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Nonsense. Leftists conflate "state capitalism", cronyism or corporatism with real, free-market capitalism. Internet monopolies like Comcast or TWC enjoy are sta

Nonsense. Leftists conflate "state capitalism", cronyism or corporatism with real, free-market capitalism. Internet monopolies like Comcast or TWC enjoy are state-granted monopolies, not "natural monopolies" (which have never existed).

dragonwriter 13y ago
> Nonsense. Leftists conflate "state capitalism", cronyism or corporatism with real, free-market capitalism. Leftists -- specifically, socialists -- created the name "capitalism" as a name for a real system which existed in the developed world in the 19th Century, in which the economic order was actively managed to favor the interest of the capital-holding class. The idea that this was system had something to do with "free markets" was part of the propaganda of defenders of that real, very much crony, system in response to that critique. Its kind of weird to call the real thing which actually existed that "capitalism" was coined to refer to as anything other than real capitalism, while referring to amorphous, ill-defined, fantasy as "real capitalism". "State capitalism" is a different thing entirely -- it usually shows up in critiques by leftists, particularly non-Leninist socialists, of Leninist(incl. Stalinist/Maoist)-style "Communism".
- doyoulikeworms 13y ago
  ITT: pedantry
lkbm 13y ago
Given that network effects and economies of scale are real things, on what grounds to you claim that natural monopolies don't exist?
coldtea 13y ago
The actual nonsense is the existance of the mythical " real, free-market capitalism", that nobody has ever seen in practice. The "free market" that does exist is based on subsidies, bailouts, state protection, monopolies, a huge army, bullying, and resource grabbing (and past 300+ years of colonialism). Heck, the "free market" is even more mythical than the laughable "really existing socialism".
- jbooth 13y ago
  Not to mention, taking an econ 101 supply and demand graph based on a quote 'widget factory' (actual textbook quote) and applying those ideas about marginal cost to utility economics where you build the grid once and then charge on subscription. Unironically. Earnestly, even.
- kbolino 13y ago
  The free market does not exist because the government stands in its way. To then go on to chide free market advocates for actions they do not support is disingenuous at best. Businessmen are not interested in ideology, if they can use the government as a cudgel against their opponents, or a crutch to sustain them in hard times, they will. Every time the government's power over the economy has been expanded, advocates of the free market have pointed this fact out and been ignored. You can't break my spine and then blame me for being paralyzed.
  - cdash 13y ago
    No one broke your spine, it never existed and never will. It is imaginary.
    - kbolino 13y ago
      Pretty sure my spine is real. Perhaps you meant to unpack that analogy first? The "free market" is simply what exists absent interference. It ceases to exist when a single player or group of players asserts force over the others. The purpose of government is to reduce the effectiveness of violence as a strategy.
  - coldtea 13y ago
    >The free market does not exist because the government stands in its way So people should quit talking about it as it existed. Not to mention that the same could (and WAS) said for communism ("it didn't exist because party bureucrats got in the way"). >You can't break my spine and then blame me for being paralyzed. No, but I can point out that the unicorn pony you frequently talk about doesn't exist and never did in human history.
Aloisius 13y ago
> not "natural monopolies" (which have never existed). Tell that to Standard Oil or The American Tobacco Company.
- thatswrong0 13y ago
  Do 10 minutes of research on Standard Oil. Not a great example.
  - Aloisius 13y ago
    I suggest spending more than 10 minutes of research on it. Standard Oil is quite literally the textbook example of a natural monopoly.
talmand 13y ago
Based on my own non-expert personal musings on the subject, I would say that natural monopolies can and do exist in capitalism. It's just that under normal circumstances they would be difficult to sustain over a certain period of time based on several factors. Without some mechanic (often political) in place to prevent a new form of competition or technological progression from developing in the market, then a natural monopoly would likely be reduced by natural market forces. If you look throughout just American history you can various examples of this. Big, strong companies that eventually fade away to disappear because of failure, lack of vision, or whatever other decisions that held the company back. It's just that there is very few examples of a true free market, except for maybe on a local level, so that we'll likely never know for sure.
- arg01 13y ago
  But of course no one advocates capitalism as an actual philosophical goal, they advocate that it's the best way to distribute our limited resources to get the most out of them. So if you accept the existence of natural monopolies it's hard to defend that the inefficiencies of regulating a monopoly to better capture externalities aren't less than the inefficiencies of personal profit maximizing behavior by the private entity with the monopoly.
logfromblammo 13y ago
Natural monopolies do exist, it's just that not all businesses claimed to be natural monopolies actually are. If you can, imagine a watershed. The river, along with its tributaries, covers the most efficient downhill route from every point in the watershed to sea level. The natural monopoly on precipitation drainage is everywhere you see flowing water. Installing a second river does not work. Wherever you try to put it, the natural tendency is for the second river to drop right down into the original watershed. You end up with just one river again. If you turn that idea into a graph, replace the ocean with the Internet, the power plant, the potable water and sewage treatment facilities, the highway system, or some other common resource, and replace raindrop targets with homes and businesses. There is only one optimal routing for roads, pipes, wires, and fibers. The surface path following that route is the natural monopoly. You can cram an awful lot of stuff on top of it if you wanted. Once poles are up and tunnels in place, the hard part is over. If a second cable company runs a second cable, that's not a waste. The customer can now buy either of two cable service packages, or both. If there's already a hamster tube up on the poles connecting the house to the municipal rat supply, and someone wants to run another for squirrels, that's not a waste. People might not want their rats and their squirrels from the same tube. So when people say cable and phone service are natural monopolies, they are wrong. It's the space those wires run through.
- praxeologist 13y ago
  The analogy with a river doesn't work at all. Rivers don't act or engage in exchange. I see what you are saying on the most optimal path for water to flow, but that is then equivocating on "monopoly".
  - logfromblammo 13y ago
    Monopoly is a single seller of a good or service. There is an economic definition that must be met for a "natural monopoly" to exist, which depends on the marginal cost of producing additional units and the fixed cost of maintaining the capital. Basically, just as you don't typically see two different rivers draining the same watershed, you don't see multiple firms serving the same natural monopoly market. That doesn't mean that it never happens; it just means that any challenger to the incumbent either displaces them entirely, acquiring their capital in the process, or goes out of business and yields its capital to the incumbent. The lowest energy state of the natural monopoly is a single firm. Excited states can also exist, and are necessary for transitions to occur, but these states are less economically efficient. Customers see higher prices, and firms see lower profits. But given that a monopoly is in itself inefficient, it can still be worthwhile for a challenger to attempt to displace the incumbent, especially if they can operate at lower costs. In a truly free market, the switch could be accomplished by an initial investment of sufficient size. In the context of the analogy, huge machines dredge a new channel for the river. For a time, water flows in both channels, but in the end, one dries up and you are left with one river again.

dragonwriter 13y ago

> Nonsense. Leftists conflate "state capitalism", cronyism or corporatism with real, free-market capitalism. Leftists -- specifically, socialists -- created the name "capitalism" as a name for a real system which existed in the developed world in the 19th Century, in which the economic order was actively managed to favor the interest of the capital-holding class. The idea that this was system had something to do with "free markets" was part of the propaganda of defenders of that real, very much crony, system in response to that critique. Its kind of weird to call the real thing which actually existed that "capitalism" was coined to refer to as anything other than real capitalism, while referring to amorphous, ill-defined, fantasy as "real capitalism". "State capitalism" is a different thing entirely -- it usually shows up in critiques by leftists, particularly non-Leninist socialists, of Leninist(incl. Stalinist/Maoist)-style "Communism".

doyoulikeworms 13y ago
ITT: pedantry

lkbm 13y ago

Given that network effects and economies of scale are real things, on what grounds to you claim that natural monopolies don't exist?

coldtea 13y ago

The actual nonsense is the existance of the mythical " real, free-market capitalism", that nobody has ever seen in practice. The "free market" that does exist is based on subsidies, bailouts, state protection, monopolies, a huge army, bullying, and resource grabbing (and past 300+ years of colonialism). Heck, the "free market" is even more mythical than the laughable "really existing socialism".

jbooth 13y ago
Not to mention, taking an econ 101 supply and demand graph based on a quote 'widget factory' (actual textbook quote) and applying those ideas about marginal cost to utility economics where you build the grid once and then charge on subscription. Unironically. Earnestly, even.
kbolino 13y ago
The free market does not exist because the government stands in its way. To then go on to chide free market advocates for actions they do not support is disingenuous at best. Businessmen are not interested in ideology, if they can use the government as a cudgel against their opponents, or a crutch to sustain them in hard times, they will. Every time the government's power over the economy has been expanded, advocates of the free market have pointed this fact out and been ignored. You can't break my spine and then blame me for being paralyzed.
- cdash 13y ago
  No one broke your spine, it never existed and never will. It is imaginary.
  - kbolino 13y ago
    Pretty sure my spine is real. Perhaps you meant to unpack that analogy first? The "free market" is simply what exists absent interference. It ceases to exist when a single player or group of players asserts force over the others. The purpose of government is to reduce the effectiveness of violence as a strategy.
- coldtea 13y ago
  >The free market does not exist because the government stands in its way So people should quit talking about it as it existed. Not to mention that the same could (and WAS) said for communism ("it didn't exist because party bureucrats got in the way"). >You can't break my spine and then blame me for being paralyzed. No, but I can point out that the unicorn pony you frequently talk about doesn't exist and never did in human history.

Aloisius 13y ago

> not "natural monopolies" (which have never existed). Tell that to Standard Oil or The American Tobacco Company.

thatswrong0 13y ago
Do 10 minutes of research on Standard Oil. Not a great example.
- Aloisius 13y ago
  I suggest spending more than 10 minutes of research on it. Standard Oil is quite literally the textbook example of a natural monopoly.

talmand 13y ago

Based on my own non-expert personal musings on the subject, I would say that natural monopolies can and do exist in capitalism. It's just that under normal circumstances they would be difficult to sustain over a certain period of time based on several factors. Without some mechanic (often political) in place to prevent a new form of competition or technological progression from developing in the market, then a natural monopoly would likely be reduced by natural market forces. If you look throughout just American history you can various examples of this. Big, strong companies that eventually fade away to disappear because of failure, lack of vision, or whatever other decisions that held the company back. It's just that there is very few examples of a true free market, except for maybe on a local level, so that we'll likely never know for sure.

arg01 13y ago
But of course no one advocates capitalism as an actual philosophical goal, they advocate that it's the best way to distribute our limited resources to get the most out of them. So if you accept the existence of natural monopolies it's hard to defend that the inefficiencies of regulating a monopoly to better capture externalities aren't less than the inefficiencies of personal profit maximizing behavior by the private entity with the monopoly.

logfromblammo 13y ago

Natural monopolies do exist, it's just that not all businesses claimed to be natural monopolies actually are. If you can, imagine a watershed. The river, along with its tributaries, covers the most efficient downhill route from every point in the watershed to sea level. The natural monopoly on precipitation drainage is everywhere you see flowing water. Installing a second river does not work. Wherever you try to put it, the natural tendency is for the second river to drop right down into the original watershed. You end up with just one river again. If you turn that idea into a graph, replace the ocean with the Internet, the power plant, the potable water and sewage treatment facilities, the highway system, or some other common resource, and replace raindrop targets with homes and businesses. There is only one optimal routing for roads, pipes, wires, and fibers. The surface path following that route is the natural monopoly. You can cram an awful lot of stuff on top of it if you wanted. Once poles are up and tunnels in place, the hard part is over. If a second cable company runs a second cable, that's not a waste. The customer can now buy either of two cable service packages, or both. If there's already a hamster tube up on the poles connecting the house to the municipal rat supply, and someone wants to run another for squirrels, that's not a waste. People might not want their rats and their squirrels from the same tube. So when people say cable and phone service are natural monopolies, they are wrong. It's the space those wires run through.

praxeologist 13y ago
The analogy with a river doesn't work at all. Rivers don't act or engage in exchange. I see what you are saying on the most optimal path for water to flow, but that is then equivocating on "monopoly".
- logfromblammo 13y ago
  Monopoly is a single seller of a good or service. There is an economic definition that must be met for a "natural monopoly" to exist, which depends on the marginal cost of producing additional units and the fixed cost of maintaining the capital. Basically, just as you don't typically see two different rivers draining the same watershed, you don't see multiple firms serving the same natural monopoly market. That doesn't mean that it never happens; it just means that any challenger to the incumbent either displaces them entirely, acquiring their capital in the process, or goes out of business and yields its capital to the incumbent. The lowest energy state of the natural monopoly is a single firm. Excited states can also exist, and are necessary for transitions to occur, but these states are less economically efficient. Customers see higher prices, and firms see lower profits. But given that a monopoly is in itself inefficient, it can still be worthwhile for a challenger to attempt to displace the incumbent, especially if they can operate at lower costs. In a truly free market, the switch could be accomplished by an initial investment of sufficient size. In the context of the analogy, huge machines dredge a new channel for the river. For a time, water flows in both channels, but in the end, one dries up and you are left with one river again.