BF2S Forums Responsible Capitalism

There are no benefits to a monopoly.  Period.

Socialism is a monopoly as well.

dayarath wrote:

Flaming_Maniac wrote:

I don't see anything responsible about it. Kid 1 starts to kick the crap out of Kid 2 and big brother steps in to stop it. The company would have gone through with the merger had the government not intervened.

Half-assing capitalism is the road to socialism, you have to take the good with the bad. The good lies on the fundamental belief that the sky is the limit, and anyone can be as successful as they have the ambition and skill to be, but measures like this directly contradict that. Are people allowed to be successful or not?

to a certain degree imo, you need competition to keep prices etc reasonable. If one person suddenly rolls over that competition and has control over all the aspects of what he does it gets a bit costly for the consumer, too costly in some cases.

same with companies making deals to eliminate eachothers' competition.

no what you need to keep prices down is, supply and demand. Anything is ONLY worth what someone will pay for it.

Like a 10,000 dollar grilled cheese with the image of the Virgin Mary in it.

If you do not want it, then do not buy it, if enough people don't buy it, the price will drop. If people continue to buy it, then YOU need to figure out where YOU went wrong and try and fix whatever it is YOU did in your life that prevents you from acquiring a product the majority of people do not seem to have a problem purchasing.

Uzique wrote:

Pug wrote:

There are no benefits to a monopoly.  Period.

Socialism is a monopoly as well.

Not strictly true. Socialism and capitalism are both entirely viable political systems as long as they are kept in check/regulated. It may seem like stating the obvious but monopolies only occur when a system is allowed to expand/grow/prosper without any intervention or control methods in place. No system is inherently monopolist and negative... at least not in terms of socialism and capitalism anyway.

There's no such thing as absolutism.

Pure capitalism will bring out a monopoly, while socialism is a monopoly run by the government.

Neither exist in capitivity.

lowing wrote:

Uzique wrote:

Supply and demand certainly is not the sole factor in determining the price of commodities or items. It's a very rudimentary and elementary way of looking at and remedying problems. There's a very basic principle that is relevant to what you're talking about called 'price elasticity of demand'. Google it if you're interested, or haven't heard of it before (if you have then my post probably doesn't seem like gibberish).

It seems to me that what you are talking about is nothing more than how supply and demand works and breaks it down to raw data for analysis?

Not entirely although it is of course concerned with quantifiable and theoretical study of the supply and demand mechanic.

Basically your view that: i) people will recognise a price as being too high ii) demand and consumption will fall for this product and iii) businesses will lower prices or face a loss in reaction to this change in market demand is the backbone of supply and demand. But it doesn't cover the whole topic and certainly doesn't remedy or present any enlightenment when considering free-market capitalism. That is because there are too many other variables and factors... it doesn't just all boil down to the basic supply:demand framework.

My example of price elasticity of demand is the idea that there are certain 'inelastic' products that will always have a consistent demand regardless of the price and quantity available. In other words the consumer's demand for the product will not change no matter how high the business hikes the prices (thus your whole point about supply and demand being the regulating force of free-market capitalism has a flaw). An example of a highly inelastic product in economic terms is oil/gas. Or cigarettes. Or alcohol even. Here in Britain (as well as worldwide) the changes to price to alcohol, cigarettes and fuel often has little to no influence on the demand for said product. Britain's government even recognises this and continually adds pennies to taxation of alcohol and cigarettes because they see it as a reliable and relatively easy way of gaining more tax-money and funding.

That was my only small point that I wanted to illustrate... my main contention against free-market capitalism is in my first post on this page.

A free market regulates and guides itself but it is this fact which makes it 'dangerous' and negative to all within it. It promotes social darwinism and that is an ideology that should never be taken seriously or involved in modern-day proceedings... America is already far too close to such a system in certain respects.

I would also argue that the reason 'fuel efficient' cars are flying out the showrooms nowadays is because of a media-driven campaign and a social-moral situation. The price of gas in America is relatively low in comparison with many other world countries and in my honest opinion the whole 'eco car' thing is just another gimmick being marketed and sold to sensationalist goons that buy into such crap. The technology for hybrid engines and gas-powered cars (as well as many other innovative technologies) has existed for many years but the actual cars only start selling on the forecourts when it becomes a political agenda and a media-promoted campaign. I really don't think that 'high' prices of gas are directly benefiting the eco-car markets in a way that is worth noting. Of course you're welcome to disagree... this is just my own cynical view of said subject .

Hiking up the prices so you enjoy healthier profit margins as a business is very different from strategically pricing a product/service so that it is "unsound". My point was that governments, bodies and corporations put up prices on their products by small amounts because the price-elasticity of demand is highly elastic and customers will not react to the change. My point wasn't that we are life-threateningly dependant on these products and would therefore pay £100.00 everytime we wanted to fill up our 1.1 litre hatchbacks.

Last edited by Uzique (2008-08-29 16:24:57)

I never denied that supply and demand wasn't a major driving force behind capitalism... it's elementary knowledge that it is so.

What I contended was that you were overlooking a lot of factors and variables that also keep the cogs of the economic machine turning in motion- it's not as simple or rudimentary as "when 'x' product is wanted 'y' price will rise exponentially" or anything like that. You can't simplify an economy let alone condense an entire system of socio-economic rule into one aphorism-like sentence. The problem with free-market capitalism is that if you simply leave supply and demand be in its 'raw' competitive state... everyone loses. Or at least a huge group of people at the 'bottom' drop through the cracks and starve/fail to prosper. This is basically classical Malthusian economics, and it has been criticised very harshly over the course of the 20th and 21st century. I know socialism is comparable to the Communist threat over in certain areas of the States but really welfare and government intervention are needed in small healthy doses to keep the system operating fairly for everyone within it. Free-market capitalism is far too absolutist and brutal to be of benefit to anyone except a very small percentile of power-holders at the top.

My example earlier was Japan vs. America. It still stands in this post I suppose (to make up for my laziness of finding another). If the US government didn't intervene in what was effectively free market capitalism in practice then Japan would have taken off on the high-tech industry race and would have prospered and capitalised hugely whilst America floundered. Without government intervention to save the USA, Japan was actually in a far better position to develop high-tech industry and gadgets for launch in the commercial/public sector. As the social-darwinist elements of free-market capitalism touch upon... if you can't keep up, you drop behind and you drop off. Without huge government spending on the Pentagon budget and the military-industrial complex- America simply would have dropped behind. So you cannot really be a huge advocate of total free-market capitalism considering that a) its implications basically led to your Great Depression and b) government intervention has saved you and helped you boom magnificently throughout the 21st century.

Which does bring me back to my first post on the actual topic- away from the slight digression concerning the theory of supply & demand.

A little thing that economists and supporters of 'freely trading democratic capitalism' always overlook is the fact that in all of history not ONE country that has developed into or switched to a system of free-market capitalism has managed to prosper and succeed. They have all failed. Sometimes with devastating effect.

Last edited by Uzique (2008-08-29 17:14:51)

Turquoise wrote:

The best countries to live in have a healthy mix of socialism and capitalism.  Look at countries like Norway, Iceland, Ireland, Australia, Canada, Switzerland, and Sweden....  All of them have highly competitive economies and large social safety nets.

Exactly; embracing capitalism and global economy whilst also retaining a 'safety net' so that the competition of capitalism doesn't leave any citizens disadvantaged or damaged. Very prosperous examples that, although not recognised superpowers, have an extremely high quality of life and a healthy economies. If you can name me an example of a country that has adopted free-market capitalism as its main ideology to great success- lemme know .

Turquoise wrote:

Uzique wrote:

Turquoise wrote:

The best countries to live in have a healthy mix of socialism and capitalism.  Look at countries like Norway, Iceland, Ireland, Australia, Canada, Switzerland, and Sweden....  All of them have highly competitive economies and large social safety nets.

Exactly; embracing capitalism and global economy whilst also retaining a 'safety net' so that the competition of capitalism doesn't leave any citizens disadvantaged or damaged. Very prosperous examples that, although not recognised superpowers, have an extremely high quality of life and a healthy economies. If you can name me an example of a country that has adopted free-market capitalism as its main ideology to great success- lemme know .

Singapore is pretty capitalistic, but they also have basically a police state.  I'm not sure what kind of social programs they have.  Also, the UAE is pretty capitalistic, but again, I don't know what social programs they have.

Government intervention doesn't have to be there in the form of a 'welfare state' or the pleasantries of socialism. Oh and resource-rich / third-world countries that benefit from already-established Western world trading and investment don't count either. I'm talking about a country that has benefitted and prospered directly as a result of free-market capitalism, with a long enough timespan of survival to prove it .

CameronPoe wrote:

An environment where every new market entrant is gobbled up immediately by the incumbent monopoly so it can maintain free reign over the price of a particular product (the price of which would necessarily decrease if a competitor existed).

How on earth can something just be "gobbled up"? As I said earlier, what is really happening to drive these people out of business is their prices are being seriously undercut because the big business has the capital to run without a profit for the sole purpose of running the other business into the ground. What happens to the price though? It goes down. What happens when they raise the price ridiculously high? Prime time for someone else to step in and force their prices down again. Someone is always looking to get an edge in, and that either forces the big business to keep prices relatively low in order to nip competition in the butt, or continuously change their pricing whenever a new threat pops up.

There is always effectively a competitor, either directly or indirectly. If not, wait ten minutes.

CameronPoe wrote:

FM - as you well know there are currently no alternatives and there won't be for 30 to 40 years. As such, we are getting sucked dry for as much as they think we can handle: making hay while the sun shines.

We are willing being sucked dry. No one is being forced to buy gas, and high prices are in fact effecting how much gas people are buying. It is forcing people to look at more fuel efficient cars and other modes of transportation. What do you think would happen if gas was at $10 a gallon? Besides rioting, you think people would consume the same amount of gas they do now? How would revenue be going for OPEC? I can't think of a better example of relatively unrestricted capitalism at work.

CameronPoe wrote:

So you're saying that free market capitalism is working because black markets have developed? That fundamentally exposes the fact the supply-demand system has broken down! Economics 101.

First of all, I am not saying that capitalism is working because of a black market, only that the black market skews the example. Without the black market the industry would be completely different, and there is a good chance that for example linux would be significantly popular, enough to force change in Microsoft's policy.

So no, the system has not broken down, the law has been broken and that is screwing with the market.

CameronPoe wrote:

Not when each cunning businessman/woman can be edged out instantly before they've even secure an entrepeneurial loan when the incumbent monopoly gobbles them up - as Microsoft have long done, as have other corporations. Your second point is irrelevant - I'm not talking about promoting weak business - mergers generally involve a massive and successful company buying a smaller successful company - there is no 'weak business' about it: all that is happening is that a reduction in the level of competition is taking place.

They aren't so cunning then. You act like entrepreneurs and their investors are a bunch of idiots. If there is a legitimate opening they will pounce, with folders of business models they tote around to angel investors. One fails? Ten behind him.

It is exactly weak business. Unless it is a merger of equals, in which case it is only elimination of competition, one company is superior to the other. Why is that company bigger? How do they have the resources to acquire the other company? Weak is a relative term, it does not mean sickly, it means not as strong.

Agent_Dung_Bomb wrote:

Maniac, you have to remember that we already went through a bout with monopolies in the early part of the 20th century, and it hurt America.  It didn't make it better, and thus the reason for laws regarding monopolies.

As I said earlier, I specified that we are in a time where Western industries are not limited by raw materials. I suppose the only counter example to that as Uzique indirectly supplied is unskilled labor. The oil and steel industries at the time were radically different to industries now, then both those raw materials were in such high demand with so little capital in other parties in the rest of the country ready to invest in increasing output that it was hindering the growth of the nation. In today's time that's just not the case.

Agent_Dung_Bomb wrote:

Now lets talk about something you have missed.  Competition drives innovation.  Without competition a company will not spend the time and money to improve a product of which they are the only supplier.  They will get lazy.  And for this reason Cam is right.  A monopoly isn't going to allow any new competition, they will buy it up or force it out by undercutting their pricing.  A monopoly would also take their monopolistic power and do whatever they can to control the resources that it needs for its products, thus disrupting the ability of competition, even if not bought up, to even be able to buy the materials necessary.

Stagnant industries drive innovation. When people see that there has not been movement in an industry for years and it is ripe for the picking, it makes it that much easier to convince people to give them a shot at developing the next big thing. The investors will get so much higher returns on a product that is in a league of its own. Developing in competitive environments requires nothing more than frequent baby steps, safe additions that will keep people hanging on for more. Companies are too quick to take the safe route and not step out on the edge when billions are on the line.

It works both ways.

Uzique wrote:

This happens today of course and the 'third world' is exploited and used as a labour-intensive sweatshop continent- but the important thing is that this occurs under government-stimulated economical conditions and has large amounts of government intervention. Case in point: America competing with Japan in terms of industrialising during the course of the 20th century. If America had gone through this period without any government intervention and involvement in the macro-economy, Japan would have undoubtedly emerged as the economic and vastly advanced superpower. Japan industrialised and sold commodities/new hi-tech industry directly through the corporations to the consumer, whereas America invested huge amounts of public spending in the Pentagon budget and development of the military-industrial complex- with any additional 'useful' goods being tossed towards the corporations for public consumption. Remember that key difference and consider how it would have gone if 'free market capitalism' was fully encouraged.

No one ever, EVER expects a truly free market. A truly free market doesn't even have a governing body, I suppose some anarchists might advocate one. Having a government that pours money into things like the DoD and NASA that are generally beneficial to the country as a whole does not mean the government has to abandon free market principles in commercial cases. Taxes are necessities that should be going somewhere beneficial, but that doesn't mean the government should big business or the consumer how to spend the rest of their money.

Uzique wrote:

Free market capitalism is just a dream- it's a theory. It's just a theological foundation taught to economic students and business grads because it is a concrete part of the 'science' and institution. I very much doubt any modern-day economist sees the absolute form of free market capitalism as a viable or even relevant part of modern day business. In short: free market capitalism lowers the standard of living for everybody in the economy and state.

It's the basic form behind every economic transaction in the Western world. Everything else is just twists we have added, very important twists of course, but you can't say the fundamentals of basketball are irrelevant as soon as someone learned how to dunk.

Uzique wrote:

My example of price elasticity of demand is the idea that there are certain 'inelastic' products that will always have a consistent demand regardless of the price and quantity available. In other words the consumer's demand for the product will not change no matter how high the business hikes the prices (thus your whole point about supply and demand being the regulating force of free-market capitalism has a flaw). An example of a highly inelastic product in economic terms is oil/gas. Or cigarettes. Or alcohol even. Here in Britain (as well as worldwide) the changes to price to alcohol, cigarettes and fuel often has little to no influence on the demand for said product. Britain's government even recognises this and continually adds pennies to taxation of alcohol and cigarettes because they see it as a reliable and relatively easy way of gaining more tax-money and funding.

Only because you are staying within your "elastic" range of the product. As you said you are dealing with pennies on the dollar. Free market capitalism doesn't pretend to get up and do its shit at the drop of a hat, it'll get up when it damn well feels like it. Double the price of any of those things and see what the demand is.

In today's society very few things are truly valuable. Food, water, shelter...there are so many sources of any of these that people only have to pay what they are (reasonably) wiling to pay. Water in the desert? Yeah, you could charge for that. $10 bottle of water in the suburban jungle? Not so much.

Uzique wrote:

I would also argue that the reason 'fuel efficient' cars are flying out the showrooms nowadays is because of a media-driven campaign and a social-moral situation. The price of gas in America is relatively low in comparison with many other world countries and in my honest opinion the whole 'eco car' thing is just another gimmick being marketed and sold to sensationalist goons that buy into such crap. The technology for hybrid engines and gas-powered cars (as well as many other innovative technologies) has existed for many years but the actual cars only start selling on the forecourts when it becomes a political agenda and a media-promoted campaign. I really don't think that 'high' prices of gas are directly benefiting the eco-car markets in a way that is worth noting. Of course you're welcome to disagree... this is just my own cynical view of said subject tongue.

Americans are not used to paying high gas prices, and we don't like it. If you have x dollars built into a budget for gas, then all of a sudden you're exceeding that by 50% in six months, then another 50% in another six months....well people are going to look for alternatives to keep the rest of their lifestyle as it is as much as possible. Elsewhere people are used to paying that much for gas, they have it worked out that way. Cultural thing.

Uzique wrote:

A free market regulates and guides itself but it is this fact which makes it 'dangerous' and negative to all within it. It promotes social darwinism and that is an ideology that should never be taken seriously or involved in modern-day proceedings... America is already far too close to such a system in certain respects.

Here is what I believe is truly the root of your argument, that social darwinism is bad. Social darwinism should be promoted at every turn, especially in a country looking to produce the best and brightest. If you want to live in a country invested with mediocrity and satisfaction with the status quo, awesome, have a ball. I would rather live in a country that challenges me and those around me to excel in my every aspect, to push me to lead a life worth living or risk living none at all.

It would also be great if you could make sure to state your opinions about my country as opinions, not facts.

Agent_Dung_Bomb wrote:

Maniac, that is where you are flat out wrong.  Monopolies will not allow new competition or innovation.  They quash it before it gets started.  They have such a high level of market and resource control, that without intervention, nothing can stop it.  You are completely naive to think that monopolies are a good thing in any way, shape, or form.

"You're wrong, I can't tell you why the points you just gave me are wrong, so I'm going to spit out the same information again. By the way you're wrong."

Agent_Dung_Bomb wrote:

You are also wrong in that the government doesn't stop a company from prospering as much as it possibly can, it only prevents them buying out the entire market and eliminate a monopoly of goods/services.

Completely mutually exclusive. The ideal for a company is a monopoly.

Agent_Dung_Bomb wrote:

Intel is a perfect example.  They have ~85% of the worlds market share for computer processors.  Has the government shut them down?  No.  Would the US government allow a buyout or merger of Intel and AMD?  Probably not.  Intel's problems with the EU stemmed from accusations that they were using their large market control to try and force vendors to not use/offer/supply competing products.  Would you really want Intel to be a monopoly?  Do you really thing the R&D they spend on processor development would exist were it not for AMD?  Given the massive costs associated with entry into such a market, and Intels large market share, do you honestly think another company could step up and provide a competing product?  Fabrication plants are ~$2B, and costs would only increase as the cost of oil and other natural resources go up.

The fact is, that Intel has the capital and resources to put AMD out of business, but they know they can't without getting slapped down as a monopoly.  I don't know about you, but I know I don't want to be paying 2-3 times the cost we pay now for technology that wouldn't be anywhere near what it is now without competition.

I demand a source for that first claim. At the very least I assume you mean consumer, not commercial processors, which is a huuuge difference.

R+D would most certainly exist, it would be driven by the software industry. Intel needs to keep coming up with new processors to get people to buy the next greatest thing, stagnation would be a recipe for disaster in such a company. Surely you recognize this.

Prices would go up without AMD. It would not be the end of the world. Enthusiast level chips have a very rich consumer base that will pay pretty much anything to have the cutting edge. I would expect companies of pre-built computers to step in and start making their own processors for low-mid range computers, providing a cheaper alternative to the faster but more expensive Intel chips. People just aren't going to buy a computer as often if the processors alone cost over $500, and this gives a good opening to companies that are already selling computer components to per-built companies to expand their line.

Flaming_Maniac wrote:

How on earth can something just be "gobbled up"? As I said earlier, what is really happening to drive these people out of business is their prices are being seriously undercut because the big business has the capital to run without a profit for the sole purpose of running the other business into the ground. What happens to the price though? It goes down. What happens when they raise the price ridiculously high? Prime time for someone else to step in and force their prices down again. Someone is always looking to get an edge in, and that either forces the big business to keep prices relatively low in order to nip competition in the butt, or continuously change their pricing whenever a new threat pops up.

There is always effectively a competitor, either directly or indirectly. If not, wait ten minutes.

This isn't very realistic.  There are plenty of industries where the barriers to industry manifest in massive overhead costs.  Even if you do manage to get past these, the established companies can easily just buy you if you prove too much of a nuisance to them.

I think the general point that is being made in this thread is that, when a market is totally unregulated (or not regulated enough), competition dwindles down to almost nothing, and then the company or companies left are able to rape consumers.  They do in many industries.  Telecoms are some of the worst about it for the reasons I mentioned above.

There's a good reason we have things like antitrust laws, but even those are easily circumvented.  We need updated antitrust laws to take into account all the creative ways big business has figured out how to avoid the current ones.

Flaming_Maniac wrote:

We are willing being sucked dry. No one is being forced to buy gas, and high prices are in fact effecting how much gas people are buying. It is forcing people to look at more fuel efficient cars and other modes of transportation. What do you think would happen if gas was at $10 a gallon? Besides rioting, you think people would consume the same amount of gas they do now? How would revenue be going for OPEC? I can't think of a better example of relatively unrestricted capitalism at work.

There has been an active effort over decades for oil companies to influence the development of transportation methods in the U.S.  We have always had the land to spread out, so doing so seemed very attractive in the short run, and as connections between oil companies, automakers, and construction firms developed, so did the sprawling nature of our cities.

You'll notice that our oldest cities tend to be more efficient in their use of space.  In much of the Northeast, for example, metro systems are more commonly used and updated to attend to the needs of their large populations.  This was also expanded upon in the D.C. area.  Chicago also makes extensive use of metro systems.

Yet, in the major cities that are younger (or saw dramatic growth in more recent decades), sprawl is more common.  There is more reliance on things like highway systems.  Ever since the push for an extensive interstate highway system, we've seen a similar push for car-centric development.  This is beginning to change due to the recent increases in gas prices, but it could be well argued that a lot of the urban sprawl problem and our oil dependency could have been lessened if our thinking and our special interests had been more aimed at metro systems.

Now, it almost feels like too little, too late.

For the most part, I agree with you that oil is a mostly unregulated market at work, but I think you're overlooking a lot of external factors that have made us particularly vulnerable to rises in gas prices.  When the public is highly vulnerable to a given market and its oligopolistic producers, that is when it is best for the government to step in to help consumers.

Flaming_Maniac wrote:

Here is what I believe is truly the root of your argument, that social darwinism is bad. Social darwinism should be promoted at every turn, especially in a country looking to produce the best and brightest. If you want to live in a country invested with mediocrity and satisfaction with the status quo, awesome, have a ball. I would rather live in a country that challenges me and those around me to excel in my every aspect, to push me to lead a life worth living or risk living none at all.

It would also be great if you could make sure to state your opinions about my country as opinions, not facts.

Social Darwinism should be more appropriately called Class Darwinism.  It's nothing more than a fancy phrase for starving the poor and feeding the gluttony of the rich.

Flaming I don't really believe there is any evidence that free market capitalism has helped to create the "best and brightest". That's not even really a matter of economics- unless by your definition "best" and "brightest" means "richest and most avaricious". In fact from an economical point of view I would say that the system that has benefitted your country most in terms of industrial/technological progression is that propounded by Keynes. Which is actually more a step in the direction of a socialist policy than an all-competing and harshly-discriminating 'free market' system. Just look at the historical facts here; over a great length of time free-market capitalism resulted not in prosperity but a Great Depression, after decades of Keynesian policy your country is very developed and has great technological and military resources. Also not to mention the profit-over-morality ethical basis of free-market capitalism created what is basically the mass exploitation of third-world countries, turning them into nothing more than back-gardens of richer and more advanced countries. The system focusses on selfishness and abstract scientific-style survivalist ideals... it is no surprise that it led to a huge economical mess and a self-destruction.

The example of your dad is a great example of what people can do with willpower, grit and determination... but I do not think it is exclusive to the 'Land of the Free'. It's almost as if you're directly spouting your own analogy of "the American Dream", and I think you're far too intelligent to be influenced by propaganda and abstract ideology such as that. It's natural for human society to fall into classes, and it is possible for anyone to advance through these classes theoretically so long as the government/institutions does not directly impose upon or restrict said system. There are no inherent barriers to human progression in non free-market countries. In fact the general rule of thumb (that is basically general knowledge and common sense) is that free-market economies generally only benefit the very-rich in gross amounts whilst furthermore continuing to impose upon and oppress the (desperately) poor.

I think you make some great points and I don't want to counter them by exposing weaknesses or any such thing. In my opinion we're on two different sides of an ideological and political fence and we both see the merits and downfalls of said systems. I agree with many of your points but I think overall we'll have to agree to disagree on what we stand for and what we applaud .

Last edited by Uzique (2008-08-31 09:12:39)