Does the game of capatalism only have one winner?

[BilPrestonEsq]

CAPATALISM "free-market system: an economic system based on the private ownership of the means of production and distribution of goods, characterized by a free competitive market and motivation by profit" Encarta World English Dictionary.

Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?

We have monopoly laws but should we have more regulations? If we could count on everyone to use common sense and abide by a moral code, laws wouldn't be necessary but obviously that's not going to happen any time soon. Do you see us moving in that direction I described? If so what are some ideas to prevent that scenario. I do believe that a free market is necessary to evolve as human beings, but only 'free' enough to continue to advance while still maintaining a more level playing field. Just interested in your thoughts.

 

[Hurkyl]

Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?

If all but one person have very little money, then prices go way down to compensate, except that merchants will charge the one rich guy exorbitant prices.


Why do you think things will converge that way, by the way?

 

[BilPrestonEsq]

Well look at walmart, if there were no monopoly laws then eventually everything would be sold at walmart. One walmart could take the place of a hardware store, pharmacy, autoparts store, grocery store, electronics store, etc. and they do and that has happened all over the country. Thats what I am referring to. I am just using walmart as an example.

 

[WhoWee]

Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?

Not unless the individual is an immortal - they would need to acquire every conceivable asset on the planet. I think it's fair to assume that would take more than a few years.

 

[BilPrestonEsq]

Where did I say it would take a few years? That would be a ridiculous question. But let's just say everyone IS immortal and the population is fixed for this question.

 

[BilPrestonEsq]

The reason for making everyone immortal and having a fixed population is that money is passed down to each generation of powerful families and political power is passed to the next generation essentially creating a possibly immortal corporation. We have to create boundaries in a question like this or else you spend to much time adding up all the factors that may or may not have an effect completely missing the point, even if you are comprimising accuracy of your results.

 

[talk2glenn]

What do you mean when you say one person has "all the money"? If you mean literal units of currency, with currency defined as a medium of exchange, then the answer isn't important.

Even if true, one person holding all of the currency in an economy would make it worthless; what is the value of a medium of exchange if there is nobody to exchange it with. Everybody else would find other means by which to exchange their goods and services, and the person holding all the currency would lose.

In practice, such a concentration of any good in a free market is unlikely. Abstract away from limiting it to money for a moment, and just consider anything that has value for any reason (a "good" by definition). As the amount of some good available to an individual goes up, and the amount to other individuals go down, the relative values for the "wealthy" person go down, and for the "poor" person go up. This encourages trade.

In your case, the person rich in currency may be poor in, say, grain, and has an incentive to trade some of his currency for somebody elses grain, and vice versa. This goes on until a general equilibrium is reached and all gains from trade are exhausted (everyone is as happy as they can be made without making somebody else unhappy).

 

[WhoWee]

Even if true, one person holding all of the currency in an economy would make it worthless; what is the value of a medium of exchange if there is nobody to exchange it with. Everybody else would find other means by which to exchange their goods and services, and the person holding all the currency would lose.

In other words, they would start a new game - and the world's richest person would once again be poor?

 

[BilPrestonEsq]

"Even if true, one person holding all of the currency in an economy would make it worthless; what is the value of a medium of exchange if there is nobody to exchange it with. Everybody else would find other means by which to exchange their goods and services, and the person holding all the currency would lose."

I just wanted to highlight that statement. But first the original question. Let's use walmart as an example. With no regulation and no 'moral code', eventually walmart would take over every business, everyone would work and shop at walmart. Thats what I am talking about. So not really one person exactly its just the way I worded the question.

 

[BilPrestonEsq]

Oh I was too late

 

[BilPrestonEsq]

 

[BilPrestonEsq]

Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market.

 

[BilPrestonEsq]

So where do we draw the line?

 

[WhoWee]

Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market.

There is another potential outcome - after someone "wins". A dictator might emerge from the masses and nationalize all industry (probably the rich guy's butler).

 

[russ_watters]

Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market.

Though I suppose it is possible in a limited case that what you are saying could happen, the real world is so vast and dynamic it isn't really possible for one company to be so large that it supplies the vast majority of our goods/services, regulation or not.

What's your point, though? This all seems very contrived.

 

[BilPrestonEsq]

The example I used, walmart, is already doing this in the real world. But this is not an attack on walmart, just an example. I'm not saying that walmart is bent on taking over the business world what I'm pointing out is that they could. They have the ability, the only thing that's stopping them is the law. They probably don't want to, but if they did want to they could. I am trying to point out a major flaw of the free market. Trying to point out it's nature. Which wouldn't be relevant except for that it's the system we have adopted, I was looking to start a discussion on how it can me made better. Monopoly laws exist, so that that scenario can't happen. What would you change? What laws would you impose to create a better system? Or is it just perfect the way it is? I am curious about what ideas people might have, I guess that's my point.

 

[Antiphon]

Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?

No. The economic system will self-organize into a pattern of maximum utility of the capital in the system for the participants.


The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants.

This has always been and always shall be the capitalist system.

 

[BilPrestonEsq]

No. The economic system will self-organize into a pattern of maximum utility of the capital in the system for the participants.


The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants.

This has always been and always shall be the capitalist system.

Self-organize?

"Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market."

Let me prove that statement. Again I am going to use walmart and again I am not picking on walmart in particular.

If you own a hardware store, you buy the products you sell from a factory for a certain price. You only have a certain amount of investment capital. Now walmart wants to get in the business. They make a deal with that same factory to buy the same products. Except they can buy in larger bulk for less money than what you pay. They can then sell the products for less in their store ultimately putting you out of business. They (walmart in this case) has even more money, more investment capital. No matter what market they want to get into they can. The hardware store example can be used in any market. They have the power to buy for less allowing them to sell for less putting any smaller company out of business.

If that statement about the nature of the free market is untrue why do we have monopoly laws?

 

[BilPrestonEsq]

"The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants."

Agreed, but that's not the free market, the free market is about making money.
Are you going to invest in a company that abides by some moral code or are you going invest in a company that wants to make money for themselves and you.

 

[russ_watters]

The example I used, walmart, is already doing this in the real world.

Doing what? Walmart isn't anywhere close to being the only good/service provider. Yeah, the're big, but they don't come close to being an example of what you described in the OP.

But this is not an attack on walmart, just an example. I'm not saying that walmart is bent on taking over the business world what I'm pointing out is that they could.

No, they really couldn't.

They have the ability, the only thing that's stopping them is the law.

If Walmart existed for a hundred years in a non-reglated environment, perhaps they could start buying car companies and oil companies, but no, it isn't the law that is preventing Walmart from doing that: they are not capable of it right now.

I am trying to point out a major flaw of the free market. Trying to point out it's nature.

Since this contrived thought experiment doesn't bear any resemblance to reality, how is it a flaw in the free market? I suppose you could say it is a flaw in some hypothetical but nonexistent market, but how is that useful?

Which wouldn't be relevant except for that it's the system we have adopted, I was looking to start a discussion on how it can me made better. Monopoly laws exist, so that that scenario can't happen. What would you change? What laws would you impose to create a better system? Or is it just perfect the way it is? I am curious about what ideas people might have, I guess that's my point.

Well, the closest thing leading down a path in the direction of what you describe would be monopolies and as you correctly note, they've been dealt with pretty effectively. So whether that flaw existed 100 years ago or some other hypothetical but nonexistent market, it doesn't exist in the real world, today. So it's already been made better than that. IMO, the market in general already has too much regulation in a lot of ways, though I think the anti-monopoly regulation is just about right the way it is.

 

[BilPrestonEsq]

If Walmart existed for a hundred years in a non-reglated environment, perhaps they could start buying car companies and oil companies, but no, it isn't the law that is preventing Walmart from doing that: they are not capable of it right now

Right now? Of course not. This is a undetermined amount of time I am talking about. I am saying it will happen eventually by design.


Since this contrived thought experiment doesn't bear any resemblance to reality, how is it a flaw in the free market? I suppose you could say it is a flaw in some hypothetical but nonexistent market, but how is that useful?

I just gave a real world example. So your saying that doesn't happen? That it hasn't already?

If you own a hardware store, you buy the products you sell from a factory for a certain price. You only have a certain amount of investment capital. Now walmart wants to get in the business. They make a deal with that same factory to buy the same products. Except they can buy in larger bulk for less money than what you pay. They can then sell the products for less in their store ultimately putting you out of business. They (walmart in this case) has even more money, more investment capital. No matter what market they want to get into they can. The hardware store example can be used in any market. They have the power to buy for less allowing them to sell for less putting any smaller company out of business. So this doesn't happen in a free market?

 

[Antiphon]

"The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants."

Agreed, but that's not the free market, the free market is about making money.
Are you going to invest in a company that abides by some moral code or are you going invest in a company that wants to make money for themselves and you.

Only the free market lives up to that definition. The free market is not "about making money." Making money is the most common but not sole motivation for trade. The ultimate motivation is survival of yourself and your family. Making money is simply the practical face of maximizing your survival.

The free market is exactly that- free because the parties making the trade come to mutually agreeable terms without coercion. It's a market because the point is to trade goods and services.

 

[russ_watters]

I just gave a real world example. So your saying that doesn't happen? That it hasn't already?

No, I'm saying your real-world example bears only passing resemblance to the extreme picture you painted in the OP because of how extreme it is and therefore how much time it would take in an unregulated market...which doesn't exist. And you seemed to acknowledge this with what you just said above:

Right now? Of course not. This is a undetermined amount of time I am talking about. I am saying it will happen eventually by design.

Since the US already saw the effect of unchecked monopoly power and has corrected that flaw in the market, the time for a company to be capable of what you described in the OP has passed. It isn't possible anymore, even with "an undetermined amount of time".

 

[BilPrestonEsq]

Originally Posted by BilPrestonEsq
I just gave a real world example. So your saying that doesn't happen? That it hasn't already?

"No, I'm saying your real-world example bears only passing resemblance to the extreme picture you painted in the OP because of how extreme it is and therefore how much time it would take in an unregulated market...which doesn't exist. And you seemed to acknowledge this with what you just said above:" RUSS

"Right now? Of course not. This is a undetermined amount of time I am talking about. I am saying it will happen eventually by design." ME

No, I said that in response to your accusation that I meant walmart was going to take over the world tomorrow to which I replied the quote above. And the example that I gave describes the steps that any company in a free market would take to get to the extreme picture I painted in the OP. Which would be the final outcome in a free market without regulation or humanity. You still fail to see the point.

"Since the US already saw the effect of unchecked monopoly power and has corrected that flaw in the market, the time for a company to be capable of what you described in the OP has passed. It isn't possible anymore, even with "an undetermined amount of time". RUSS__________________

I made a reference to monopoly laws in the OP. I am aware. My question for you and everyone was simple. First I made a statement about the design of the free market, wondering if anyone else has the same opinion. It was meant to be a critique of the free market system. How it can be altered to serve us better. I was hoping for insightful commentary. Apparently to some it's perfect the way it is. OK

 

[WhoWee]

I made a reference to monopoly laws in the OP. I am aware. My question for you and everyone was simple. First I made a statement about the design of the free market, wondering if anyone else has the same opinion. It was meant to be a critique of the free market system. How it can be altered to serve us better. I was hoping for insightful commentary. Apparently to some it's perfect the way it is. OK

Clearly, the "immortal" requirement would only be applicable to a corporation. With that said, perhaps the debate would be more relevant if it applied to a new (future) world - such as Mars?

 

[BilPrestonEsq]

Clearly, the "immortal" requirement would only be applicable to a corporation. With that said, perhaps the debate would be more relevant if it applied to a new (future) world - such as Mars?

Ha! Maybe if I structured it in that way it would have been a lot more productive! Still relevant considering it's the system we have here on earth. And it effects us and the well being of future generations. But if I said Mars then we could've taken the ideas meant for some ideal Mars market and just applied them here.(head in hands)

 

[WhoWee]

Ha! Maybe if I structured it in that way it would have been a lot more productive! Still relevant considering it's the system we have here on earth. And it effects us and the well being of future generations. But if I said Mars then we could've taken the ideas meant for some ideal Mars market and just applied them here.(head in hands)

Part of the problem in the here and now is everyone plays by slightly different rules (countries). The easy response is for everyone to get together and agree. However, that would not be in our (US) best interest. Instead, it would be in our best interest to bring the rest of the world up to our standards - but it would also be the most expensive alternative - and we can't afford to pay for it.

For now, I think we need to accept that people who live in tents will probably be willing to accept lower wages. At the same time, we need to comprehend that our graduate programs are filled with foreigners - our education system needs to be rebuilt and designed for excellence (IMO).

 

[brainstorm]

In other words, they would start a new game - and the world's richest person would once again be poor?

That would be unlikely to happen. More likely would be for the person with all the money to begin lending out to various people, who would in turn pay others and further lend out their money, continually expanding the economy in a way that would maintain the person with all the money as holding all the obligations of all their debtors.

In reality, capitalism can generate extreme wealth but when the markets function correctly, businesses would simply lower their prices until a price-equilibrium was reached where products were getting sold. Of course, the very rich could buy up everything with a fraction of their money, but why would they want to do so unless they had something they were trying to get from the people who needed the goods?

In reality, true free market capitalism doesn't exist because there are barriers to entering every market. A real free market would be like a serfdom where the serfs were liberated from their obligations to the landlord and suddenly became free to choose how to use their land and what to do with the products.

What is currently called "free market capitalism" is more like a multitude of landlords with an even greater multitude of potential employees who need income to repay debt. Both the landlords and the employees attempt to increase their incomes in order to consume products produced by other lords and their employees. Then, when their enterprises are failing to produce sufficient income, they seek government assistance to maintain their liquidity and ensure they don't have to go into farming just to feed themselves.

In a true free market, surplus personnel would eventually be driven to no other choice but to plead for the resources to at least self-sustain. Instead of doing this, they try to utilize democracy to secure funding to avoid the need to take up the most basic menial forms of necessary labor.

 

[WhoWee]

That would be unlikely to happen. More likely would be for the person with all the money to begin lending out to various people, who would in turn pay others and further lend out their money, continually expanding the economy in a way that would maintain the person with all the money as holding all the obligations of all their debtors.

In reality, capitalism can generate extreme wealth but when the markets function correctly, businesses would simply lower their prices until a price-equilibrium was reached where products were getting sold. Of course, the very rich could buy up everything with a fraction of their money, but why would they want to do so unless they had something they were trying to get from the people who needed the goods?

In reality, true free market capitalism doesn't exist because there are barriers to entering every market. A real free market would be like a serfdom where the serfs were liberated from their obligations to the landlord and suddenly became free to choose how to use their land and what to do with the products.

What is currently called "free market capitalism" is more like a multitude of landlords with an even greater multitude of potential employees who need income to repay debt. Both the landlords and the employees attempt to increase their incomes in order to consume products produced by other lords and their employees. Then, when their enterprises are failing to produce sufficient income, they seek government assistance to maintain their liquidity and ensure they don't have to go into farming just to feed themselves.

In a true free market, surplus personnel would eventually be driven to no other choice but to plead for the resources to at least self-sustain. Instead of doing this, they try to utilize democracy to secure funding to avoid the need to take up the most basic menial forms of necessary labor.

Competition will always be the equalizer - and present on both the supply and demand sides.

 

[brainstorm]

Competition will always be the equalizer - and present on both the supply and demand sides.

It could be, but there are reasons why it doesn't work out that way. Consider dividing people into two teams: 1) the Scrooges; who consume and spend very little and end up with lots of savings to show for it and 2) the Live-it-ups; who want to use their economic means to enjoy themselves instead of conserving and saving all the time. Theoretically, competition between the two types of consumers would result in the Live-it-ups being forced to conserve and save to avoid bankruptcy since the Scrooges would obviously not be spending much money on them when they ran out. However, the Live-it-ups may figure out ways to convince the Scrooges that they should invest in businesses that Live-it-ups spend their money in, so as to make more money. By doing this, the Live-it-ups could maintain their high-spending lifestyles while getting the Scrooges to perpetually fund them. Of course, this would be risky because the Scrooges might eventually get tired of investing in enterprises that cater to Live-it-ups, and then what would the Live-it-ups be able to do except adopt the conservative lifestyles of the Scrooges?

 

[WhoWee]

It could be, but there are reasons why it doesn't work out that way. Consider dividing people into two teams: 1) the Scrooges; who consume and spend very little and end up with lots of savings to show for it and 2) the Live-it-ups; who want to use their economic means to enjoy themselves instead of conserving and saving all the time. Theoretically, competition between the two types of consumers would result in the Live-it-ups being forced to conserve and save to avoid bankruptcy since the Scrooges would obviously not be spending much money on them when they ran out. However, the Live-it-ups may figure out ways to convince the Scrooges that they should invest in businesses that Live-it-ups spend their money in, so as to make more money. By doing this, the Live-it-ups could maintain their high-spending lifestyles while getting the Scrooges to perpetually fund them. Of course, this would be risky because the Scrooges might eventually get tired of investing in enterprises that cater to Live-it-ups, and then what would the Live-it-ups be able to do except adopt the conservative lifestyles of the Scrooges?

Wouldn't competition on the supply side increase production to meet the consumption needs of the Live-it-ups?

 

[brainstorm]

Wouldn't competition on the supply side increase production to meet the consumption needs of the Live-it-ups?

It should, if resources are sufficiently abundant and demand sufficiently low to be relatively non-competitive. Once the Live-it-ups reach a standard of consumption high enough to generate scarcity and competition for access to that consumption, price would rise until a sufficient number of Live-it-ups are excluded from consumption to ensure a balance between resource-availability and total amount produced/consumed.

However, seeing prices rise due to competitive consumption, the Scrooges would invest in the profit-industries that service the Live-it-ups and save the money they make. This would gradually result in the flow of money decreasing, at which point the Scrooges would have to decide whether they wanted to keep investing in the consumerism of the Live-it-ups for a lower profit. They might decide that the lower levels of profit were not worth the resource-waste and decide to invest in more resource-conservative industries.

Of course, the Live-it-ups would resist and try to bolster their shrinking lifestyle industries by making them profitable again, perhaps by distributing fiscal stimulus money and otherwise trying to drive up revenues and income to levels that would sustain lots of jobs and consumer spending.

 

[WhoWee]

It should, if resources are sufficiently abundant and demand sufficiently low to be relatively non-competitive. Once the Live-it-ups reach a standard of consumption high enough to generate scarcity and competition for access to that consumption, price would rise until a sufficient number of Live-it-ups are excluded from consumption to ensure a balance between resource-availability and total amount produced/consumed.

However, seeing prices rise due to competitive consumption, the Scrooges would invest in the profit-industries that service the Live-it-ups and save the money they make. This would gradually result in the flow of money decreasing, at which point the Scrooges would have to decide whether they wanted to keep investing in the consumerism of the Live-it-ups for a lower profit. They might decide that the lower levels of profit were not worth the resource-waste and decide to invest in more resource-conservative industries.

Of course, the Live-it-ups would resist and try to bolster their shrinking lifestyle industries by making them profitable again, perhaps by distributing fiscal stimulus money and otherwise trying to drive up revenues and income to levels that would sustain lots of jobs and consumer spending.

It's not logical that Live-it-ups would want to pay higher taxes - to enable stimulus funding - is it?

 

[brainstorm]

It's not logical that Live-it-ups would want to pay higher taxes - to enable stimulus funding - is it?

They would if they got to the point of believing that "living it up" was more important than money itself and if they had faith that the economic machine they created by doing so would never hurt them in any way. They might, like during fascism before WWII blame a certain religion/class/race of people for being Scrooges and believe that if they just eliminated or intimidated them into investing all their money into the high-consumption economy, that it would continue working forever. Of course, by doing this they would set a fascist precedent that would result in periodic eliminations and/or other population control to ensure that a high standard of consumption was available to all. If they didn't want to get their hands that dirty, though, they could just exclude a certain class of people from their standard of living and prevent them from saving and otherwise acquiring greater economic power.

 

[WhoWee]

They would if they got to the point of believing that "living it up" was more important than money itself and if they had faith that the economic machine they created by doing so would never hurt them in any way. They might, like during fascism before WWII blame a certain religion/class/race of people for being Scrooges and believe that if they just eliminated or intimidated them into investing all their money into the high-consumption economy, that it would continue working forever. Of course, by doing this they would set a fascist precedent that would result in periodic eliminations and/or other population control to ensure that a high standard of consumption was available to all. If they didn't want to get their hands that dirty, though, they could just exclude a certain class of people from their standard of living and prevent them from saving and otherwise acquiring greater economic power.

I guess the Live-it-ups would need to guarantee their power (ability to maintain their machine) - the class warfare aspect might enable the trend - is this what you mean? Basically, a majority of people on the receiving end will guarantee the re-distribution machine never breaks down?