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Cartels are a feature of free markets. I would argue that it's good for the state to take some sort of interest in regulating them, one of several ways that I'
by samatman 3y ago
Cartels are a feature of free markets.
I would argue that it's good for the state to take some sort of interest in regulating them, one of several ways that I'm not a free-market fundamentalist.
But arguing that the formation of cartels makes a market non-free is backward. Cartels emerge through free association in trade. Regulating them might make for a more functional market, a more efficient market (or it might not) but it makes for a less free market, always.
I will add that I consider the very idea of "absence of the state" to be badly-formed, states vary considerably in their constitution but there's always something serving that role, even if it's a few elders in a village.
- wahnfrieden 3y agograeber/wengrow would disagree
- samatman 3y agoNeither of those people are a good source on the common definition of free markets. "Free market" is just two words, they can mean whatever an author wants. But it's useful to have a common vocabulary, and respectful to stick with the definition used by whomever introduces a term.
- wahnfrieden 3y ago> I will add that I consider the very idea of "absence of the state" to be badly-formed, states vary considerably in their constitution but there's always something serving that role, even if it's a few elders in a village.
- mjburgess 3y agoA market isn't free if prices aren't set by supply and demand operating under the guarantees of free exchange given by states (ie., property rights, and the rest). A cartel sets prices, and is one of the many ways markets are unfree. There's a ton of confusion created by libertarian sorts who fail to distinguish between government regulation which sets prices, and regulation necessary for the operation of the market itself. Basically delusional ideologues have denied the latter exists, by just ignoring it. If a government acts to set prices it makes a market non-free, just as much as if a cartel does so. "Free" cannot plausibly mean that a mafia is fine but a police force isnt.. and the claim that it does is just libertarian propaganda. Governments which regulate markets so as to prevent cartels are acting to prevent the very sort of price-setting which "free" denotes does not occur
- ludwigDual 3y ago> A cartel sets prices, and is one of the many ways markets are unfree. That's true, but cartels can't enforce this. New or external firms can compete with the cartel. If a cartel reduces production or raises prices then it incentivizes competitors to meet the market demand with lower prices. The only way the cartel can exclude new firms is by controlling the entirety of some resource or enforcing the cartel usually in the form of lobbying for regulations.
- wahnfrieden 3y agoIn Ontario, the "dairy cartel" invaded the big name convenience stores and groceries and forcibly replaced product on the shelf with their own without repercussion
- ludwigDual 3y agoI wonder what factors prevented competition with the "dairy cartel" in Ontario as would happen in a free market. Most likely there are restrictions on what products can be sold to willing customers that are costly for smaller firms to comply with. There may also be subsidies that have criteria that entrenched firms benefit from, but impose additional restrictions on how new firms can function.
- mjburgess 3y agoWhy would it be worthwhile to compete with a dairy cartel? Of all the things one can do with capital, why go to war with a cartel over relatively small margins? You're assuming also that the cartel is operating only "economically", not also, eg., bribing, blackmailing, (stealing, murdering, ...), ...potential competitors. Why not just invite any competitor into the cartel? Why not buy them out? Why not "make life difficult" for them? The underlying assumption that "things wash out" requires supposing that an extremely simplistic newtonian model of an economy where politics doesnt really occur. But people are foremost political, ie., engaged in tribal behaviour, collectivising, using force, and so on. This doesnt "wash out".
- asadotzler 3y agoIf a cartel sets the price, rather than supply and demand, is it really a free market? Of course the answer is no and that's obvious to anyone giving it any thought at all.