in another thread why wouldn’t it be in the self interest of some other water company to charge less? Is there only one lake left in the world? No only has ever had the kind of monopoly you are speaking of. Rockefeller had tons of smaller competitors, much smaller. Eventually, they became able to compete with him and his market share decreased like a rock long before the “monopoly” trial. $600 for a gallon of water is a logical impossible situation.
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As far as technological monopolies go, that’s due to state-granted intellectual property laws. That’s not the result of a free-market and would not exist in one. See Kinsella, Against Intellectual Monopoly. And the book Jeff Tucker is blogging about at MisesBlog.
If company X paid media outlets not to advertise for company Y, it would raise his costs and increase consumers independent search for some other alternative. Coercion could be protected against either by PDAs, as supported by Rothbard, Hoppe and Block, or the minarchist states supported by Mises, Schiff and Paul.
I’m afraid this is unadmitable evidence against the free market, old sport. These monopolies are propped up by government in numerous ways. Most water and electric companies in my neck of the woods ARE either flat-out government run or run by “Public Authorities” or the government sets a huge barrier to entry by charging the company for the right to operate on there turf. Not exactly Laisse-Farie, unlesss there some counter-example of a truly private monopoly in the energy grid that’s eluding me. If so I plead ignorance.
If you have a browser with tabs (which you should [:P]), its easiest to open up the “Reply” page in a new tab. Then, if you want to reply to more than one post, just copy-and-paste and manually insert the quote tags, preferably with user=“Whoever you are quoting” in the opening tag.
Yes, many here would most likely consider this a check on unscrupulous market activities. Specifically, the fear of this happening would hopefully keep the following scenario from happening:
Those who advocate a state-less society would no doubt agree that the water company could try this, but that it faces many obstacles, the least of which is armed rebellion. More than likely, without state-erected barriers to competition, someone else would just sell water at the market-clearing price. And if that wasn’t possible due to one company owning all the water (which is difficult to conceive), I’m sure some of their hypothetical employees would smuggle out some water and sell it at a much lower price. Consider also that producers of necessities are consumers as well. As unlikely as the above scenario is, AnCaps would most likely agree that a fair market solution would be achieved, even if that meant forcibly taking water at gunpoint just to survive.
This is also a hypothetical possibility. But consider some fundamental economic concepts in determining how feasible this scenario is. What are the opportunity costs associated with saving up to buy a single nuclear weapon? Although I don’t have the exact price data at my hands, I’m confident that they are not cheap. One would have to forego years worth of excess consumption, scraping by on the bare essentials just to purchase one. Now factor in the costs of maintaining, transporting, and even arming it. What about the cost of concealment? And that’s just from the consumer’s point of view. What are the opportunity costs associated with producing nuclear weapons? Producing highly expensive nuclear weapons that few people will want to buy means foregoing building other things that might make a capitalist rich. Consider also the enormous social stigma a nuclear weapon producer would face in a society which realizes that anyone can buy one, even someone’s next door neighbor.
I can’t prove it, but I’m sure that without a state apparatus, industries centered around mass-killing weapons would wither away. The only buyers of these things are strong, centralized governments anyway.
I did. I felt they were not relevant. They may not be.
They could, and they probably will if a state-less society is ever realized. This however, will drive up the cost of their own product, while at the same time providing incentive for a member of the collusion to break with their comrades, undercut them, and make some good money. Even if that didn’t happen, how hurt would the greater society be if they can’t have tennis shoes, movies, or even water at the absolute cheapest price? Certainly not enough to justify coercion of market participants IMO.
Your scenarios are thought-provoking, but you have yet to convince me that anything above will cause a market to implode and destroy society. Without the imminent danger to society most often used as a rationale for intervention, I can see no reason why government would need to intervene to begin with.
How can any firm that charges 600/gallon of water make a profit? that makes no sense
I am not totally clear yet about the concept of ‘coersion’ and AnCaps or Austrians. You seem here to be arguing that when a government forces something “Sell water to people or else” that is coersion. But if an angry mob does essentially the same thing, you consider that “free market”.
Well I like to think of the Soviet Union after the collapse. It would appear there was an explosion of the selling of mass-killing weapons. I, probably like you, though don’t have enough information to speak intelligently about the mass-killing production situation there now.
I totally disagree with your second point. Yes it is correct that only gov’s purchase mass-killing weapons. But that is because Gov’s have made it illegal and extremely difficult for the private sector or private citizens to purchase/produce them.
Much of your argument against nukes, was against the difficulty in production, to where there is no doubt. But what about truck bombs? All you need is fertilizer and gasoline. (see Oklahoma city Bombing)
Will you concede that no form of government or economic system is going to eliminate ‘psychos’ from society? People who for whatever reason, or as a reaction to whatever stimuli, just want to commite mass murder. In an AnCap society (Which I firmly believe is impossible) I don’t see how market forces would prevent maniacs from acquiring and using very very deadly weapons. Poisons, chemicals, there are soo many products that can ultimatly lead to mass death. I don’t see how an AnCap society prevents this.
Access to information is just as important if not more so than the threat of monopolies. A monopoly can exist quite easily if consumers are unaware of competitors. If I were in an AnCap society and a successful company like Microsoft. I would 1st pay to have all competitors killed. The AnCap response would be that consumer would become angry and stop buying my products. But that only happens if they have that information, which I would do everything in my power to prevent. Secondly, I would spend large portions on advertising and propaganda, constantly referring to how wonder and benevolent I was and how evil and destructive competitors were. So that even if the story came out that I was killing off competition, the propaganda blitz would lead people to doubt the validity. Some people on these boards argue that the masses are blind to the truth, I don’t see a valid argument for why that would all suddenly change, particularly when you take away those controls that DO try to prevent the subversion of information.
My overall point being, good information is KEY. And I would like to hear your explanation of a governmentless society could guarentee a wealth corporation couldn’t severly limit ‘bad’ information. (I think the 'well their costs go up and they have to charge more for their products argument is bogus, because rich competitors already have the benefits of mass production and economies of scale in addition to larger revenue streams.)
Ixtellor
Government doesn’t prevent it either. You may recall 9/11/2001. Due to government regulation, these jets were weapons-free zones easily commandeered by nineteen determined men and over 2,000 people died.
Entire sectors of US urban centers are no-go zones for any peaceful person. In particular, you should avoid areas of government-owned housing.
Social pathology actually increases with more government. In an an-cap society, pathological individuals wouldn’t get due process and court-appointed lawyers and room and board and medical care for the rest of their lives. Instead, they’d be killed in flagrante delicto or driven into exile. Instead of welfare to subsidize their violent, consumptive lifestyles, bums would either work or starve.
Your parade of hobgoblins about Microsoft slaying its competitors and propagandizing is just stupid. Only governments do that sort of thing. Can you point me to a single successful private business model along those lines? Even in past times of minarchist, “night-watchman” governments?
As I explained in another topic due to the state we have a society of children. Government coercion causes people to shift their consumption patterns to favour more current consumption due to uncertainty over the future and fear of future predation. This exacerbated by government fiat money, which, once again discourages savings and encourages people living beyond there means.
The welfare state has the exact same effect. As explained by an article on this site the Swedish people went from being independant, self reliant adults into a society of children demanding that the old leave their jobs because it violates “their right to a job”. The welfare state causes people to become dependant on the state thus weakening the social institutions that have traditionally taken care of charity: the family, the church, the community and private chairty.
Moreover as Byzantine pointed out, various lifestyles that would have been wiped out long ago are being subsidized by the state.
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I believe nothing lasts forever, so you will never find a company that maintained dominance forever.
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De Beers.
- Strawman. I never said government’s provent crime or acts of horror all the time. But I think its safe to say places with laws are safer than say Somalia during the reign of the warlords.(You know, that time period where they had no government)
You left out option C. Get a gun and murder you to take your posessions.
There are many many societies, mostly historically, where criminals were killed without any form of due process. It has never in the history of the world reduced the crime rate. Child rapists are brutally murdered by angry mobs in part of Africa today. Guess what, there is still child rape in Africa.
Ixtellor
Right. Like the armies of bums who held America in their iron grip before we gave them welfare.
Africa is an inapt example. That is an entire continent where most people are functionally 12-year olds in terms of mentation and impulse control. In the US the rates of social pathology correlate very well to increased government despite trillions of dollars in spending. And where are the most dangerous areas of any town? Places where the government pays people to be violent and poor, of course.
What specifically do you have to say about DeBeers? I’d wager there’s government involvement.