5 ms·

But would it still be a "free market" if governments just go around splitting up companies once they get (too) big? Not defending the idea of a free market her

But would it still be a "free market" if governments just go around splitting up companies once they get (too) big? Not defending the idea of a free market here, I'm leaning pretty far past socialist myself, but I know that the US in general cares deeply about free market philosophy.

worrycue 5y ago
I don’t know if it “free” but I do know that monopolies that abuse their market position makes for a less efficient market.
conception 5y ago
For a market to be free it must be well regulated. If a market is controlled inordinately by a few, it ceases to be free.
- pphysch 5y ago
  Then it's not a truly free market, because central planning (regulation) is sometimes overpowering the price mechanism.
  - ddingus 5y ago
    The idea of a robust, enduring free market itself needs to be questioned. Complete economic freedom leads to monopolies, who then act to preserve and benefit from their position. They do this because they know everyone else both wants that position and would do the same thing to maintain it. All this happens because growth is seen as necessary. Always necessary. Markets with rules can check those behaviors, but come with other complications, a big one being bought and paid for rule making by bigger players doing what? Maintaining position and growth. In the end, why do we even allow markets? To benefit people. Factored down, rules aimed at insuring markets actually do serve the people means the people have to have a say in the rules created with authority granted by the people for the purpose of improving things for the people.
    - pphysch 5y ago
      > In the end, why do we even allow markets? Because it's the best we got, historically. Decentralized price mechanism outperforms wetware planning at allocating resources efficiently. Now software has changed that and central planning is much more capable. Truly pure free market economies are virtually impossible, because as soon as the first firm is formed, it becomes a mixed economy. That is, economic transactions done within the firm are not done according to the global price mechanism, but to other rules and conventions. And the only way to prevent firms from being formed would be some extreme regulation i.e. central planning...
      - ddingus 5y ago
        And does it not follow the idea of free markets is questionable? I have long thought it is. Historically, we got all of this out of the need to benefit from our collective labor and resources, developed tech... The only reason there are markets at all is for our mutual benefit. And it follows from there to evaluate market rules to insure that actually happens.
Xelbair 5y ago
Monopoly, while the end goal of any actor under capitalistic system, is the antithesis to capitalism itself. Capitalism exists to force competition. So yes, splitting a monopoly should be part of 'free market', as having monopolies basically destroys it.
throwaway4good 5y ago
It is about making sure that the free market is actually working not so much about freedom as in freedom of expression - any course about economics will have section about monopolies and its societal cost - showing charts like this: https://college.cengage.com/economics/0538797274_mceachern/student/lecture/8428.pdf https://college.cengage.com/economics/0538797274_mceachern/s... The cost is real but so is the national security advantage.
- mahogany 5y ago
  So in order to keep the free market working, we have to make it... less free? I thought the definition of a free market is one that is free of government/outside regulation and interference. But it's also a market that is free of monopolies, apparently, and the only way to get rid of a monopoly is via government/outside regulation and interference. Isn't that a contradiction? Perhaps we should use another name for a market where we restrict monopolies -- that site you linked talks about "competitive markets".
  - areoform 5y ago
    I would argue that markets tend towards greater "order" over time. The idea that regulations are something only the government does is somewhat misleading and it leads most free market proponents to turn down sub-optimal pathways. Instead, it is more useful to see the initial state that new "green-field" markets are in as desirable. Open for anyone, including small companies, to come in, build something ground-breaking, and then grow. Overtime, the system tends towards a steady state where one of the companies, or a set of companies start to dominate the others, leading to the formation of cartels. These cartels then impose regulations, be it on the lifespan of bulbs, or on the particulars of the ad market, which are then enforced using the capital and power they have obtained. These are regulations in all but name. They're enforced by an implicit threat of economic consequences and by restricting access to resources by changing the landscape. In this case, it's Chrome and FB, which are pushing their dominance to ensure that the web becomes theirs - explicitly. They're doing this by buying out the 'land' (Chrome, Android, Search, Social Media, Ads), the 'suppliers' (think about the sheer number of open source projects that Google funds and nudges their way), and the market ("it's all free!") thereby making it practically impossible for anyone to pose a threat to their dominance. Google is controlling who becomes a competitor by enforcing rules – in this case, secret rules – that only they know of and about. They are, in essence, regulating the market, except towards their ends. Power abhors a vacuum. If a power hierarchy doesn't exist in a new space, then a new power structure will organically develop in place. Whether or not this new structure is aligned with the incentives of the broader community and new entrants/players/innovators is dependent on who and how the structure is formed. This is why I would argue that at least with Governments there's a theoretical method of incentive alignment and accountability when things wrong. Methods that have been exercised in the past to course correct. Corporations lack that. It would be the lesser of two evils to create ways to reverse stale fields to the original green field state every once in a while to allow new ideas and companies to grow. It might be more valuable to do so than to allow the continued monopoly of these companies.
throwawaysea 5y ago
I think a “free market” has to retain some degree of competition and choice. Companies above a certain size (of capitalization) or with natural anti-competitive elements (like network effects) or with ownership of multiple sides of a market or with massive patent war cheats all impede competition. They move the free market away from a competition driven incentive to something more stagnant that can discourage entrepreneurial competitive innovation.
- dragonwriter 5y ago
  > I think a “free market” has to retain some degree of competition and choice. An ideal market is both competitive and free, but the former is not a component of (and is often, outside of abstract ideals, in tension with) the latter.

worrycue 5y ago

I don’t know if it “free” but I do know that monopolies that abuse their market position makes for a less efficient market.

conception 5y ago

For a market to be free it must be well regulated. If a market is controlled inordinately by a few, it ceases to be free.

pphysch 5y ago
Then it's not a truly free market, because central planning (regulation) is sometimes overpowering the price mechanism.
- ddingus 5y ago
  The idea of a robust, enduring free market itself needs to be questioned. Complete economic freedom leads to monopolies, who then act to preserve and benefit from their position. They do this because they know everyone else both wants that position and would do the same thing to maintain it. All this happens because growth is seen as necessary. Always necessary. Markets with rules can check those behaviors, but come with other complications, a big one being bought and paid for rule making by bigger players doing what? Maintaining position and growth. In the end, why do we even allow markets? To benefit people. Factored down, rules aimed at insuring markets actually do serve the people means the people have to have a say in the rules created with authority granted by the people for the purpose of improving things for the people.
  - pphysch 5y ago
    > In the end, why do we even allow markets? Because it's the best we got, historically. Decentralized price mechanism outperforms wetware planning at allocating resources efficiently. Now software has changed that and central planning is much more capable. Truly pure free market economies are virtually impossible, because as soon as the first firm is formed, it becomes a mixed economy. That is, economic transactions done within the firm are not done according to the global price mechanism, but to other rules and conventions. And the only way to prevent firms from being formed would be some extreme regulation i.e. central planning...
    - ddingus 5y ago
      And does it not follow the idea of free markets is questionable? I have long thought it is. Historically, we got all of this out of the need to benefit from our collective labor and resources, developed tech... The only reason there are markets at all is for our mutual benefit. And it follows from there to evaluate market rules to insure that actually happens.

Xelbair 5y ago

Monopoly, while the end goal of any actor under capitalistic system, is the antithesis to capitalism itself. Capitalism exists to force competition. So yes, splitting a monopoly should be part of 'free market', as having monopolies basically destroys it.

throwaway4good 5y ago

It is about making sure that the free market is actually working not so much about freedom as in freedom of expression - any course about economics will have section about monopolies and its societal cost - showing charts like this: https://college.cengage.com/economics/0538797274_mceachern/student/lecture/8428.pdf https://college.cengage.com/economics/0538797274_mceachern/s... The cost is real but so is the national security advantage.

mahogany 5y ago
So in order to keep the free market working, we have to make it... less free? I thought the definition of a free market is one that is free of government/outside regulation and interference. But it's also a market that is free of monopolies, apparently, and the only way to get rid of a monopoly is via government/outside regulation and interference. Isn't that a contradiction? Perhaps we should use another name for a market where we restrict monopolies -- that site you linked talks about "competitive markets".
- areoform 5y ago
  I would argue that markets tend towards greater "order" over time. The idea that regulations are something only the government does is somewhat misleading and it leads most free market proponents to turn down sub-optimal pathways. Instead, it is more useful to see the initial state that new "green-field" markets are in as desirable. Open for anyone, including small companies, to come in, build something ground-breaking, and then grow. Overtime, the system tends towards a steady state where one of the companies, or a set of companies start to dominate the others, leading to the formation of cartels. These cartels then impose regulations, be it on the lifespan of bulbs, or on the particulars of the ad market, which are then enforced using the capital and power they have obtained. These are regulations in all but name. They're enforced by an implicit threat of economic consequences and by restricting access to resources by changing the landscape. In this case, it's Chrome and FB, which are pushing their dominance to ensure that the web becomes theirs - explicitly. They're doing this by buying out the 'land' (Chrome, Android, Search, Social Media, Ads), the 'suppliers' (think about the sheer number of open source projects that Google funds and nudges their way), and the market ("it's all free!") thereby making it practically impossible for anyone to pose a threat to their dominance. Google is controlling who becomes a competitor by enforcing rules – in this case, secret rules – that only they know of and about. They are, in essence, regulating the market, except towards their ends. Power abhors a vacuum. If a power hierarchy doesn't exist in a new space, then a new power structure will organically develop in place. Whether or not this new structure is aligned with the incentives of the broader community and new entrants/players/innovators is dependent on who and how the structure is formed. This is why I would argue that at least with Governments there's a theoretical method of incentive alignment and accountability when things wrong. Methods that have been exercised in the past to course correct. Corporations lack that. It would be the lesser of two evils to create ways to reverse stale fields to the original green field state every once in a while to allow new ideas and companies to grow. It might be more valuable to do so than to allow the continued monopoly of these companies.

throwawaysea 5y ago

I think a “free market” has to retain some degree of competition and choice. Companies above a certain size (of capitalization) or with natural anti-competitive elements (like network effects) or with ownership of multiple sides of a market or with massive patent war cheats all impede competition. They move the free market away from a competition driven incentive to something more stagnant that can discourage entrepreneurial competitive innovation.

dragonwriter 5y ago
> I think a “free market” has to retain some degree of competition and choice. An ideal market is both competitive and free, but the former is not a component of (and is often, outside of abstract ideals, in tension with) the latter.