I'm a newcomer to this school of thought (and pretty new to economics in general). I'm currently reading Israel Kizner's essay collection "The Driving Force of the Market" and I'm stuck on a point that he brings up in the first essay (called Entrepreneurial) about competition and, in particular, about anti-trust laws.
The claim is that antitrust laws block entrepreneurial entry into the market and thus anti-competitive in nature.
But, surely, in theory and in practice, monopolies through mergers are more likely to restrict the competition necesary for a free market to function.
I understand the essence of the claim, which is that government inteference in the free market tends to reduce the freedom of a market, but I've always considered loose antitrust laws to be the exception to that rule.
Kirzner then brings up advertising as an example of an imperfectly competitive industry which "are precisely the kinds of entrepreneurial initiative which make up the dynamic competitive process."
So, my question is, in the Austrian view, are antitrust laws not supported? And could somebody offer me a clearer explanation of why what is? It may just be my lack of economics background, but I just don't understand his point in the way he's explaining it.
Thank you!
Antitrust laws are backed by force, ergo a big gun. Monopolies can be taken down by any "David" with a better idea.
Kirzner is saying that advertising is tool our proverbial "David" uses to compete; itis a product of entrepreneurial initiative or human action.
It is only inevitable, though, when the politicians are allowed to control the fates of companies. When the government is kept out of the business world, at least mostly, then there is no benefit for big business to collude with them. But when the government can control who wins and who loses in the marketplace, then they get involved. A major way of doing this is anti-trust. Walter Block often makes the point that it is impossible to not be violating anti-trust laws, because if you are setting prices higher than your competition, then it is profiteering and exercising monopoly power; if you set prices lower, then it is predatory pricing and dumping; if you set prices the same as your competitors, then it is collusion and cartelization. Since it is impossible to not violate anti-trust, or at least impossible to not be "investigated" for anti-trust violations and brought to court, the decision of who to use these laws on is absolutely arbitrary. Remember now who controls the government - the lobbyists and big corporate interests. What do you think those anti-trust laws will be used on? Anti-trust laws were created by politically-connected companies to destroy their rivals and have been used for that purpose since.
I seriously doubt you could provide a specific reference to Rothbard (your first link) saying 'the state will always exist' or that the only protections we could have from a private army is government theft and coercion to 'save' us from private theft and coercion. And Kinsella is anti-IP which you gave no suggestion that you are with your 'why would they develop new software if they couldn't have guaranteed rent-seeking', to paraphrase a bit.
And Kinsella is anti-IP which you gave no suggestion that you are with your 'why would they develop new software if they couldn't have guaranteed rent-seeking', to paraphrase a bit.
I meant look in the counter points in the discussion of those theories. A lot of good points are made in support of IP and the state.
I contend that a private army is just another name for a government. They both weild the same power and one can combat it with another private army, gov't, whatever you want to call it. It's all just semantics dressing up the same thing: The power of coercion.
I'd love to discuss IP and why it creates more value than no IP, but think it should be on a new thread.
Mashuri:I contend that a private army is just another name for a government. They both weild the same power and one can combat it with another private army, gov't, whatever you want to call it. It's all just semantics dressing up the same thing: The power of coercion.
If coercion is the problem wouldn't it make more sense to combat that instead of using 'good' coercion to fight 'bad' coercion?
Mashuri:I'd love to discuss IP and why it creates more value than no IP, but think it should be on a new thread.
Bump an old thread, please.
Mashuri: I understand that, under ideal conditions, state and private power would stay separated. Unfortunately, human beings are the subjects here and our innate behavior undermines those ideals. Because the state will always have political power, the private sector will want a piece of it and, conversely, the public sector will always want a piece of economic power as well. Collusion is inevitable. Do you think Dell and Sun carried more political clout than Microsoft? Hell, no. Anti-trust is abused but it is also used to break up some of this collusion. It helps pit powerful entities against each other.
I understand that, under ideal conditions, state and private power would stay separated. Unfortunately, human beings are the subjects here and our innate behavior undermines those ideals. Because the state will always have political power, the private sector will want a piece of it and, conversely, the public sector will always want a piece of economic power as well. Collusion is inevitable. Do you think Dell and Sun carried more political clout than Microsoft? Hell, no. Anti-trust is abused but it is also used to break up some of this collusion. It helps pit powerful entities against each other.
You might remember that it was Netscape that initially was bringing major issues to Microsoft, over their alleged monopolization efforts in browsers via Internet Explorer. And, yes, Netscape had much more well-established DC ties than Microsoft. Microsoft had its offices in the state of Washington and dared to do business in America without a large base of lobbyists to back them up (perish the thought!). And what is the case afterwards? All the major players in the high tech industry have huge presence in DC. You complain of the collusion between corporations and government, but your solutions all lead to more collusion, not less.
The "pitting powerful entities against each other" theory of government has been shown to be demonstratably false. That was the great "advantage" of the branches of government, separation of powers, and all that. What has happened? The country which has implemented that most fully, the United States, has ended up with the largest and most powerful government the world has ever seen, and the cooperation in government regarding key issues is almost universal. If regulation was supposed to "pit powerful companies against each other" then that has been shown to be a failure as well. The more regulated an industry, the more the competition almost entirely fades away, and the more cartelization exists. The same old story that has always been the case remains - the powerful, the political class, collude to oppress and milk the productive class.
Mashuri: Getting rid of the state does not get rid of coercive power at the barrel of a gun.
Getting rid of the state does not get rid of coercive power at the barrel of a gun.
No, of course not. But getting rid of the state does get rid of institutional coercive power, and more importantly, legitimized coercive power. And not having a compulsory monopoly on force around would leave society free to develop much better means of dealing with whatever coercive power is left, through market processes.
I'd be less worried about roads and more so about who the next warlord would be that decides to make the rules for us.
There's no reason to assume that any warlord is going to be making the rules for anyone, when everyone is free to make whatever defensive organizations they feel are necessary to defend themselves from the few criminally parasitic members of the human race.
I second the suggestion that you search for threads pertaining to this subject. It will be easier for both you and us if you take that shortcut. But in addition, I'll offer you an essay written on this subject which sums it all up in one neat package.
http://mises.org/story/1855
Pro Christo et Libertate integre!
I second the suggestion that you search for threads pertaining to this subject. It will be easier for both you and us if you take that shortcut. But in addition, I'll offer you an essay written on this subject which sums it all up in one neat package. http://mises.org/story/1855
Thanks for the link. I read that entire article and I'm most of the way through, "The Ethics of Liberty" as well. The more I read here, the more I'm noticing a fundemental flaw in the assumptions underpinning mainstream Libertarian beliefs (and most other socioeconomic theory, BTW): A gross over-estimation of how much mankind's malleable rational brain influences his behavior compared to his hard-wired emotional and physical (aka, survival) brain. I'm not surprised, as our understanding of what exactly makes us tick has been improving at a quick pace. As this knowledge is acquired, so too should economic theory accordingly adjust. Since this really deviates from the OP's question I'll save it for another thread. In the meantime, I'll finish "Ethics" and continue to read more on Mises, as I believe Libertarianism is still closest to the ideal system.