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Are we even in a free market anymore? Competition is supposed to bring prices back down but all the industries seem to have monopolized and now they just set t

Are we even in a free market anymore? Competition is supposed to bring prices back down but all the industries seem to have monopolized and now they just set the max price people will tolerate before getting rid of the service or product all together. Also known in economics as a profit maximizing monopolist.

antisthenes 3y ago
Free market is an inherently unstable system. Capital _always_ consolidates until only a few market players are left. At that point it's anyone's guess how much they actually compete or collude between themselves.
- t-writescode 3y ago
  This is why one of the government’s jobs is to break or stop monopolies. Capitalism only works when competition is possible, probable and realistic.
  - piloto_ciego 3y ago
    Regulatory capture though…
    - t-writescode 3y ago
      It's a bit orthogonal to monopolies being broken up by the government; but, yes, another danger to sustaining the healthy competition that capitalism promises to us lay people is regulatory capture, where small players are literally unable to enter into the fight. The specific tools to break down monopolies are, I presume, different from the tools that would be used to permit future companies to compete with established companies in danger of becoming a cartel or monopoly.
  - p_l 3y ago
    "Free market". The point of capitalism is gathering of capital and preferably making capital only by virtue of having said capital. Competition is for chumps who don't have enough capital to get rid of their competitors or form a cartel.
    - t-writescode 3y ago
      Could you elaborate on what this conversation adds? When I said "works", what I should have said is "exists in a sustainable way that benefits the regular citizen". I would consider cartels and monopolies and similar to be capitalism "not working" - that is "bringing about harm to those under it". The assumptions we're taught in grade school about how capitalism breeds competition and competition means the customer wins only work when capitalism has reins on it to stop it from becoming a bunch of monopolies so that there can still be competition.
  - opportune 3y ago
    Some monopolies are naturally occurring or at least much more efficient than competition provided the monopoly isn’t abused. In other cases, temporal monopolies happen simply due to competition (if Spacex’s starship becomes reality in the near future, they’ll have a monopoly on that tech for years or even decades) and technological advancement. In some cases I think the government should simply operate (in the case of utilities) or heavily regulate monopolies while allowing them to exist. IMO a monopoly is only bad insofar as it overcharges customers, stifles innovation, and abuses its position to prevent competitors from arising or gaining market share. It’s not the monopoly itself that’s the problem
    - swagasaurus-rex 3y ago
      > It’s not the monopoly itself that’s the problem If all of those bad things happen only because they have monopoly power, then yeah the monopoly itself is the problem.
- opportune 3y ago
  There is no such thing as a free market, nor a centrally planned one, outside of thought experiments. A real market is composed of discrete players (you never have unlimited options) with things like friction, collusion, switching costs and stickiness at all levels, cognitive overhead, conflicts of interest (a firm making suboptimal decisions because influential people in the firm will personally benefit from the decisions). There are natural monopolies and economies of scale, as well as insurmountable moats, intellectual property creating monopolies or deadweight loss, an omnipotent (unlimited money) central planning committee (central bank) making decisions that can directly affect you… Conversely you cannot have true central planning because it essentially violates an economic version of the CAP theorem (you’ll never have synchronized perfect information in a way that’s fault tolerant) and assuming production is constrained, optimally balancing all constraints is NP-complete. But even beyond that you have incomplete or falsified information, defection (deviate from the plan due to disagreement) and corruption, some outcomes being inherently noisy or unpredictable, the need to delegate, lack of price discovery or disambiguating between stated and revealed preferences… All we can do is try to patch on changes to any approach to address shortcomings. Although the strong rule of law and consistency in the US legal system makes things extremely stable, it also enshrines loopholes and bad outcomes, so in some ways I wonder if China’s system (which relies on its decision makers being relatively competent and benevolent-ish, which they’ve been very fortunate to benefit from since Deng) might be better given they can throw out rule of law to force outcomes.
pydry 3y ago
We weren't ever. "Free markets" were myth sold to us to justify the current order. Like and updated version of "divine right of kings".

antisthenes 3y ago

Free market is an inherently unstable system. Capital _always_ consolidates until only a few market players are left. At that point it's anyone's guess how much they actually compete or collude between themselves.

t-writescode 3y ago
This is why one of the government’s jobs is to break or stop monopolies. Capitalism only works when competition is possible, probable and realistic.
- piloto_ciego 3y ago
  Regulatory capture though…
  - t-writescode 3y ago
    It's a bit orthogonal to monopolies being broken up by the government; but, yes, another danger to sustaining the healthy competition that capitalism promises to us lay people is regulatory capture, where small players are literally unable to enter into the fight. The specific tools to break down monopolies are, I presume, different from the tools that would be used to permit future companies to compete with established companies in danger of becoming a cartel or monopoly.
- p_l 3y ago
  "Free market". The point of capitalism is gathering of capital and preferably making capital only by virtue of having said capital. Competition is for chumps who don't have enough capital to get rid of their competitors or form a cartel.
  - t-writescode 3y ago
    Could you elaborate on what this conversation adds? When I said "works", what I should have said is "exists in a sustainable way that benefits the regular citizen". I would consider cartels and monopolies and similar to be capitalism "not working" - that is "bringing about harm to those under it". The assumptions we're taught in grade school about how capitalism breeds competition and competition means the customer wins only work when capitalism has reins on it to stop it from becoming a bunch of monopolies so that there can still be competition.
- opportune 3y ago
  Some monopolies are naturally occurring or at least much more efficient than competition provided the monopoly isn’t abused. In other cases, temporal monopolies happen simply due to competition (if Spacex’s starship becomes reality in the near future, they’ll have a monopoly on that tech for years or even decades) and technological advancement. In some cases I think the government should simply operate (in the case of utilities) or heavily regulate monopolies while allowing them to exist. IMO a monopoly is only bad insofar as it overcharges customers, stifles innovation, and abuses its position to prevent competitors from arising or gaining market share. It’s not the monopoly itself that’s the problem
  - swagasaurus-rex 3y ago
    > It’s not the monopoly itself that’s the problem If all of those bad things happen only because they have monopoly power, then yeah the monopoly itself is the problem.
opportune 3y ago
There is no such thing as a free market, nor a centrally planned one, outside of thought experiments. A real market is composed of discrete players (you never have unlimited options) with things like friction, collusion, switching costs and stickiness at all levels, cognitive overhead, conflicts of interest (a firm making suboptimal decisions because influential people in the firm will personally benefit from the decisions). There are natural monopolies and economies of scale, as well as insurmountable moats, intellectual property creating monopolies or deadweight loss, an omnipotent (unlimited money) central planning committee (central bank) making decisions that can directly affect you… Conversely you cannot have true central planning because it essentially violates an economic version of the CAP theorem (you’ll never have synchronized perfect information in a way that’s fault tolerant) and assuming production is constrained, optimally balancing all constraints is NP-complete. But even beyond that you have incomplete or falsified information, defection (deviate from the plan due to disagreement) and corruption, some outcomes being inherently noisy or unpredictable, the need to delegate, lack of price discovery or disambiguating between stated and revealed preferences… All we can do is try to patch on changes to any approach to address shortcomings. Although the strong rule of law and consistency in the US legal system makes things extremely stable, it also enshrines loopholes and bad outcomes, so in some ways I wonder if China’s system (which relies on its decision makers being relatively competent and benevolent-ish, which they’ve been very fortunate to benefit from since Deng) might be better given they can throw out rule of law to force outcomes.

pydry 3y ago

We weren't ever. "Free markets" were myth sold to us to justify the current order. Like and updated version of "divine right of kings".