Questions on the nature of Capitalism

Political Philosophy
1

I am currently embroiled in a debate and I was curious what the properly articulated refutations of these arguments are, as I am not very good at applying what I know in well-thought out arguments without having to write stuff out yet. I am working on it and seeing how others go about this would help me greatly. Thanks.

At this point, the arguments of mine which had seen some expression were:

First, I am not a Syndicalist: I am a Pareconist. Further, I never used the word “Extort,” but rather “exploit.”

  1. Exploitation is a necessary byproduct of an economic system based on paying employees as low as possible for their retention meanwhile charging consumers as much as possible without turning them into ex-customers… Although I am not a Keynesian by any means, I think he may have articulated it most succinctly when he said Capitalism was “the astonishing belief that the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.” My argument is that older/bigger businesses with more market share are much more competition-hardened and in a free market can easily engage in practices like predatory pricing to destroy the up-and-comer businesses. Further, young businesses face the difficult of little renown. These two facts together make fair competition much more difficult than laissez-faire capitalists pretend is the case.

  2. The free-market allows, and even encourages, the existence of monopolies. I wrote, as rationale, two of my reasons for this: a) businesses can, do, and have used a variety of anti-competitive business practices such as predatory pricing, dumping, tying, etc., and B) that factors such as tradition and habit further exacerbate the lack of real competition in a free-market. You may not think it thus, but the bulk of the people I’ve met in my life have simply out of habit shopped at the same places for as long as I’ve known them and they don’t check prices or quality at other places. The only time it appears that this is NOT the case is when something drastic happens (a Wal-Mart is built in a small town, their favorite restaurant is found to not be up to health code, etc).

The first one is one I have the most problem with answering. The second one I have trouble laying out an argument for well.

Also, it I am not asking anyone to do so, but I am also engaged in this conversation with the same person (both of these are the full context, nothing has been left out)

Tom: My chemical Romance sounds exactly like classic rock… just saying… Im also digging the anti-government lyrics…

Me: The funny thing about these anti-power/anti-government artists is that they are usually socialistically minded, anarchistically minded, or, at the very least, quite liberal in some kind of weird emo/punk “i’m a rebel or we are different from the crowd” type of thing. Its kind of hypocritical if you actually find out the details on a lot of these peoples personal views. I have no idea about Chemical Romance though.

Alexander: Socialistically/Anarchy/Liberal is good…

Me: I guess that would depend on your perspective of things. I’m a Capitalist. The only thing I want from all of that is the social liberalism. The rest eventually leads, philosophically, to statism in my view.

Alexander: Seems that anarchy is completely the opposite of what you think it would lead to.

Me: I am well versed in the modern conception of Anarchy (aka Volunterism) our difference in opinion is a common debate grounded in philosophical matters (metaphysics and epistemology specifically) between Libertarians and Objectivists. Anarchy has not had enough trial runs to say with certainty what it would “lead to”, our guesses are just different. I feel that a properly constrained government enforcing objective laws is necessary or it will eventually progress toward problems. You have the right to disagree however. The root of this difference of opinion between the two group is a very complicated matter that won’t be resolved anytime soon.

John: And has pure Capitalism had enough ‘trial runs’ for us to know what it would lead to? :lol: Where exactly do you draw your line, Ryan? Is 20 times enough? 30 times? When have we tried a system enough to know what it’d lead to? The fact of the matter is that Anarchy has been implemented numerous times throughout history, many times with great success. Further, when one says, “It hasn’t been tried enough,” doesn’t that suggest that, at the very least, that person is suggesting it be tried more? If not, then what you’re advocating is permanent, static, status quo, no innovation in anything whatsoever, etc. Such a position isn’t just stupid, it’s regressive and draconian. Also, why is it necessary to know what it’d lead to? Worst case scenerio: Anarchy devolves into State (which we already have). Why not give it another trial?

Alexander: John beat me to the “We have A, we can’t try B because it might lead us back to A.” argument. :frowning:

Me: When I was referring to trial runs with Anarchy I was referring to societal context. Most anarchic systems were in earlier periods of time in which they did not face issues they would today (scale/changes in the nature of foreign entities, and so on). Also, we have had a good number of trial runs of Capitalism in confined respects throughout the 19th and 20th century in which we can come to *certain* conclusions. We do in fact have much more “to go on” in respect to Capitalism than to the other social system in question. I am not saying it is not viable, I just question its long term sustainability as a system overall. If people want to experiment and see what the truth of the matter is I certainly will not get in their way, if it turned out, somehow, to be better than Capitalism I would of course support it at that time.

Me: As to the long term sustainability of it, that is highly dependent on specific conditions such as the contents of the constitution of said limited government and other things.

Also, saying it hasn’t been tried enough could suggest it needs to be tried more but that would mean eliminating the context of my statement. If people want to try it, be it here or in other countries or locations, I have no problem with them doing so, I just don’t advocate it personally. Also I would appreciate if the cloaked hostility was toned down some.

2

Your friend seems to be essentially making the same argument in both #1 and #2- that capitalism would create monopolies and destroy the free market pricing system. The exploitation argument in his first point can be easily refuted, because the trade between employee/employer and supplier/customer are all done voluntarily. Two people simply do not trade with each other voluntarily unless they both think that they will be better off as a result. If an employer offers somebody a paycheck in exchange for the person’s time and effort and both people agree to the terms, where specifically is the exploitation occurring?

As far as the “capitalism causes monopolies” argument- I’ve always liked how clearly Alan Greenspan refutes this fallacy in CUI:

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. An economy dominated by such monopolies would be rigid and stagnant.

The necessary precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field. This can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises. Without government assistance, it is impossible for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. For if he attempted to set his prices and production at a level that would yield profits to new entrants significantly above those available in other fields, competitors would be sure to invade his industry.

For example, let’s say a cell phone company were to somehow become the only supplier of cell phones in a laissez-faire economy. If this company tried to sell its phones for a price higher than where the price would be set by supply and demand, then those unnaturally high profits would turn the cell phone production industry into a very lucrative endeavor. There would be a huge incentive for entrepreneurs and investors to start cell phone companies, so that they could undercut the monopoly and still make big profits. It wouldn’t be long until the industry becomes flooded with new suppliers who respond rationally to selfish incentives, and the market sorts the price problem out like it does in every other situation.

3

The first argument is made from Marxist exploitation theory, which rests on the disreputed Labor Theory of Value, which basically states that value is intrinsic in the amount of labor required to make an item and any profit or surplus extracted from the amount paid to the worker and the amount taken by the owner is exploitation of the worker by the capitalist.

His complaint about monopolies are essentially a corrolary of his exploitation beliefs.

You need to point to the flaws in the root of Marxist exploitation and provide an alternative, the classical liberal theory of exploitation (which Objectivism agrees with and indeed validates and expounds upon) is that he who initiates physical force is the exploiter, and he who is robbed, looted, or plundered from is the exploited. So in number 1 there is no exploitation because the surplus value is the amount willing market participants voluntarily agreed upon, the worker accepts it voluntarily because of his time preference, and everyone gains. In number 2, there is no exploitation because a single-seller of a good or service has no coercion involved under laissez-faire unless there is some interventionism present, and as long as there is the freedom of entry, the seller must provide a value or face competition, and no Keynesian “faith in greedy people” is required.

Sorry those are big run-on sentences, but then again I am terrible at debating.

4

My argument is that older/bigger businesses with more market share are much more competition-hardened and in a free market can easily engage in practices like predatory pricing to destroy the up-and-comer businesses. Further, young businesses face the difficult of little renown. These two facts together make fair competition much more difficult than laissez-faire capitalists pretend is the case.

This only applies if the market is somehow static, which no market is, or can be. Even if a large business were to acheive monopoly status, all a prospective entrepreneur has to do is find a way to satisfy the same desires using less resources. There are a variety of approaches to this problem, including, but not limited to: producing the same product more efficiently (raise quality:costs ratio); producing a different but similar product more cheaply; providing for a small niche market not well served by the existing company, etc.. Anyone not willing to engage in this kind of thinking doesn’t need to be a business owner in the first place.

Countering his big-business advantage theory as well is the fact that, in the face of truly innovative competition, it is much more expensive for a large company with a great deal of already-bought-and-paid-for capital to retool production methods to adapt to changing demand than it is for a small company with relatively little productive capital. Remember also that the small company was the one that changed the market conditions to begin with, so all the retooling they are likely to need, at least for a while, is in the form of expansion and improved efficiencies of method. If his contention with regard to the difficulty of little renown held any water, all businesses would be little less old than their industries, which is clearly not the case. Wal-Mart, to name an obvious example, has been around for a great deal less time than retail.

All this is largely irrelevant, however, in the face of his definition of the problem as a lack of competitive ‘fairness’. If a free market does not promote fair competition, what does? Is the concept of productive competition even coherent in the absence of a free market? As soon as someone arrogates to themselves the right to distribute resources produced by others, competition moves from striving to create the most value at the smallest cost to being the best at convincing those in power to give you the most for producing the least. Only a government can possibly engage in such an egregious contradiction of reality without quickly falling apart (and that only because they have such a large pool of relatively rational producers to leech off of). Any reduction of freedom in the market is necessarily harmful to fairness (at least according to any coherent definition of the word).

5

And has pure Capitalism had enough ‘trial runs’ for us to know what it would lead to? smile.gif Where exactly do you draw your line, Ryan? Is 20 times enough? 30 times?

Once would be nice, but we haven’t even had that.

6

Thanks for the input everyone. I appreciate it more than you realize.

This was his response:

John Fairbanks First thing: Thank you for responding to the issues. I realize that you may not have wanted to engage yourself in a long or deep discussion (granted, we have not yet begun to explore the depths of this conversation), but I simply cannot take “These issues have already been debated” or such statements seriously at all. Further, I DO appreciate such conversations as these. So, again, I offer you my thanks at least.

Voluntary Trades: I disagree with the idea that all trades which are voluntary necessarily involve consent and fairness. As an Anarchist, my concern is with authority, and it is my position that businesses hold authority. When a business sells something that an individual needs, or even desires very much, that business has a certain degree of latitude as far as where they can set the cost of the good. Granted, there may be other businesses to buy the goods from, but even you must agree that there aren’t always alternatives–the market may be a small one, your access to other businesses may be hindered, and so on. Further still, multiple businesses could conceivably agree to keep prices above what the market would normally set them at in an attempt to increase profits for all of them. In any case, there are certainly circumstances (in my mind, the bulk of circumstances) in which the choices are so limited as to make calling the trade “Voluntary” is sort of dishonest. When people are forced with, say, absurdly high health care costs they may agree to pay for it in order to continue to live but I think it folly to call this trade “Voluntary”–And mind you there is in this analogy no plunder, robbery, or looting; there’s only what you would seem to describe as free, voluntary trade.

Monopolies: You wrote, “The necessary precondition of a coercive monopoly is closed entry—the barring of all competing producers from a given field. This can be accomplished only by an act of government intervention, in the form of special regulations, subsidies, or franchises.” I have trouble understanding why this is necessarily the case. Are you telling me that anti-competitive business practices like tying, dumping, and predatory pricing don’t exist and/or have never occurred? Further, you wrote that if prices are set too high then other competitors will invade the industry. This is reasonable to suggest, but I don’t see it necessarily being true either. If the start-up costs are high at all (which is usually the case) then that already eliminates opportunities for a lot of people entering the field.

Additionally, if the field is selling a product for which finite materials are required there are further difficulties. Given these things only, it is conceivable to imagine situations in which there is a de facto monopoly simply because of how limited the resources are (so limited that the business that pioneered the field bought them all up, for instance) or as a result of the area having enormous start-up costs so that other people can’t afford to enter the field (say the start-up costs were so high that Bill Gates had to spend all his wealth covering them). You ended by talking about this section by talking about Economics courses (about which I care not; the institution through a variety of mechanisms produces substantial bias in fields like Economics) and saying that history has proven again and again that those things about which you have spoken are true. It begs me to ask you when and where these things have transpired? As far as I am aware, there hasn’t been “An intervening force”–That is, free-market Capitalism seems to have never existed. Of course, I may be mistaken, and am open to whatever evidence you may shoot my way.

Other Economies: You wrote, “All this is largely irrelevant, however, in the face of your definition of the problem as a lack of competitive ‘fairness’. If a free market does not promote fair competition, what does? Is the concept of productive competition even coherent in the absence of a free market?” It must be understood that I only identify the lack of competitive fairness a problem inherent to the free-market program. I don’t really find the idea of competitive fairness to be of any inherent value, it’s just that I think that it WOULD be of utmost important for free-market economies to function well, and I don’t think that in a free-market productive fairness can really be maintained.

In your last paragraph, you moved to what looks like should be either an attack on an economy that I support or an attack on everything not free-market, but neither have these things have been done. If you were attempting the former, I suggest you go back and look at what system I told you I advocated and then learn something about it. Actually, if the latter was attempted I’d recommend the same. The only available alternatives aren’t “Mixed Economies,” “Free-Market Economies,” and “Socialist Economies.” (INSERT: He is a Pareconist)

And now I slip once more into chemical cryostasis. Toodles, my beloved interlocutors.

7

… John Fairbanks…

I disagree with the idea that all trades which are voluntary necessarily involve consent

This is like saying: “I disagree that all bachelors are necessarily unmarried.” or “I disagree that all ice is necessarily a solid.”

As an Anarchist, my concern is with authority, and it is my position that businesses hold authority

Translation: You have stuff. He wants your stuff, and he’s going to take it. You have a dollar. He has a gun.

Further still, multiple businesses could conceivably agree to keep prices above what the market would normally set them at in an attempt to increase profits for all of them.

They could, and every time this has been tried, the cartel always crashes because it is an inherently unstable business model and there is still free entry into the field of competition.

When people are forced with, say, absurdly high health care costs

Forced. Forced to deal with artificially inflated prices because of government interventions, and forced to purchase the well-connected companies products because of government mandates.

Are you telling me that anti-competitive business practices like tying, dumping, and predatory pricing don’t exist and/or have never occurred?

Any crook can take something which doesn’t belong to him and/or beat his neighbor over the head in the process. That is why we are not “anarchists” like this crook, and want to form a protection agency (government) which functions according to the recognition of individual rights, and goes after those who initiate force or fraud.

If the start-up costs are high at all (which is usually the case) then that already eliminates opportunities for a lot of people entering the field.

That’s why we have these things called “banks” and “investors” which give you these things called “loans” and/or buy stock in your company if you can impress them with your plans. Or should the “anarchist” just go steal the necessary cash to start his business because the bank is obviously in a “position of authority?”

Additionally, if the field is selling a product for which finite materials are required there are further difficulties.

We live in a world of scarcity.

It must be understood that I only identify the lack of competitive fairness a problem inherent to the free-market program.

You may want to be careful how you talk about “fair competition” with him, because he thinks “fairness” is based on egalitarianism and not justice.

INSERT: He is a Pareconist

ie., recycled communism. :rolleyes: Well, it’s unlikely that you will succeed in convincing him, but you can always remind him that under laissez-faire, he is free to be whatever he calls it, but under his system, you can’t live free because there exists no property rights.

8

Would you mind asking him if he agrees with this description of Parecon before I bother to systematically expose it’s inherent contradictions? I’d hate to waste the effort, otherwise. I posted the full quote as an FYI for anyone else on this forum who wants to know the face of this enemy of freedom.

  1. How would you describe Parecon for those who have never heard of it?

Participatory economics is a model or vision for a different way of conducting production, consumption, and allocation. The guiding values are solidarity, diversity, equity, and self-management. These values mean people caring about one another and being social in their inclinations, having varied options and outcomes, having fair distribution of wealth, income, and also circumstances, and it also means people having a say over the decisions that affect them in proportion to the extent they are affected.

Having these values at its core means that participatory economics proposes institutions that (it claims) propel these results rather than propelling anti-sociality and individualist competition, homogenization of outcomes and tastes, gross inequality, and top down hierarchical rule all familiar from both capitalism and the two post capitalist coordinator models that their advocates respectively call market socialism and centrally planned socialism.

What institutions does parecon offer instead?

Workplace and consumer councils with self management decision making.

Balanced job complexes, which means a division of labor in which each actor has a mix of tasks and responsibilities that is balanced so as to convey average workplace quality of life and average empowerment to all.

Remuneration only for effort and hardship – not for output, power, or property.

And…

Participatory planning – which is a cooperative interactive approach to allocation that replaces both markets and central planning.

So parecon combines these central institutions into an economic system that accomplishes economic activity to meet needs and fulfill potentials while also propelling solidarity, diversity, equity, and self-management. Parecon therefore gives us true classlessness and is therefore an alternative both to capitalism and to the horrible systems that previously existed in Eastern Europe.

Source: http://www.zcommunications.org/parecon-by-michael-albert-1

9

Exploitation is a necessary byproduct of an economic system based on paying employees as low as possible for their retention meanwhile charging consumers as much as possible without turning them into ex-customers

Ask him if he thinks he exploits grocery companies if he engages in price-shopping. That is, after all, trying to find the most value for the least money. It’s the same activity he is condemning when done by employers or producers.

10

Ask him if he thinks he exploits grocery companies if he engages in price-shopping. That is, after all, trying to find the most value for the least money. It’s the same activity he is condemning when done by employers or producers.

It is absolutely unfair that a consumer should be able to deny me their money and buy a competitor’s product at a lower price! How can I possibly stay in business if consumers are free to exploit producers by only buying products at the lowest possible price while simultaneously demanding the highest quality product! They are trying to trade a minimum amount of their value for a maximum amount of mine!

:dough:

11

Voluntary Trades: I disagree with the idea that all trades which are voluntary necessarily involve consent and fairness. As an Anarchist, my concern is with authority, and it is my position that businesses hold authority. When a business sells something that an individual needs, or even desires very much, that business has a certain degree of latitude as far as where they can set the cost of the good.

It is certainly true that the more I desire a good, the more I am willing to pay for it, and the more than a monopolist can charge. However, there is an upper limit to what he can charge which is always present in the market system. That upper limit is how much I value the good. He cannot make me engage in a detrimental trade. I may not like the terms of trade, but by definition I like them better than I would like it if the monopolist didn’t offer his good at all. He is offering some net value to me, at least; otherwise I simply wouldn’t buy it. I really really want an iPod touch. I think they’re awesome; it’s a great invention. However, I am not willing to pay the pricetag at my current income level. Apple are the only people offering this device, and they charge damn high for it, in my opinion. However, they have done nothing to make me worse off than I’d be if Apple didn’t exist at all. Someday soon, I’ll be in a situation to better afford what I would consider “luxuries,” and I’ll make the purchase then. Until then, they are incapable of imposing any actual cost on me. This argument applies whether there are alternatives or not. This is why, in a free market, the power of a “monopoly” only extends so far, and the position of monopoly or oligopoly is inherently insecure in a market context.

When people are forced with, say, absurdly high health care costs they may agree to pay for it in order to continue to live but I think it folly to call this trade “Voluntary”

It is telling that the example he uses is one in which government regulation of the industry has brought about the cost explosions he speaks of. If exorbitant prices were really a common feature of a market economy, you’d think he could find an example from a relatively deregulated industry.

Are you telling me that anti-competitive business practices like tying, dumping, and predatory pricing don’t exist and/or have never occurred?

All of these practices are inherently limited or unstable, again because of the features of a market system. As a producer, if I have a highly desired good A, I can only tie as big a good B to it as people value A. My ability to tie goods together is limited in the same way as my ability to price highly, discussed above. I still must offer the consumer some net value, or I get no business at all.

Dumping and predatory pricing are not sustainable activities. Corporations hemorrhage money when they engage in such practices. And when those practices come to a stop, as they must, the fundamentals of the situation are unchanged. Others may enter the market if they can compete below the corporation’s long-term price (the price they have to charge long-term to stay in business). Predatory pricing cannot create a permanent monopoly. At best, it can bankrupt a few current competitors. However, the list of potential competitors is virtually unlimited, and when the practice stops, some of these people will re-enter the market to take on the corporation which has foolishly broken its balance sheet. Even if Wal-Mart beats K-Mart in this way, that is no long-term solution, because stores like Costco and Target can just as easily pop up when Wal-Mart raises its prices again.

If the start-up costs are high at all (which is usually the case) then that already eliminates opportunities for a lot of people entering the field. … it is conceivable to imagine situations in which there is a de facto monopoly simply because of how limited the resources are (so limited that the business that pioneered the field bought them all up, for instance) or as a result of the area having enormous start-up costs so that other people can’t afford to enter the field (say the start-up costs were so high that Bill Gates had to spend all his wealth covering them).

Let’s examine this start-up costs argument in more detail, because it is one of the most common ones used. Let’s say I head a corporation, and I see the potential for investing in an entirely new product, never before seen by my consumers, in which the startup costs are exorbitant. I make a major investment, bring this product into existence, and sell it at an incredibly high price. Let’s say this high price is one hundred times my current production costs, now that I am all set up. Is this price really too high?

Well, simply looking at current production costs, it’s easy to see why some would say the price is too high. It only costs be ten dollars to make each unit, and I’m charging 1000! What’s up with that? However, this view fails to take into account the fact that the current production costs are not the only costs associated with making the product. The start-up costs were real physical barriers that I overcame in order to produce the product. Producing the product is expensive, when all things are considered. Furthermore, how high a price I can actually charge depends on how expensive the good is to make (on how high the start-up costs were). If the good is more expensive to make in terms of start-up costs, I can charge a higher price for it. If I really start charging too much, even factoring in the start-up costs, then it becomes profitable for someone else to pay the start-up costs and enter the market. Thus, the amount I can charge is limited by the costs of production.

But… that’s no different than any good, anywhere. The more expensive the production, the higher the price. If you factor the start-up costs into production costs, what you find is that so-called “monopolies” who paid high start-up costs are in fact no different than any other corporation. The amount they can charge is directly related to the amount they had to spend to produce the product. The fact that a lot of it is a lump-sum at the beginning is, in the long view, irrelevant.

The only difference between a monopolist who paid large start-up costs and someone who’s just producing and selling at a price slightly above production costs is the spacing of the costs paid by the company. The first paid a lot of the costs up front, while the second pays most of them as each product is produced. It only looks like the monopolist is charging too much if one takes too restrictive a view of his costs and excludes the start-up costs.

12

Thanks for posting that, this system is laughable, and so clearly based on altruism as an ethical standard I couldn’t even accept if it didn’t lead everyone to starvation.

13

Would you mind asking him if he agrees with this description of Parecon before I bother to systematically expose it’s inherent contradictions? I’d hate to waste the effort, otherwise. I posted the full quote as an FYI for anyone else on this forum who wants to know the face of this enemy of freedom.

His response:

Yup, as far as a synopsis goes it was pretty good. Also, I am a subscribing member of ZCom and have myself had the privilege of some communication with Michael Albert (who began ZCom and was basically the founder of Parecon).

In other words…fire away captain!

14

I’m sorry it took me so long to reply; we just had a big storm come through and were without power for about a day. Here’s what I came up with as a critique:

You appear to be advocating that people be free to do what they want to do without having to work under anyone else’s supervision. The problem, as you well realize, is that that it is simply impossible for a productive enterprise to have no supervision, so you replace the business owner with the collective group of workers, and assume everyone will prosper equally and care about one another. All you can achieve by this is what is known as a tyranny of the majority; everyone, voting on those issues that most affect them personally, will vote to receive the most remuneration for the least effort. Those who vote otherwise will receive fewer resources, and have progressively less influence. The most dishonest will grow in number and influence, and end up as the de facto rulers. You can’t erase self interest from humanity by wishing it away.

However, I have been assuming I was arguing with an Anarchist, who would not want any oversight organization (like a government) to be given the power to decide what is “fair” distribution of wealth, income, and circumstances (i.e., what constitutes a unit of effort and hardship, and what amount of remuneration is appropriate per unit). If you do advocate such an organization, how is Parecon different from centrally planned socialism? If not, how do you propose these determinations will be made?

Perhaps you envision equally powerful committees coming together and cooperating on distribution between one other. Who sits on those committees? If your answer is any number smaller than everyone, we now have the top-down hierarchal rule you despise, as the committee members will certainly have more power than others. How long before that becomes a full-time job, with benefits? If it is in fact everyone, how do you suppose any decisions will ever get made out the cacophony of needs that would inevitably present itself at any such meeting? Do you really believe those decisions will be wise ones, even by your own standards?

Regardless, the most advantageous position for an individual to take, in such systems, would be to produce the smallest amount of resources relative to everyone else while doing his best to convince others of the greatest hardship and expenditure of effort on his part. To produce more of something with less effort would earn no benefits, so why improve skills or methods? For that matter, why pursue excellence when even a mistake requires an expenditure of effort, therefore earning more (per unit of effort) than expending the effort to do the job well? You may protest that human nature is better than that, that people naturally pursue excellence, and rightly so, but under a Pareconist system it is not those who are better who will prosper. If effort and hardship, not productive ability and intelligence, are the standard by which wealth is distributed, then mindless brutes will reign supreme.

15

Voluntary Trades: I disagree with the idea that all trades which are voluntary necessarily involve consent and fairness.

I need clarity on what his argument is before I can refute it. In this first sentence he claims that not all voluntary trades are consensual, which would mean he’s using a definition of “voluntary” that I’m unaware of. (Merriam-Webster [my emphasis]: “proceeding from the will or from one’s own choice or consent”) But then later in the paragraph he argues that the very trades in question are not even voluntary in the first place. Which is it?

Are you telling me that anti-competitive business practices like tying, dumping, and predatory pricing don’t exist and/or have never occurred? Further, you wrote that if prices are set too high then other competitors will invade the industry. This is reasonable to suggest, but I don’t see it necessarily being true either. If the start-up costs are high at all (which is usually the case) then that already eliminates opportunities for a lot of people entering the field.

Those are competitive business practices. None of them impinge upon the freedom of anybody else to start their own company in the same industry. The don’t ban entry the way that government does.

His intent seems to be to prove that companies will do these things to set prices higher than the market would, but that’s not where we’re in disagreement. My point is that if a monopoly raises its prices without an increase in the cost of supply and independent of market forces, then this will create huge profit incentive for new suppliers to flood the industry until the prices reach equilibrium.

His argument that high start-up costs would eliminate the creation of those new suppliers is unrealistic. These days, investors fund new business endeavors with even the highest start-up costs, as long as they’ll make an adequate return on their investment. They find enough profit motive to do so even in these industries where the prices are set by the natural forces of supply and demand. So, in a situation where a monopoly has set prices independent of the market and created profits that greatly exceed supply costs, why wouldn’t investors all be eager to get into that field? If the profit of prices set by supply and demand is enough incentive for investors to create new competition, then why wouldn’t the even higher profits of prices set by a monopoly create an even higher incentive for investors to create new competition?