Moreover, capitalism is the least game-able of all systems, because it presumes that everyone is trying to game it. In practice there will be some structural inefficiencies and failures, but at least it starts from somewhere that is difficult to game.
No capitalism in itself is not the least game-able. It entirely depends on what flavor of it is in discussion. Free-market capitalism is inherently power centralizing. As a result, you need to ensure government is enforcing market competition.
Every actor is looking for a way to avoid market competition. Every time you hear a company discuss building a moat, that is a company that doesn't want to compete in a market and is actively working against the benefits of capitalism. Every time you see a monopoly, it is again a marketplace working against the benefits of capitalism (i.e. market competition).
At all times the government must strongly and actively maintain market competition or capitalism simply eats itself.
> Free-market capitalism is inherently power centralizing
I understand the argument you're making, but I don't think these are the words to use to do it, makes it more confusing, and you're glossing over some thorny issues. One could just as easily and more accurately say "power is inherently power centralizing".
I assume you are equating "free-markets" with "laissez-faire" markets which I don't think is accurate, else why would we separate the two concepts? Better to use the term "perfect market capitalism" (essentially markets where no player has the power to affect prices) and then specify market imperfections and failures as the cause of "inherent flaws" and worthy of regulation.
markets don't eat themselves, participants with power eat them.
But we also need to understand the difficulty of regulation. Keeping this brief thru a lot of hand waving and overgeneralization, Microsoft monopolized the personal computer market in the 1990's, and made buckets of money doing it, but they were not able to then leverage that into enduring monopolies in (the internet and) cell phones and cloud services, which together supplanted the personal computer as "what was popular" for personal information and communication. Would an evolving government regulatory regime applied to Microsoft have been able to create a better outcome in the same time frame without stifling industry than did what Schumpeter called the "creative destruction" of progress through free market forces? (yes I could word that more and better, but I want to hit reply and be done, so hopefully my point is not lost.)
When you talk about "free markets" failing, you feed the idea that socialism is a good idea, which is a serious baby/bathwater problem. Better that people learn more about perfect markets.
Thanks for the reply - Although I think you still may be missing my key point. I'll be brief, hopefully it comes across not as rude but as more direct.
"Power is inherently power centralizing" - we both agree that that is the fundamental issue.
"Laissez-faire" in any practical sense is worthless. No-one should reasonably in this day an age be advocating for essentially anarcho-capitalism or an adjacent laissez-faire derivative thereof. People do, I think it's incredibly naive - but you appear to be in agreement so we'll move on. We expect any form of state sponsored capitalism to enforce it's main benefits (of which I argue one of the most important keys is actual market competition).
> market's don't eat themselves, participants with power eat them.
Yes and the default state of any market is for there to be power imbalances. (it's almost impossible to have markets without them). And since power imbalances are in practice inherent in markets, and participants are what constitute a market, it is correct to say that "markets eat themselves". To contradict this is to either find a market without power imbalances (essentially only exists in theory), or find a market without participants (clearly a market not relevant for our purposes).
Since participants in markets are continuously trying to consume the market there must be a continuous countervailing force to prevent this. That is my thesis.
> When you talk about "free markets" failing, you feed the idea that socialism is a good idea, which is a serious baby/bathwater problem.
This is a terrible line of reasoning. It is essentially a head-in-the-sand defense. Essentially saying we shouldn't talk about the failure of free markets because by acknowledging their shortcomings when people look at all the different possible ways to improve it and one of the says they run across might be socialism. As a result we shouldn't discuss the failures of free markets. The rest of our post is well reasoned even though I disagree - this is not, so I won't spent much more time on it. In no point did I mention socialism, and avoiding discussing failings of a system because people might look to others is a weak way of defending its merits.
> Better that people learn more about perfect markets.
Perfect markets generally are not the state of markets. "Perfect Market Capitalism" is like the "Efficient Market Hypothesis" - its a simplification that makes reasoning much easier, and there are cases where you can apply it. But in practice there is clear, continuous evidence that it does not hold, and ignoring the messy bits is where the system falls apart.
Finally, regarding your PC example I'll saying the following: Ensuring companies are forced to engage in "fair market competition" (avoiding the no true scotsman of perfect market capitalism) by preventing the societal marketplace harming impacts of monopolies, oligopolies, network lock-ins and similar is essential for a healthy society. Any market with power imbalances will tend towards solidification.
We cannot avoid imperfect markets, there will always be transaction costs, barriers to entry, natural network effects. And when there aren't, participants in a market will find ways to introduce them for their benefit. Imperfect markets get more imperfect over time due to the actions of their participants. It is inherent in markets.
So we have two options, immediately address the most imbalanced cases. Or ignore them and hope that the market will become less relevant before the leader has a chance to leverage their position of power. The latter approach is wrong. "Tech" is the only field that moves fast enough for this to even be possible, and you can see from how centralized tech is that even in tech it more often fails than succeeds. Or put another way about regulation: yes you want term limits even if it means a great politician can only have two terms in office instead five, even if they could've done great things in those 5 terms. Because the risks of no term limits is much worse for society. Same reason you want to regulate market dominating companies, even if they could've done great things in that market dominating position, because the risks it brings to a net negative on society are to large.
A simple start is break up market dominant companies and prevent market capturing merges. But fundamentally society must always be vigilant in preventing markets from centralizing power, or from preventing any system from centralizing power. Capitalism (and most systems) centralize power by default. So society must always have a counterbalancing force to get the most benefit from capitalism. Free purely unregulated markets are bad because they centralize power to avoid competition. The goal of society should not be free markets. The main benefit of free markets are market competition. The goal of society should be to maximize market competition (which is different than striving for the impossible goal of perfect markets). And external force needs to act to balance to consolidating nature of free markets to maximize market competition and maximize benefit to society.
> This is a terrible line of reasoning. It is essentially a head-in-the-sand defense. Essentially saying we shouldn't talk about the failure of free markets because by acknowledging their shortcomings
I said (perhaps confusingly) we absolutely should talk about sources of market failure, but that we should not take ourselves into the weeds by calling them "free market failures" because market failures are the parts that are not free-as-in-freedom, they are on "free" as in "freedom"-to-coerce,-kidnap,-rip-off etc.
properly functioning markets require honest/symmetric information and choice, and that no player can control prices (that's off the top of my head, not writing a treatise here): then, show people that what markets do after that is precisely solve the thorniest of problems that socialists are trying to solve, allocation of resources.
> market failures are the parts that are not free-as-in-freedom, they are on "free" as in "freedom"-to-coerce,-kidnap,-rip-off etc.
Again, this is wrong. This is fantasy that people like to believe, but it is not the case. The failures on in the "free-as-in-freedom" parts. And that's the part I'm explicitly calling out because it is naive.
Communists arguing that the main thing required for communism is we get everyone to give up their own self-interest and work just as hard for no financial reward is wrong and devoid of reality. Saying that this is a requirement for successful socialism is absurd and ridiculous.
Free market capitalists arguing that people will just give up their own self-interest and not behave selfishly to maximize their profits, by explicitly avoiding and inhibiting perfect competition to their direct benefit, is also just as absurd and ridiculous. It's not because of a devolvement into laisse-faire or anarcho-capitalism (or due to 'extra-market coercion' or kidnapping as you list). It is inherent in free-as-in-freedom "free market capitalism". Selfishness drives profit motive. Profit motive in markets that are imbalanced create inequal power. Power imbalances in any human system (like a marketplace) centralize power. Centralized power prevents competition. That is the key point. And thinking that people won't be selfish and prevent legitimate market competition, or ignoring that power imbalances always centralize in systems, or believing that just giving people freedom to act will not devolve into centralized power is barely less naive than the "communists" view I wrote above. Free markets naturally lead to centralized power and eliminate market competition. That is the fundamental problem.
The essential force that free-as-in-freedom "free market capitalism" needs is a countervailing force that enforces market competition. Without it capitalism eats itself due to human nature. Just the same as communism eats itself due to human nature.
I'm trying to get you to stop throwing around the word "free market" in a meaningless way, especially in a negative light, because it muddies your argument and throws mud on "free markets" which most people have a positive impression of. When you say "free market", it is completely unclear to anybody who is not in your head wtf you are talking about; it only comes out when you finish your sentence slagging it.
"Free market" does not have a clear or set definition. It is not a term used by economists except as a catchall in the context where the audience knows what the economist is talking about. It comes from the time of "classical liberalism" when the liberalizing was "freeing" markets from the control of the aristocracy, but today we also need to keep them free of collectivism, even though collectivism in modern parlance fits the thinking that we now call liberalism, so I don't think it's a great idea to use those terms either.
To keep out of that linguistic morass, stop slurring the term "free market".
Markets always exist, because people will always trade, even if it's a spoonful of my prison rations for a spoonful of your prison rations. If we as prisoners make a trade, are you calling that a freedom? So just talk about markets. The little description I just gave is a clear thought, and the word free doesn't add anything. Black markets are the truest free markets, they entail free trade of all items. Everything not free about a black market is exogenous.
Learn the terminology of markets; economics studies "perfect markets", and then identifies sources of "market failures" and "market inefficiencies". The type of unregulated free market that devolves into cartels and monopolies and caveat emptor is better known as laissez faire. Markets that are regulated within western democracies are free markets that don't devolve.
on the surface you're just throwing words around on top of however many layers of more complex thought goes into your arguments.
Free markets are a good thing. If you want to talk about market failures, don't use the word free. Free does not mean "unregulated".
I believe capitalism is the best economic system we've invented and likely will invent, but, you give it too much credit. American capitalism has worked largely because it was underpinned by a foundation of Christian morality. With that foundation crumbling, capitalism will fail, like any other system would when managed by a largely corrupt and immoral society.
We are seeing it happen in real time. Our president is a crook. We have plenty of evidence that he influenced-peddled to foreign countries for millions. Our media lie to us constantly. Most of the government, including the DOJ, FBI, and CIA, are run by corrupt, partisan, and evil people who are largely unaccountable to the public. Our judicial benches are filled with partisan activists who largely ignore the law and the constitution as they make whatever rulings they can to promote their ideologies or world views. Capitalism will not save us from any of this, especially as long as so much of the public keep voting into office people who actively support this kind of corruption.
Isn't it? If one bank tries to send fake transactions, it can have real effects. If some crypto nodes try to send fake transactions, it mostly just doesn't work unless you have a 51% majority. But at that point the system is mostly worthless anyways.
With decentralized applications at least, there are always bugs and people lose their life savings due to poor mechanics or faulty code, and there's no recourse. See rekt.news for an idea of how 'ungameable' these financial products are.
With a federally insured bank, securities, or other regulated financial products there's a watchdog ensuring compliance and regulations, transactions are largely traceable and auditable, and if someone finds a way to game the system there's a legal entity with a massive presence that will come down on you anyway.
There are advantages to both, and centralized finance is certainly 'gameable' in ways also, but I definitely wouldn't say that it's more gameable than decentralized finance.
