Inherent failing of liberalism...

[RedSkunk]

The most obvious inherent failing with classical liberalism, or free market capitalism.

It is this contradiction.

Firstly, there is the statement that everyone ought to have an equal shake at things. Everyone should have the chance to rise or fail based on merit. It is a free market, and that individuals / parties have have the superior product should be able to sell that superior product. Competition. Perfect competition and competitive markets are the theoretical perfect capitalist society.

Secondly, the point of a company is to make a profit. Those most fit to survive should survive, those who can't – fail. Additionally, profitability results in market power. And market power begets market power – through increased amounts of capital that can be used to reinforce superior product / status quo / etc., through additional R&D, being able to undercut / buy out competitors, ETC.

Without government intervention, and even with most of the time, unimpeded free market capitalism results in oligopolies. Think of a single market that is not dominated by half a dozen or a dozen companies. Can you?

The avowed libertarian or free market capitalist will contend that oligopolies are the result of government intervention, or other influences outside of the market. This seems to fly in the face of historical realities, however. Rockafeller and the early oil industry was an oligopoly without any government intervention. In fact, the early American oil industry is a perfect example of this inherent contradiction in classical liberalism. I'd recommend Daniel Yergin's The Prize for anyone interested in oil's history.

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Thoughts or critiques? I'd like to hear differing opinions here, because I'd like to believe in the infallibility of capitalism, and/or libertarian ideals [since I'm essentially a "social libertarian."]

[Begoner]

I completely agree with you. However, the libertarian argument will be that threat of competition will force the oligopoly to cater to the needs of the consumer, set fair prices, etc. -- otherwise, a competitor might spring up and drive them out of business. However, I find this argument to be completely unrealistic, and, frankly, bollocks.

[JMHX]

In all seriousness, RedSkunk, I can see what you're saying, but I wonder exactly what you're getting at with it. Who are the Libertarians saying oligopolies are formed by anything other than market power?

[MortifiedPenguins]

I can agree with you on that.

No market completely pure will work.

But liberalism is still a very good ideal to use in economics, but just don't let it go to such an extreme that America starts looking like America from the 1890's.

[Nylo]

It may not be perfect, but it's worked pretty damn good for over 250 years. Even though oligopolies are essentially what you don't want, even they themselves are subject to the judgement of a people free to buy or not buy their product with their own money.

AOL and AT&T have a rep for doing pretty shitty in the past (though AT&T notsomuch nowadays via mergers). It forces the powers in charge of oligopolies to constantly compete to maintain their power.

[TheloniousMONK]

At 9/20/06 05:53 PM, RedSkunk wrote: It is this contradiction.

Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.

[IllustriousPotentate]

At 9/20/06 05:53 PM, RedSkunk wrote: Thoughts or critiques? I'd like to hear differing opinions here, because I'd like to believe in the infallibility of capitalism, and/or libertarian ideals [since I'm essentially a "social libertarian."]

Though a staunch social and economic libertarian, I understand and agree with your viewpoint. However, just the application of capitalism in its purest form to an actual economy is bound to have aberations, after all, can there ever really be perfect competition in any system? Trying to apply a system based for perfect competition where there is only imperfect competition will lead to a few leaders of the pack—the oligopolies you mention.

And sure, while government intervention is often needed to rein in these oligopolies in the short term, in the long run, the capitalist system provides reins to these oligopolies, be it in the form of diseconomies of scale; changes in supply and/or demand, etc.

[RedSkunk]

At 9/20/06 10:30 PM, TheloniousMONK wrote: Contradictions do not exist. Whenever you think you are facing a contradiction, check your premises. You will find that one of them is wrong.

Care to provide an argument?

[RedSkunk]

At 9/20/06 07:45 PM, Truthiness wrote: In all seriousness, RedSkunk, I can see what you're saying, but I wonder exactly what you're getting at with it. Who are the Libertarians saying oligopolies are formed by anything other than market power?

I'm trying to figure out whether or not oligopolies are the natural result of free market capitalism, and if they are, whether there are any better solutions out there. I said that if oligopoly is the natural result, then libertarian ideology is flawed, in that a market dominated by an oligopoly is far from a competitive market.

[YHWH]

I, for one, wouldn't mind if there was an oligopoly, even though I disagree with you on your arguement of the free market bringing them about.

[JMHX]

You may have a point, RedSkunk, not only in the industry oligopolies of Carnegie, Rockefeller, etc. in the United States, but in the Tea Oligopolies the British had in India. It can be argued that the government allowed the oligopolies on tea to exist by crushing native producers, but the fact that it was essentially an unrestrained British free market shows some evidence that, free from controls, industries will cluster towards oligopoly.

[Zalbun]

I think that Libertarians would state that Monopolies are, infact, a detrimental market force to the same tune of Unions (simply inverse) essentially, both would be artificially distorting market equilibrium.

I'm sure Milton Friedman has an answer, but I don't know it.