There's nothig 'relative' about it. A firm either operates as a free-enterprise firm or it is a monopoly. That is basic economic analysis. 'Private' monopoly is a perfect example of oxymoron.
Okay, then divide a monopoly up into two types, one being "private", the other public, then perform comparative analysis of the two. You seem unable to divorce normative from economic analysis.
-Jon
Freedom of markets is positively correlated with the degree of evolution in any society...
Jon: Okay, then divide a monopoly up into two types, one being "private", the other public, then perform comparative analysis of the two.
February 17 - 1600 - Giordano Bruno is burnt alive by the catholic church. Aquinas : "much more reason is there for heretics, as soon as they are convicted of heresy, to be not only excommunicated but even put to death."
You're tedious in the extreme. No, my categories are not wrong. It's not all black and white. Monopolies vary from one another, just as democracy varies from monarchy, just as communism differs from fascism, and various forms of socialism from either of the prior, each requiring different forms of analysis. There's no liberty involved. It is wertfrei analysis, so I am not sure why you're trying to argue that Stranger is "advocating" anything.
Because wertfrei analysis poses the danger of functioning as a legitimizing tool due to its utilitarian and subjective nature. It certainly can be useful, but by itself it is not enough to make a case for or against anything, hence the need to delve into theories of ethics and justice.
Jon: You're tedious in the extreme. No, my categories are not wrong.
Brainpolice: Except libertarianism and laissez-faire is opposed to privilege and in favor of rights. Legal privileges to "capitalists" are anathema to a free market.
Except libertarianism and laissez-faire is opposed to privilege and in favor of rights. Legal privileges to "capitalists" are anathema to a free market.
That is off-topic.
In the "private" monopolies created and sustained by the state that we're talking about, the risk is externalized.
No it is not. The owner of the monopoly must still risk his capital to produce a good for which the future sale price may not turn a profit.
The fallacies of intellectual communism, a compilation - On the nature of power
Juan:Wrong. Employees are subject to different risks, just as the capitalists are. Not to mention the fact that 'employees' can own stocks and so be capitalists. What makes free-enterprise so productive is division of labor and private property. But it seems that private property or liberty are not revelant in 'economic analysis' ?
How does private property or liberty explain why capitalist enterprise (risk-free labor) are widespread while cooperative enterprises (owner-employees) are rare or simply inexistant?
You need economic analysis to explain that.
Brainpolice: So in other words, you're essentially openly admitting that there is such thing as "state-capitalism" and you appear to view it as a "lesser evil".
So in other words, you're essentially openly admitting that there is such thing as "state-capitalism" and you appear to view it as a "lesser evil".
State capitalism means nothing unless you qualify the ownership of the state.
Stranger: How does private property or liberty explain why capitalist enterprise (risk-free labor) are widespread while cooperative enterprises (owner-employees) are rare or simply inexistant?
Stranger: The owner of the monopoly must still risk his capital to produce a good for which the future sale price may not turn a profit.
Juan, you've just asserted it. You've not really proven it. I'm not even calling you names - your argumentative style is indeed tedious. If you aren't happy with calling it private, call it whatever you will - mercantilistic, fascist &c. There is still a difference between various forms of monopoly.
BP, I respect that, but it should not hinder economic analysis. The economist should, rather, make it clear what their moral propositions are.
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Jon: Juan, you've just asserted it. You've not really proven it. I'm not even calling you names - your argumentative style is indeed tedious.
If you aren't happy with calling it private, call it whatever you will - mercantilistic, fascist &c. There is still a difference between various forms of monopoly.
Are you denying that corporatist/neo-mercantalist policies externalize the costs of certain buisinesses? If so, what planet are you living on? The monopolist is protected and bailed out by the state - and the costs are externalized onto the taxpayers and consumers. The capital they are risking is, at least in part, that which rightfully belongs to other people. Besides, the main risk that could cause them to not turn a profit has been eliminated - competition. The monopolist has a captive consumer base who have no choice but to patronize them if they want that type of product. They are effectively legally gauranteed future profits by the elimination of their competition. This is also how IP laws work.
How is a system in which the state forces the people at large to foot the bill for big buisiness "capitalistic" in any libertarian sense of the term?
What do I need to prove ? That a monopoly is a clear attack on property rights ? Do you want me to prove that 'humans act' as well ? x=x ? The only tedious thing here is Stranger's constant refusal to use basic terminology in a consistent way.
You act as though the lack of gradations within the spectrum of monopoly is on equal footing with x = x. Economic analysis is more complex than "private property or not" for in either case a variety of arrangements are possible.
You seem to still be in denial ? The production of A, B, C, etc. can either be done by firms in a free market (free enterprise) or can be done by monopolist producers. You can call these monopolists whatever you want : monarchists, fascists, commies, social-democrats, whatever. From a praxeological point of view they are merely people shielded from competition by political force and the results of this arragement are always the same.
Not really. The way the incentives are structured, whether the owner or nameless bureaucrats get to reap the rewards &c. will all influence the operation of the monopoly. So from a praxeological POV, the result is not the same. It's inefficient relative to a free market, to be sure, but relative to one another these forms of economic organization are not the same. And no economist I know of assumes they are.
You act as though the lack of gradations within the spectrum of monopoly is on equal footing with x = x.
but relative to one another these forms of economic organization are not the same.
I'm still waiting for you to acknowledge that a producer can either operate in a free market or not. Or perhaps logic has been repealed ? Btw, are you using the jargon of physics ? What is it that you are measuring in order to build such a 'spectrum' ?
Or perhaps you're arguing against a strawman. I know you're fixated on semantics, but the "jargon of physics" was no more than mere metaphor.
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That may be an unproven assertion ? Again, you are just creating categories out of thin air. Your categories highlight irrelevant details while missing the fundamental point.
In the same manner that individuals act so as to attain ends with given means is an "unproven assertion"? I fail to see how whether one gets to keep their proceeds or not is an "irrelevant detail". No, rather you're insisting on seeing things solely in black and white. Whether the monopolist functions as private owner of the monopoly they control, or whether they are little more than a temporary caretaker will certainly alter their incentive structure. Dismiss this as "irrelevant", but it really isn't.
Jon: I fail to see how whether one gets to keep their proceeds or not is an "irrelevant detail".
Whether the monopolist functions as private owner of the monopoly they control, or whether they are little more than a temporary caretaker will certainly alter their incentive structure.
I fail to see the difference between a 'private' monopolist and a soviet-style firm manager. Both are controlling resources because of political pull, not because they are the best minds at serving consumers.
Right. But they will manage them differently, according to how much they're allowed to keep or not, and to pass on, and so on.
That's rather vague. I'd bet some money that the communist oligarchies who controlled places like Russia engaged in some sort of long-term planning, in order to keep their power. So there were 'incentives' for soviet managers to do at least some things right. And there are a lot of incentives for private monopolists to do things wrong. You are comparing two systems that are basically the same, but focusing on 'nominal' differences.
Soviet managers usually got away with various activities by doing things like fudging figures and the like. They were not entitled to the profits their activities generated, unlike a private owner who is. This is a major difference and is not merely nominal. A lot can go wrong in either case. As a matter of efficiency the case where the monopolist is a private owner will result in less inefficiencies. Both situations distort economic calculation, though the lack of ownership only worsens matters.
Juan: From a praxeological point of view they are merely people shielded from competition by political force and the results of this arrangement are always the same.
That is, for someone informed in economics, completely incorrect.
Brainpolice:Are you denying that corporatist/neo-mercantalist policies externalize the costs of certain buisinesses?
The subject is monopoly and not whatever pet issue you are in a crusade against.
Brainpolice:They are effectively legally gauranteed future profits by the elimination of their competition.
This is a complete confusion of profit. A monopolist has no guarantee of making a profit on his enterprise. He may be such an inefficient producer that the costs of production he undertakes exceed the final revenue from the goods he sells.
Brainpolice: How is a system in which the state forces the people at large to foot the bill for big buisiness "capitalistic" in any libertarian sense of the term?
Why do you keep asking this question as if it is relevant to this discussion?
This isn't a "pet issue" and it relates to the subject of monopoly. And the thread's original question has to do with whether or not the transfer from state monopolies to "private" monopolies is truly "capitalism". You seem to think so - by the very least, me and Juan don't. So my criticisms are totally relevant.
What don't you understand about "legally restricted competition"? Yes, that's effectively a gaurantee that the profits will go to you if they go to anyone because there are no other people for them to go to in the given area. Logic 101. This is especially true with respect to the patent monopoly, which is nothing but a legal gaurantee of future profits.
Because you're functioning as a vulgar libertarian, I.E. a defender of monopoly and current economic conditions through the misuse or abuse of free market theory. It is totally relevant to this discussion. You keep insisting on having this conversation in a vacuum, as if we're not allowed to question the assumed premises or get into the justice of the matter.
Jon: As a matter of efficiency the case where the monopolist is a private owner will result in less inefficiencies.
Stranger: BrainPolice: They are effectively legally gauranteed future profits by the elimination of their competition. This is a complete confusion of profit.
BrainPolice: They are effectively legally gauranteed future profits by the elimination of their competition.
Brainpolice:What don't you understand about "legally restricted competition"? Yes, that's effectively a gaurantee that the profits will go to you if they go to anyone because there are no other people for them to go to in the given area. Logic 101. This is especially true with respect to the patent monopoly, which is nothing but a legal gaurantee of future profits.
Even once your competitors have been excluded, you have not made a penny unless you can produce a product, and producing this product is going to cost you resources, which means that you will have to take a risk, which means it is possible that you are not going to make a profit. It is basic economics of production 101.
Brainpolice:Because you're functioning as a vulgar libertarian, I.E. a defender of monopoly and current economic conditions through the misuse or abuse of free market theory. It is totally relevant to this discussion. You keep insisting on having this conversation in a vacuum, as if we're not allowed to question the assumed premises or get into the justice of the matter.
Suppose I am a bloodthirsty monopolist and also vulgar. What difference would it make as to the economic nature of monopoly?
Juan:That is not true. The private monopolist can charge as much as he wants and the fact that he keeps what you term 'profits' is a powerful incentive to do so. If a 'private' monopolist can provide the worst possible service at the highest price, that's what he'll do.
I think you need some more education before you get the right to be offended by economic discussion.
That is not true. The private monopolist can charge as much as he wants and the fact that he keeps what you term 'profits' is a powerful incentive to do so. If a 'private' monopolist can provide the worst possible service at the highest price, that's what he'll do. That is the reason why the state, after granting a monopoly, regulates the prices of the services the monopolist provides. The first intervention causes problems wich need to be 'fixed' with more intervention.
So can the public monopoly. In fact, defence is a brilliant example of a public monopoly that charges a maximum price for the lowest possible quality of service. However, a private monopolist still has ownership over the full capitalized value of their venture as well as full title to it so that in the event of their death they may pass it on. Which has greater incentive not to run the firm into the ground?
Stranger: I think you need some more education before you get the right to be offended by economic discussion.
Jon: Juan: If a 'private' monopolist can provide the worst possible service at the highest price, that's what he'll do. So can the public monopoly.
Juan: If a 'private' monopolist can provide the worst possible service at the highest price, that's what he'll do.
However, a private monopolist still has ownership over the full capitalized value of their venture as well as full title to it so that in the event of their death they may pass it on. Which has greater incentive not to run the firm into the ground ?
Yeah, both at the base face the same problems, though in the case where the firm is fully owned there is an incentive to not let it fall to ruin and only aim to pocket current receipts. Both will stagnate, charge high prices &c., only the public monopoly will be the worse of the two, as it has little to no incentives to cut costs, introduce innovations &c., whereas if it increases profits the private owner does.
Juan: The only force that causes firms to be efficient or else die is called competition.
You really need to learn the law of returns because that is not true. Even Crusoe and Friday, despite having no third-party competition, have an incentive to be efficient and to achieve the optimal marginal returns.
Stranger: Even Crusoe and Friday, despite having no third-party competition, have an incentive to be efficient and to achieve the optimal marginal returns.
Jon: Yeah, both at the base face the same problems, though in the case where the firm is fully owned there is an incentive to not let it fall to ruin
Why do you think that's necesarily true ? I can easily provide a counter example : the owner of the monopoly has quarreled with his family - he'd like to see his heirs flipping hamburguers at MacDonalds.
Yes there is no deterministic necessity in human action, hence I spoke of incentives, not iron laws. That does not invalidate the general point. Given that it's if ceteris are paribus that it's true, it's a bit odd to assume ceteris are imparibus (e.g. rich vs poor country.)
Juan: It is true that any individual has incentives to use his or her resources efficiently (it is also true that individuals can waste their resources if they feel like). However, from the fact that economic actors try to maximize their well-being, it does not follow that private monopolies are more efficient than public ones. Mises : " The law of returns asserts that for the combination of economic goods of the higher orders (factors of production) there exists an optimum. That there is such an optimum of combination is all that the law of returns, popularly called the law of diminishing returns, teaches. There are many other questions which it does not answer at all and which can only be solved a posteriori by experience." I don't see the connection between the law of diminishing returns and the problems caused by monopoly, either 'public' or 'private'.
Simple enough, a private monopoly will optimize the capital value of his monopoly by supplying his monopoly good at the point where the marginal revenue is equivalent to the marginal cost. A public monopoly, being owned by nobody, will be the subject of power struggles to use up the capital. A private monopoly is therefore economic while a public monopoly is not. This is also why monarchy is preferable to democracy.
Do you consider monarchy to truly be "private"?
Brainpolice: Do you consider monarchy to truly be "private"?
So long as the monarch determines who will inherit his state, then yes, he can be said to have exclusive control of it.
Stranger: Brainpolice: Do you consider monarchy to truly be "private"? So long as the monarch determines who will inherit his state, then yes, he can be said to have exclusive control of it.
Do you think that monarchy is justified because it's allegedly "private"? If you view monarchies as truly being "private property", and assuming the obvious that you think that private property is legitimate, then you're basically legitimizing the state so long as it's not democratic. The state is henceforth legitimate - as arising from "private property". This hands a huge bone to the collectivist anarchists who claim that private property inevitably gives rise to the state and argue that market anarchism is essentially the same thing as monarchy. It pretty much concedes the argument to them.
Also a problem I see with what you're saying is that political democracies would actually also fall under your definition of "private". An oligarchy has exclusive control over it. The only difference between monarchy and democracy based on these definitions is merely a matter of how many people have exclusive control over it, where in a monarchy it's a single person or family and in a democracy it's more of an aristocracy. The democracy nonetheless is still exclusively controled, as from the standpoint of most people they don't really control it at all in any real sense. They are subject to it.
Stranger: A public monopoly, being owned by nobody, will be the subject of power struggles to use up the capital.
That's a good point that there never really has been a "pure" monarchy. There is always some kind of oligarchy involved. All democracy really does is expand the oligarchy. Likewise, as I've tried to point out, there never really has been a "pure" political democracy, as democracies are still oligarchies. A "pure" political democracy is a logical impossibility, since it would require everyone to be state agents.
With that clarified, I also fail to see how monarchies don't involve power struggles to use up the "capital". There is always some degree of factionalism internal to the political oligarchy.
All democracy really does is expand the oligarchy.
Brainpolice:Do you think that monarchy is justified because it's allegedly "private"? If you view monarchies as truly being "private property", and assuming the obvious that you think that private property is legitimate, then you're basically legitimizing the state so long as it's not democratic. The state is henceforth legitimate - as arising from "private property". This hands a huge bone to the collectivist anarchists who claim that private property inevitably gives rise to the state and argue that market anarchism is essentially the same thing as monarchy. It pretty much concedes the argument to them.
Monarchy is private ownership of the state, and in that sense is preferable to public ownership of the state, but that doesn't mean it is just, since only one man is allowed this right and not all men.
However, public ownership of the state does not correct this injustice, it simply compounds its mistakes.
Juan:Wrong. A public monopoly is owned by politicians, just as ´private´ monopolies are.
That is, once again, grave economic error and I can only suggest that you continue your studies before you post anything but a question on this forum.