You can always tell who has been reading Marx

Ms. Orr gets dreadfully confused about capitalism and markets here and you can see a nice little Marxist assumption rearing its ugly head:

Capitalism, unregulated, is a beast that eats itself, killing the impulse that creates it. Competition is healthy until an undisputed, unbeatable winner emerges. Then the game is over, and monopoly dictates. How anyone can find this assertion controversial, in the light of the recent financial collapse, is the only real mystery.

Yup, it\’s that capitalism tends to monopoly argument.

Which, as we\’ve said before, is how the capitalists might like it to be. Any and every capitalist worth his salt would desire to be a monopolist, absolutely true. But we have a way of stopping that happening:

Again, neo-liberals \”believe in\” cuts, pretty much always, because they believe in a small state that can\’t interfere with the market-God.

That\’s where the confusion over capitalism and markets will get you. We \”neo-liberals\” don\’t set up altars and sacrifice virgins to the market (maidens being in such short supply that we couldn\’t anyway). Rather, we simply acknowledge that the market, through the creation and maintenance of competition, is the way to tame the monopolistic impulses of the capitalists.

And, please, note very well, there is absolutely a place for the State in this. Maintaining the space for that competition to exist.

Which is why we rage and shout about much of the regulation that is poured into that market space: we\’re convinced (on the basis of some pretty strong logic and empirical evidence as well) that much of it serves not to open up that space but to close it down.

When only large companies can afford the barracks full of form fillers required by the regulators then only large companies will exist, trending us towards that monopoly and stifling that competition which we need to counter it.

We absolutely do not worswhip either markets or capitalism: but we do insist that it is markets which manage to tame capitalism.

Why in buggery do you think we scream about the awfulness of the Soviet economy? No, it\’s bugger all to do with the fact that the State owned it, leaving no room for capitalists to wax greasily rich. It\’s because there were no markets to stop the monopolist screwing over the consumers.

5 thoughts on “You can always tell who has been reading Marx”

  1. An important way to respond to such points is to point out that for most defenders of free markets today, the market is not a sort of static game full of omniscient Gods with pure, utility-maximising goals and perfect knowledge, no barriers to entry, etc. That is the daft “perfect competition” model of the textbooks, which arguably has done enormous harm because in real life, the market is quite different.

    In fact, it is precisely BECAUSE of the partial knowledge, different tastes, skills and assets of people that give markets their reasons for existing. I have something I want, he has something that I have that he does not have, ergo, we have a trade.

    The problem with the “capitalism” devours itself line is that it is very, very hard for a business in a free market to dominate a market and crush competition unless it has got privileges and protection from the State. In a free market, if there are some firms like a Microsoft that dominate a field, it is normally the case that the firm has got to be big because it did a great job. A lot of anti-market folk confuse bigness with lack of competition.

    A final point is that these guys need to grasp the “Austrian” PoV that competition is a process through time, not a static game. Small firms rise to challenge the Big Boys. Remember, a few decades ago, IBM and GM were the dominant firms, and no-one had heard of Honda or Apple. Now things move on.

  2. Jonathan Pearce: “The problem with the “capitalism” devours itself line is that it is very, very hard for a business in a free market to dominate a market and crush competition unless it has got privileges and protection from the State. In a free market, if there are some firms like a Microsoft that dominate a field, it is normally the case that the firm has got to be big because it did a great job.”

    I’d describe that as being more of an example of privileges and protection at work. Let’s not forget that Microsoft benefits from some of the biggest anti-competitive state interventions, in the form of copyright and patent. On top of that, there’s the corporate charter, which enables firms to grow much larger than an unlimited liability firm might.

    In a genuine free market, with those privileges removed, I doubt Microsoft would be anything like the size it is.

  3. how did the recent financial collapse show us that capitalism involves competitors destroying each other until one unbeatable winner emerges?

  4. Hoary quip coming – sorry

    What’s the difference between a socialist and a capitalist?

    A socialist has read Marx. A capitalist has read Marx – and understands it.

Leave a Reply

Your email address will not be published. Required fields are marked *