Will the free market solve everything?

John K Clark (johnkc@well.com)
Tue, 25 Feb 1997 20:50:22 -0800 (PST)


William Kitchen bill@iglobal.net On Mon, 24 Feb 1997 Wrote:

>It is doubtful that you can show a case in which a pure free market
>economy has actually improved the human condition for more than few

That's true, I can't show you such a case, nor can I show you a pure free
market economy, the contagion of nationalism has spread to every square inch
of the planet.

>An op-amp circuit with strong positive feedback will tend not
>towards balance, but to lockup in either an extreme positive or
>extreme negative state. Ungoverned free market economies also have
>strong positive feedback, and share this same characteristic.

A wonderful theory, but like all theories it must be compatible with the
facts. Let's Look at the corporate giants of 25 years ago. A & P was by
far the largest retailer on planet earth, today I think they still exist
someplace but I wouldn't swear to it. Where is Eastern Airlines or Pan
American or Control Data or Studebaker or Packard? It sounds ridiculous now,
but just a few years ago many said that IBM should be prevented from entering
the PC market because it would completely dominate it. Many of the giants of
today like Microsoft, Walmart, Intel, Digital, Sun or Turner Broadcasting
were tiny or non existent 25 years ago. On the other hand we have the same
damn governments we had 25 years ago and, in the USA at least, government
controls a much larger percentage of the economy than it did then.

Government, however minimal it starts off to be, will grow because it has
advantages that no other power center has. A corporation, no matter how big,
can not force you to consume their product and then pay for it, nor can a
corporation force you to work for it. On the other hand, if government needs
labor to serve on a jury or fight a war it makes no difference if you want
to work for them or not, you must. If you don't want the services the
government provides, you still must pay for them. The government will make
you an offer you can't refuse, otherwise men with automatic weapons will come
to your house knock on your door and drag you away.

>There is little purpose in constructing a society of any kind if not
>for the benefit of the members of that society. I construct machines
>to be my slaves, not to be enslaved by them. The same should be true
>of anything we construct.

Nobody understands themselves so they sure as hell don't understand the
economy in which they live well enough to construct it to specifications.
Imagine trying to calculate the price of an object from first principles,
it would be like writing a book on auto repair using only the equations
of Quantum Mechanics! Fortunately the market will tell you what the price
is real quick.

>However, I cannot say that taking wealth away is unacceptable in
>every possible case.

I agree. Taking wealth away from other people and giving it to me is very
acceptable, I find that everybody basically agrees with me about this, except
they do want to make one modification. Personally I think that change destroys
the beauty if of my original plan.

>Economic polarization cannot go indefinately without some kind of
>corrective measure.

And you expect government to provide that corrective measure? It's crazy to
think government will be on the side of the weak, making friends with
the powerless and making enemies of the powerful is no way for a politician
to stay in power.

>This is my model of what would happen with an economy that has zero
>governmental regulation.

Whenever there is talk about deregulating a section of the economy the loudest
howls of protest come from the leaders of the industry being regulated.
The regulation is there to stamp out competition and preserve the status quo,
despite some wonderful rhetoric it has nothing to do with helping the weak.

>"Highest correlation of effort with reward" is something I would
> include in the definition of "fair".

Effort is irrelevant. If would take enormous effort to learn to play the
piano with you feet, but if you want to do it then go right ahead, however
I feel not the slightest pang of guilt in not personally rewarding you for

>Some important problems will require specialized knowlege just to
>recognize them.


>Free markets are not effective at solving such problems.

What are you talking about? Companies hire thousands of people with very
specialized knowledge, and unlike government specialists, they are held
accountable when their theories prove to be wrong.

I think the trouble in all this is that you're comparing the Free Market as
it actually exists, warts and all, against a saintly omniscient government
that ALWAYS knows what the right thing to do is, and even more important,
ALWAYS has the moral courage to do it. It's not very surprising that the
market comes out second best in such a mythical contest.

>What I proposed was lowering the price to a level that would not
>allow you to compete and still remain profitable. I would lose money,
>but would not willingly incur any greater losses than were necessary.

The lower you set the price of widgets the greater will be the demand for
them, the greater the demand the more widgets you must manufacture, the
more you manufacture the more money you lose. I don't care how much money
you have, if it is finite, this sequence can only end one way.

>In the proposed scenario, I am the one with the vast resources.

And you are assuming that my resources are close to zero, if so that means
that very little money is needed to get into the widget business so even if
you get rid of me a thousand new competitors will soon spring up. If it takes
a lot of money to make widgets then my financial resources must be

>Even if you buy them from me you still have to market and distribute

True, but the beauty is that every widget I buy from you makes you weaker,
and you are my competition.

I have to ask, do you really think this is a good way to make money, would
you use your hard earned savings to buy stock in a corporation that tried to
corner a market in this manner? If so I'd like to talk to you about investing
in my perpetual motion machine company.

John K Clark johnkc@well.com

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