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Among anti-capitalists, there is a common accusation: that the cornerstone of capitalism is "keeping the poor in their place" while making the rich get richer. This is, to be frank, patently false; while there are probably a few (evil) people who want to keep people poor, the vast majority certainly wouldn't mind other people getting rich, and most really do want to see people's lives improve, though not at the cost of their own.

In a capitalist system, this is possible, because wealth is not considered a finite resource like physical objects are. While it is certainly traded, it is also created by the workers, and so while there is a finite amount at any given time, that amount is always growing. This is due to money bring treated as an abstract concept, not tied to the physical realm. It's also considered to be the main advantage of capitalism: because there is growth, there is always improvement, as opposed to a socialist system which lacks incentive to grow and therefore necessarily stagnates.

However, this can be broken. The reason is that the driving force of capitalism is competition. This is what induces companies to both improve their products and keep their prices low: being able to stay viable in the marketplace. As a side effect, though, it makes wealth more accessible to more people. Also, as improvements are made, barriers to entry are lowered; this is what makes entrepreneurship possible.

However, if that competition actually ends, the incentives are all lost. Under monopolistic conditions, there is no incentive to improve, nor to keep prices low. In fact, in a monopoly, the incentive is towards not doing these things. And so, it doesn't happen. When that occurs, barriers to entry rise, as do prices, hurting the people and denying them the opportunities they deserve.

This, in the end, is the real problem with laissez-faire capitalism: monopolies can and do occur under such a system. In order to keep things running smoothly, therefore, at least some regulation is a must, to ensure that competition, and with it the impetus to improve, stays a constant. Not necessarily enough to be called socialist (indeed, great care must be taken to avoid economic stagnation), but a balance must be struck somewhere.

There are some obvious problems with what Millennium writes, even though I agree on most part. Since money is the driving force in a capitalistic system, it is possible for a company to reach a critical mass after which it can only be stopped - or even slowed down - by the ruling of more laws. Take Microsoft for a perfect example. There is just one problem in this too: many people can be bought and what such companies don't lack, is money.

Another problem is - as I have criticized earlier (see the last paragraph of my writeup on the subject) - that devotion to money, greed that is, will damage human relationships and the person's own psychological well-being. Opportunism is good, to a degree, since it does work towards the concept of the Survival of the Fittest, thus contributing to the strength of the human genome but, once intelligence and cunning meet greed and possibly other psychological issues the situation spells trouble for everyone all over (except the finance of the company that particular person works for). Opportunism is, with no exceptions, selfish by default (and thus a perfect property to have in a capitalistic system). Like detective Somerset says, in the movie "Seven":

"Apathy is a solution. I mean, it's easier to lose yourself in drugs than it is to cope with life. It's easier to steal what you want than it is to earn it. It's easier to beat a child than it is to raise it. Hell, love costs: it takes effort and work."

I would add: "It's easier to cover a fear than it is to face it. It's easier to treat an illness than it is to cure it", even though this partly falls under his first statement. With illnesses I'm addressing both physical and psychological illnesses here. It's no coincidence that doctors are more than eager to prescribe anti-depressants to patients suffering from anxiety or other psychological issues. It's no coincidence that the use of anti-depressants, and illegal drugs, especially those that boost one's sense of self (Note: as The Oolong Man pointed out, I don't mean drugs that boost your ego in a "damn I'm good" way but, rather, those that generally make you feel more "at home" with yourself), such as ecstacy or amphetamine, are becoming increasingly more popular. Materialism is a way to cover one's own uncertainties behind a maked-up surface and (the image of) financial independence and, since people in capitalistic countries are becoming increasingly more anxious and uncertain of themselves (or, more accurately, lost) - for a combination of reasons - also materialism is becoming all the more popular.

What time and strength can there be for other people, if you consume yourself in the wonders of capitalism? What will and inspiration can there be for you to seek yourself, when all it takes to feel good about yourself for a short while, is to buy something new? Capitalism and opportunism, promote and endorse short-sightedness and greed and discourage patient, long-term planning and unselfishness but, since it takes planning, time, concentration and effort to work on yourself, to get to know yourself and, to come to terms with yourself, we have a potentially huge problem at hand.

Somewhat sarcastically, I dare claim that the big quest for people in capitalistic cultures today is not improving oneself, it's finding yourself in the first place!

Note: as Cletus The Foetus criticized, consumerism does not equal capitalism. Of course not, but they are very closely related as consumerism is a by-product of capitalism and they both - in their current forms - contribute to problems in human relations, especially in the form of creating short-sightedness and escapism from problems and people.

First, you may want to read the rest of Millenium's writeup and typo's writeup to get more context. Their discussion implies that laissez-faire capitalism has some inherent problems from which we need to protect ourselves. I would like to address them directly.


Millenium: This, in the end, is the real problem with laissez-faire capitalism: monopolies can and do occur under such a system. Under monopolistic conditions, there is no incentive to improve, nor to keep prices low. In fact, in a monopoly, the incentive is towards not doing these things. And so, it doesn't happen.

In order for a monopoly to exist for any length of time, something must protect it from the competition of capitalists with enough money to compete, whose incentive is (obviously) to get some of the profits that are currently achieved through the monopoly. Let's assume something like that exists, and that it is not a law, for that would be a violation of the idea of "laissez-faire capitalism," wouldn't it? For example, perhaps it is the case that all such capitalists find that it is more profitable to expand the business that holds the monopoly by purchasing shares of it, rather than competing. This requires that all such capitalists find the prices set by the monopoly holder to be acceptable. Furthermore, the product provided must be something the consumer cannot do without, for example water, (or else the increasing price will decrease demand]. This is the worst case I can imagine, and I submit that it provides no good reason to avoid laissez-faire capitalism. Here's why:

Millenium: Under monopolistic conditions, there is no incentive to improve...

This means that anyone wishing to provide water in an improved way will generally do it by competing, or else the monopoly will not exhibit this particular negative feature.

Millenium: ... nor to keep prices low. ...barriers to entry rise, as do prices.

I can see how prices rise, but I do not see how barriers to entry rise. I would think that increased prices for water would make it easier for new businesses wishing to provide water to purchase or create the means and make enough money to do well. So it seems that the effects of the monopoly, as described by Millenium, would actually increase the chances of would-be competitors. To say that the emergence of a monopoly decreases these chances of successful competition appears to put the cart before the horse. What makes more sense is that decreased chances of successful compeition can produce a monopoly.

typo: it is possible for a company to reach a critical mass after which it can only be stopped - or even slowed down - by the ruling of more laws.

This is simply a bizarre claim. I'll admit that with the existence of a government that can be influenced by the large amount of money that a monopoly can generate for a company, laws may be created (using that money) that can prevent the compeition that inevitably slows down every successful company. For example, the state holds a monopoly on the creation of money and the use of force for the protection of property (and everything else), and so it is nearly impossible to stop it, but considering the state to be a company that has reached the critical mass of which typo is writing is certainly in direct opposition to an argument against laissez-faire capitalism. Likewise, many cities and counties provide energy suppliers with monopolies over the generation and/or distribution of energy, and this too often makes energy companies unstoppable. But again, these monopolies exist only because of laws, not because of laissez-faire.

typo: Take Microsoft for a perfect example.

This is an excellent idea. Microsoft almost has a monopoly over home operating systems. But Apple still has a strong Mac following, and Linux's place in home operating systems has been increasing. But let's suppose they got squeezed out, and Microsoft suddenly has a complete monopoly over the home-based OS. The claim is that the monopoly will A) lose incentives for improvement, and B) cause an increase in prices. In fact, these are the very reasons that Linux has started to find its way into home computers. It seems clear that Microsoft's monopoly, should it ever come about, would only increase the profits (raised prices, remember?) and the opportunities (Microsoft would stop improving, right?) available to fledgling OS designers.


typo: devotion to money, greed that is, will damage human relationships

Money is essentially a tool for transporting value from one place or person to another. It is an abstraction of value. Greed, or an obsession with increasing the amount of money you hold at the expense of at least one of your moral principles, will damage your relationships with others. Does this mean that you should avoid increasing your net worth? More to the point of using this as a reason to restrain laissez-faire capitalism, should you be prevented by law from such behavior? Can a law really prevent a person who might damage his or her relationships with others from doing so? It seems to me that the answer to all these questions is no. I think the way to avoid damaging your relationships with others is to take responsibility for building and maintaining them. In fact, I'd go so far as to say that the short-sightedness that typo talks about is created and promoted not by capitalism, but by laws that subject our long term plans to the whims of our rulers.

Big business

Highlander and nasreddin both point out how monopolies protect themselves from competition. The methods they cite are:
  • buying competitors
  • using muscle to suppress competitors
  • bullying suppliers to prevent competitors from getting supplies
  • patents and trademarks
  • exclusive contracts
In this list, we find elements that are in opposition to laissez-faire - that is, they require coercive government intervention to be maintained. For example, as Highlander points out, trademarks and patents and contracts are very much encouraged and appreciated by big business. However, they are examples of big business' hypocrisy in its claims of promoting a free market. In a free market, the enforcement of contracts, trademarks, copyright, and patents is done without government intervention, and so when a monopoly uses them as a tool of oppression, they are no longer respected and the monopoly loses the advantages. This, of course, is the basis of the hypocrisy of big business in this area. Big business likes monopoly, and so it encourages the government intervention that supports it.

The other items in the list clearly show that the monopoly uses some of its profit to maintain itself, and as long as the customers (people who need water in my worst-case scenario) continue using enough product to support those levels of profit, the monopoly is able to remain in effect. However, when customers don't like the higher prices, they purchase less - let their lawns go dry, stop washing their cars, or move to a wetter area. This is the balance that a free market achieves. When the monopoly is bad for the customers, they stop supplying it with resources - they give up some water, and they may even pay more for water from what small competitors manage to exist, just to stick it to the big bad monopoly. In a market free of coercion, being bad for the consumer is the one thing that companies will strive most to avoid. Of course, this assumes that customers pay attention and take personal responsibiility for understanding the market in which they are making purchases, and that is something sorely lacking these days because government intervention teaches us to rely on the government for due diligence.

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