Actually it is an invisible finger. Corporations carve up areas and do all the price fixing they can. Competition is good for the consumer. That is what helps create new products and improvements in old ones. That is also what creates price competition. Why would a corporation want that? Therefore there is no free market. Companies don’t want it.
I think we must agree to disagree on the gravity and probable longevity of this near monopoly (along with the broader implications for the supposed freeness of the so-called free market or the integrity of the democratic system supports it). And I pretty much agree with what gonzomax. Moreover corporate power would clearly be even more unbridled if it weren’t for government vigilance–something the free market ideology acknowledges only in a negative way.
…but since companies don’t have guns, what they want doesn’t matter. People have the freedom to choose, so except in a very small number of cases, there are competitive markets and choice.
Where you won’t find choice is where the government gets involved, because the government DOES have guns. Thus the major monopolies have always had the backing of government. Railroads, phone companies, cable TV companies, power companies, etc.
Goldman Sachs, Halliburton, Bank of America, Military contractors, Blackwater, Enron and a few others you forgot.
None of those companies are monopolists.
Did you just spit out a random list of companies you hate or something?
But Sam it’s naive to think that simply because corporations don’t have armed forces (plenty do have guns in one way or another but that’s not a relevant point for me) that they don’t a) influence government actors in often manipulative ways and (more to my original point) b) manipulate consumers through their market power.
For example, I may in theory have the “choice” not to use Microsoft software but in practice I do not. I need it for all kinds of work-related things and even the purchase of an Apple computer or the learning of Linux (which in my case would take untold hours of learning a new operating system) would not entirely preclude my not being able to avoid the use of their products. So every time a buy a new computer (which is pretty darn often given the short lifespan of a laptop) I end up with some kind of Microsoft dealing evening though my “choice” would be otherwise.
And then there’s the whole issue of bailouts. The free market (or, more accurately in this case the deregulated financial industry) creates a giant mess and the taxpayer is asked to pick up the tab. Now you may actually oppose those bailouts and you may prefer that AIG and other “too big to fail” corporations were simply allowed to go the way of Lehman. But in either case the financial crisis is damning for your position.
Because either the free market is bull because it relies on government bailouts or the free market is unstable because it creates the conditions for world-scale depression.
Anyway you look at it markets are actually not free in any meaningful sense of the word: they’re not free of the need for taxpayer support, they don’t free us of the influence and manipulation of the most powerful corporations, and excessive inequalities of power corrupt democracy–and that’s not even putting guns into the equation.
They certainly do influence government actors. But I hope you realize that this is just as much an indictment of government as it is of business. The real answer is to separate the two. Adding more government regulation just creates new ways in which companies manipulate those regulations to their own benefit. The real threat to choice comes from government action, not private action.
As for market power, of course companies develop market power. But that market power is like a reserve - the minute you start using it in uncompetitive ways, you start losing it. Example below:
I would dispute that, because many people use non-Microsoft OSs and business applications, including Apple and Linux. But even more to the point, did you notice that even though Microsoft has all this market power, it has produced Windows 7, which is the best OS it has ever made, and is selling it cheaper than any OS it has ever sold? If you truly don’t have a choice, then why doesn’t Microsoft just say, “hey, that new version of windows will cost you $1000, and we’re not going to support the old one any more. You have to upgrade.”?
They don’t do this because the only reason they hold that market share is because they don’t act like they hold it - they still have to act competitively or they’ll lose it. That’s the difference between a true monopoly and a company that just gains market share because of its competitive ability.
They did behave that way with the browser. It wasn’t long ago that people were wringing their hands about Microsoft controlling almost all the web browser market. But Microsoft stopped acting competitively because the browser was a free part of the OS and they thought they had all kinds of market power that would allow them to scale back investment in improving the browser. The result is that they’ve lost 40% of their desktop browser market share, and even more if you consider the number of people who are now accessing the web through mobile devices. And everyone expects them to lose even more. How is that possible if no one had choices?
Not really. First of all, you cannot exclude government from this. It was government that offered special tax incentives for home ownership. It was government that held interest rates incredibly low. It was government, through Fannie Mae and Freddie Mac, that first started securitizing mortgages and helped to create all this toxic debt. It was government that helped create an atmosphere of very low savings rates by providing such a big safety net that people became risk-takers. It is government that secures bank loans through FDIC, making bankers less risk-averse.
But certainly business had its excesses as well. I’m not claiming that the market is perfect - just that it’s better than central government control.
And let’s not forget the mistakes the government is currently making, which have yet to hit the fan. Governments around the world are running on borrowed money. The U.S. debt is set to double in eight years. Medicare is insolvent. Social Security is unsustainable. And yet, government is borrowing even more money for new projects, rather than fixing the messes they’ve already created. Why aren’t they being held accountable?
I was in favor of adding liquidity to the banking system, because it had to be done. I was not in favor of the later bailouts of GM and Chrysler. They should have been allowed to fail. Saving them created a moral hazard.
The best you can say is that the marriage of business and government creates these conditions.
Markets do fine without taxpayer support. They’ve done fine in the past, and they do fine in many countries. In fact, there is still a huge free market in the United States - it provided the computer you’re reading this on, the desk you’re sitting at, the clothes you are wearing, the food you ate this morning, and just about every other material good you own. It did so efficiently, cheaply, and fairly. This notion that the highly regulated and high-flying financial derivatives industry somehow disproves the concept of free markets is just ridiculous.
This sentiment is frequently repeated for some reason. It is quite inconsistent with the past decade or three of research in economics and political science.
On a somewhat more obvious level, not only adding but also removing regulation allows for the exact same kinds of rent-seeking behavior.
Sam only a very stubborn person would use Microsoft as an example of how well the free market works! There mere fact that one can use market power in uncompetitive ways shows that the market is less free than you insist; and Microsoft has been behaving manipulatively for decades, not for a minute.
But then you’d be disputing a statement of fact about my life about which I know a great deal and you very little.
I never said that Microsoft was an absolute monopoly; they obviously have a great deal of incentive not to alienate consumers like me and I myself named alternatives! Bottom line though: there are four computer users in my house hold one of whom is pretty savvy and 3 out of the 4 ended up needing to use the dreadful Vista for a time because the alternatives would have been too expensive in terms of time and money.
To clarify something that may be less obvious to you: I’m not arguing against markets, I’m arguing against the myth of the free market.
Which is not and has never been under discussion! Don’t you think I know what a true monopoly is?
Please describe a specific period and place when markets have “done fine” without taxpayer support.
On and what maeglin said.
Apparently so.
In your mind, is the market better off with 50 different companies making 50 different operating systems or just a few standardized ones? Why do you think 90% of the world drinks Coke or Pepsi.
Left to their own devices, economies of scale and network externalities will induce many industries to consolidate as they mature. The Microsoft / Apple oligopoly works well because it provides standardized platforms that everyone else uses. For the most part it doesn’t matter which of the hundreds of PC brands or component manufacturers or software companies you buy from because they all are designed to work on the same Microsoft operating system.
Pretty much every company that does not require government subsidies.
Oh, okay, so your premise is that oligopolies can work well. And maybe for many people and many purposes they do. But that’s a different point that arguing for market freedom.
Note: I’m not up to snuff enough to talk about how things might be different (better) were there more alternatives in the OS sphere. I’ve read and heard many such discussions but it’s not my line and would be beyond the hijack we’ve already got going here.
Really? Can pretty much every company can do without taxpayer funded police, highways, fire departments, emergency services, defense of the realm, the federal reserve, student loan programs, etc. etc. etc. etc.
I think you see my point. Sam likes to pretend that you could have a market without government and then, while analyzing the world that we have, to blame every ill on government while suggesting that the answer to everything is less/no government. But that’s to argue based on the putative reality of something that can’t exist and never has.
It looks like you’re confusing the accumulation of market power (influence) with an “unfree” market. And it’s especially easy to fall into this fallacy if you don’t happen to like the company that holds the market power (e.g. Microsoft, Exxon, etc.)
“Free” in “free market” does not mean equally distributed choices. The “free” means freedom from interference of the government. It does not mean freedom from influence of large corporations or freedom from the influence of famous people or freedom from the influence of society expectations.
Let’s consider the ultimate “free marketplace”: the marketplace of IDEAS. Human language would be an example of this. By far, the dominant human language is English (including non-native speakers). Since there is no corporation that invented English or marketed it or sold it, who do you blame that English is the dominant language for global business, computer programming, and airplane traffic control? When a Japanese pilot communicates with a Russian air traffic controller, they both speak English! Since you can’t conduct business without English, does that mean the “marketplace of languages” is “not free”? Of course not… you are free to speak Swedish or Togo or to invent any language you wish such as Klingonese. The fact that your language won’t be as “useful” is English is irrelevant to freedom.
Another “idea” in the marketplace-of-ideas would be marriage. There’s nothing in the fundamental laws of biology that says a man and woman must make vows to live together or have children. The DNA in your cells will have no idea whether you’re married or not. Marriage is completely a human invention. So think of the “marketplace” as having several competing ideas: children within marriage vs wedlock. And monogomy vs polygamy. Right now, the “marriage” idea is dominant within the marketplace of love relationships. If a person doesn’t happen to agree with “marriage”, it doesn’t mean the marketplace is not free.
Mathematics is another example where ideas compete. We base our number system on base10. It could have been base2, base3, or base 12. Base10 won out in the marketplace of ideas.
Virtually every culture’s customs and traditions is a collection of “winners” from the marketplace of ideas.
Just because you don’t happen to like the outcome of how society clusters around an idea (e.g. English language, marriage, or Microsoft Windows) doesn’t mean it’s not free.
Nothing would work well if everyone was an idiot. Idiots don’t do a very good job running things, because they’re idiots.
I mean, if we cut through the arguments over corproations (is it possible to have a thread longer than 30 posts without someone whining about Microsoft?) and whatnot and cut right to the chase of the OP, no economic system would work well if it were run by idiots. Wide open capitalism, feudalism, communism, European-style capitalism, kleptocracy, fascism, it ameks no difference; they’ll all run worse than they otherwise would if run by fools. You’ll also find basketball teams, restaurants, hobby stores, PTAs and water purification plants will run much worse if handed over to idiots. Honestly, if this is the best attack against the free market than can be mustered, it’s pretty sad.
Well I can’t speak for Sam but I don’t think anyone is arguing for Anarchy. I think most people agree markets work best when they are backed by a framework of reliable infrastructure and security. Those things tend to be provided by governments.
For the moment, msmith537, we are as one 
Yea - I noticed the ‘perfect information’ and ‘no barrier to entry’ assumptions slipped in back there. Along with the ‘no dominant producer/no collusion to distort the market’ make-believe you are highlighting. All are utter fantasy and worthless as base assumptions on which to espouse the wonders of the market.
As Adam Smith said , to paraphrase.
Any time 2 industrialists meet there will be a conspiracy to defraud the consumer.
He wasn’t big on unregulated free markets.
Ruminator, you wrote,
I beg to differ. Monopolies have long been defined as threats to the free operation of competition in (so-called) free markets.
If you’re point is that freedom has many meanings, I agree with you. But my point is that none of those mythic meanings are delivered on.
In the present example their are two different propositions at stake. #1: Markets aren’t free of government–nor should they/can they be. And #2: insofar as they aren’t free of the manipulation of excessively powerful corporate actors, they should and could be more free–but generally speaking that requires government intervention.
Okay, so you’re saying yes to question 1. That leaves questions 2 and 3.