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Are all business entities somewhat coercive monopolies today?

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Aren’t all Businesses Coercive Monopolies in Today’s World?

The title of Ayn Rand’s Capitalism: The Unknown Ideal holds a profound meaning. I think she was an extraordinary visionary who understood the world we live in now would have absolutely no resemblance to a different world in which government had never intervened in the economy. I share her vision. Maybe we wouldn’t even be driving cars on roads!

According to Ayn Rand, “A coercive monopoly is a business concern that can set its prices and production policies independent of the market, with immunity from competition, from the law of supply and demand.”

I accept the premise that interference with force by government is the direct cause of coercive monopolies. By force, the government imposes controls on all business today, large and small, hindering their ability to act completely on their own behalf with licensing, subsidies, incentives, regulation, etc. Even the relatively less unfettered businesses must buy a license and are subject to restrictions on zoning, safety, etc. There would be no coercive monopolies, only healthy beneficial ones, in a completely free market economy. That is the point I’m having trouble with because I also hear from ARI that it is possible to compete fairly and do business morally in today’s economy. But how can that be so in light of the fact all business today is controlled in one way or another with force by government? Doesn’t that make all business, regardless of its nature or size, inherently a coercive monopoly in some way?

For example, in Canada, the system is so corrupt that many government friendly businesses who have accepted an incentive, for example, to use the Maple Leaf in their logo or add the phrase “Proudly Made in Canada” in their store window or another example, to incorporate a green message into the business logo, or ad, etc. The businesses who take up the incentive are then favored, i.e., they may be privy to a preferred location with, for example, easy access of traffic flow (i.e., merge lanes into that mall instead of left hand turning light or a preferred location like a government registries office or the post office). Would that not give those businesses a coercive advantage over other businesses who chose not to take the same incentive? If some businesses have advantages over others due to government intervention, doesn’t that make the whole economy inherently corrupt and more difficult for other potential businesses to enter the market and to compete fairly. Wouldn’t that mean all existing business are coercive monopolies? It seems impossible for a true level playing field to exist now in our mixed economies and that all businesses who currently exist have an unfair advantage over those potential new innovations and businesses. If there weren’t any government involvement, I believe there would be so many more businesses competing.

I agree completely with ARI in striving for the Ideal which Ayn Rand articulates. However, my concern is the way ARI frames the message. Currently it appears to be somewhat confusing.

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Re-read Ayn Rand's definition of coercive monopoly: it doesn't say, "a business whose existence is in some way protected by the government". That definition would in fact encompass all businesses since you need basic civilization and enforced property laws in order to have any sort of business.

She said, "a business concern that can set its prices and production policies independent of the market, with immunity from competition, from the law of supply and demand.”.

If the government simply prevents my competitors from stealing my products, that does not allow me to charge my customers whatever I want. Those things don't follow at all.

As for "bad" regulations, their existence alone still doesn't imply a coercive monopoly. If my competitors are playing by the same rules--even bad ones--it's still a level playing field. The government can (and very often does) increase barriers to entry and this can get to the point of precluding competition, but in practicality this is currently, most of the West, the exception and not the rule.

So the answer here is to take markets on a case-by-case basis. The market for letter carrying is clearly a coercive monopoly; the market for common carriers (cable, phone, etc.) are often effectively a coercive monopoly with regulations precluding a viable challenger (although with a certain amount of choice like there exists for Internet access, people are starting to use terms like "duopoly" or "triopoly" or whatever); the market for cell phones, while having very significant barriers--many of which are government-mandated--are coercive monopolies since those barriers are not a significant factor in competition.

Also, a company that builds very high barriers to entry but does not use the government in a meaningful way is not a coercive monopoly (viz. Microsoft, who has a monopoly [which as we know will never ever be broken :-) ] is essentially impossible to compete with but that market position, being established honestly, is not a coercive monopoly.

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Re-read Ayn Rand's definition of coercive monopoly: it doesn't say, "a business whose existence is in some way protected by the government".

First, I didn't say that a coercive monopoly is in some way protected by the government. Essentially what I said is that new potential businesses would have their chance at success compromised to what its full potential could be because the playing field can never be level in today's world.

Take my example where some govt favored businesses would have better traffic flow than others. If the roads weren't public and in govt control, the playing field would be more fair. That is, if property rights were protected and owned by individuals and not govt, coercive monopolies would have no chance at all. Therefore, unless property rights are galvanized in objective law, all businesses are somewhat coercive to others trying to enter the marketplace.

According to Ayn Rand's definition of coercive monopolies, some businesses are coercive because they limit the access to enter the market to compete. We are talking about the extent or degree this affects all new business and I'm saying a monopoly is coercive if it limits to any degree access to free competition. Coercion is the practice of forcing another party to behave in an involuntary manner and that is what occurs today in business the minute a license is obtained by a new business operator. Unfair advantage is just that. . . coercive.

I hope someone can show me where I'm wrong.

.

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I hope someone can show me where I'm wrong.
It's pretty clear that all sorts of government rules hamper all sorts of businesses in all sorts of ways. The impacts of government rules will never be the same on all; some will always be hurt more than others: sometimes by design, sometimes by being favored, sometimes through corruption, and often through luck. In that sense, your post is really uncontroversial.

In your OP you indicated that something ARI says contradicts your OP, but you didn't give many details. I assume most of what ARI would say on the subject would boil down to: government creates too many statist rules that stifle business.

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First, I didn't say that a coercive monopoly is in some way protected by the government.

But a coercive monopoly, insofar as its also a business, is protected by the government in both good ways and bad ways...

As for the rest of the thesis, I'm exactly sure what the point is--perhaps you can clarify. If the point is that, in the USA, it's impossible to do any sort of business because of regulations, I would say that is wrong, and needlessly defeatist. Surely there are some businesses that are very difficult to enter because of regulations, and a few that are practically speaking impossible, but I know a lot about business and I would tell you it really isn't that bad out there (speaking about the USA here--I know zero about other countries in this regard). Also, remember that regulations only effect competition when they are different for one company versus another. The government controlling the roads is actually an example where practically speaking that doesn't happen.

The subtle point here is about degrees and measurement: does the given regulation distort things by .1%? 1%? 10%? 100%. If we're talking about a new business, the risks are so enormous that unless regulations are rampant (100% if you will), other natural factors are far, far more decisive. For ongoing and commodity businesses, a government-mandated "boost" of say "5%" is often still not significant to competition as compared to other factors.

I typically see regulations having the undesirable effect of distorting competition rather than killing it. It sometimes makes companies do weird things, to the detriment of everybody...

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In your OP you indicated that something ARI says contradicts your OP, but you didn't give many details.

Ayn Rand was an "all or nothing" kind of thinker. I am as well.

“In any compromise between food and poison, it is only death that can win. In any compromise between good and evil, it is only evil that can profit.”

Ayn Rand

There are many examples put forth by ARI giving leadership in the Philosophy of Objectivism to businessmen in order to act morally and be truly successful in their pursuits, success meaning achieving happiness. In essence what I'm saying is how can any business be successful in today's mixed economy and how can any businessman strive for true happiness when in some way he is acting disingenuously because he must play by the rules in order to exist? This brings up the issue of morality. How shall man act if he is being forced to act dishonestly for his own long term survival? Will he truly be capable of achieving real happiness?

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There are many examples put forth by ARI giving leadership in the Philosophy of Objectivism to businessmen in order to act morally and be truly successful in their pursuits, success meaning achieving happiness.
I'm not familiar with ARI editorials and can't figure out what you're seeing in them. Are they saying that businessmen can be happy? If so, I don't see a problem with that. Or, are they saying businessmen can be moral. If so, I don't see a problem with that either. Or are they saying that businessmen are special in some way -- in being more moral than some other profession? (I'm not sure what you mean by "leadership").

Anyway, quite apart from what ARI says, I'm not clear about what you're saying. Businessmen can be just as moral as you or me, if we're not businessmen.

Edited by softwareNerd
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Businessmen can be just as moral as you or me, if we're not businessmen.

I disagree with your choice of words. We're *ALL* businessmen.

I'm a computer programmer. That's my business. I sell my time and ability to program for a salary and benefits. I'm also a landlord. I sell the use of my property for money.

If we're not businessmen, then we're living by some means other than productive effort and trade with other producers.

If we're living by some means other than productive effort and trade with other producers, then statistically speaking we're almost certainly living off of the productive effort of others without engaging in trade - which, as Man Qua Man, would be immoral.

One rare exception to the statistics would be the substinence exister who lives solely by producive effort and trades with no one.

Edited by Greebo
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Let me see if I understand properly. Are you saying that by participating in the mixed economy businessmen are sanctioning the Government’s involvement? That because government intervention does create distortions in the market our participation means some are taking advantage of those distortions at the expense of others?

If so, then I think you are dropping a very important component of practical application – The need for people to live. When I say “live” I mean it in the full sense of the word in Objectivism best described by Tara Smith as thriving to the full extent as proper for man. As long as one doesn’t sanction the system it is moral to still work within it (within reason) since the first function of life is to productively live. Or to put it another way, you don’t compound the attack on your values by pursuing fewer values. You still need to live and should do so within the best of your ability.

The purpose of Objectivists trying to convince businessmen to not support the system is to object to it on moral grounds. By accepting the morality of self-sacrifice and agreeing to the terms of the Government (along with their anti-productive cheerleaders) businessmen are effectively tying the rope into the noose with which they are expected to cheerfully hang themselves. It’s the long range goal of dismissing the philosophic source of the mixed economy so it can be eliminated one day.

But the fact is those same businessmen still need to live and should live in every sense of that word. There is a big difference between morally accepting the status quo versus dealing with it as a requirement to live. Right now we are not at the level of dictatorial control that would make associating with others through trade more harmful to the participants than not doing it at all. Trade is still a positive even if less positive then if the Government got out of the way.

You have a good point however and to add to it in a positive way, an interesting discussion can be built around at what level Government intervention does morally justify “quitting the system”. When would it become unproductive to try to be productive, so to speak? Atlas Shrugged builds a major conflict around this point as throughout the book various businessmen go on strike when they hit their breaking point to this question (and the protagonist reveals the morality of that question to them). When would the government reach the level of dictatorship that would make trade not in our best interest? Good question and one I’ll have to think about.

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at what level Government intervention does morally justify “quitting the system”. When would it become unproductive to try to be productive, so to speak?

Rephrasing my question in this way helps shed some light on the idea for me. Of course man must be productive in order to live but I guess I wonder at what point it is fruitless or shall I say turns the "thrive" aspect into mere survival for an individual and therefore society as well. I can think of examples of careers which are, in my view, totally useless.... the mouchers of the business world, like lawyers making money on irrational contradictory law. Or the kinds of products selling on the shelves which are totally useless and are simply made to achieve the highest profit margin.. and somehow the idea of a fad occurs in the culture and everyone wants one.. (easily sold to a population of people who have been rendered non-thinking sheeple) but it is really a useless item and would not benefit anyone's life in any real way. Or imagine all the things that are not being made that would be so valuable to people today but we are being deprived of their very inventionbecause of government interference . I think all of these corruptions are the result of the government mixed marketplace and would not exist in a true lassaize faire system.

Atlas Shrugged certainly aludes to that tipping point and maybe we're already there or have gone past it but where is John Galt?

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Here on the Mike Slater radio show, Don Watkins of ARI has shown how when government mixes in business, they essentially become an arm of the government. In that way, they are coercive monopolies hindering many potential businesses from entering the market in the first place. Just one example is that compliance to government regulation is so cumbersone and crippling to business even before a license is acquired, the time wasted aspect alone is a huge factor toward hindering new, innovative competition.

http://ftpcontent.worldnow.com/kfmbam/podcast/audio/the_mike_slater_show_7003.mp3

I think its essential for ARI to express that fact clearly. Even the lesser unfettered businesses are shackled and somewhat coercive to new business.

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