Specific Free Market Questions

Political Philosophy
1

I consider myself an Objectivist however I am having some trouble finding information to combat some claims made by another person and I was hoping someone here could assist me. This is a 3 way conversation and the following does not include me, my goal is to be able to offer a suitable response to this man. I don’t have the historical knowledge to make my point and am having trouble finding it, further, I am interested in the answer myself.

A person posted up a free market quote (yes this is on facebook :stuck_out_tongue: )

response:

Brian

Post 1:

The fallacy of free market thinking is its inherent humanism–i.e. its belief that man is ultimately good, that a happy employee and happy consumer translates to a happy bottom line and that therefore the corporation and the “free” market will ultimately do right by those it serves. This book says the government is an unnecessary evil. Great, then how about after we’re all done reading The Market for Liberty, let’s go pick up Upton Sinclair’s The Jungle. Or maybe some Charles Dickens or Mary Wollstonecraft. Or my personal favorite, Rachel Carson’s Silent Spring. I always enjoy reading how free market capitalists, when left to their own devices, strive so earnestly for the greater good. (Note: I am a capitalist, but I happen to think non-rancid meat, child labor laws, the abolition of slavery, women’s suffrage, desgregation, a DDT-free food chain, and other similarly tyrannical impositions of our government were pretty okay.)

Brad

Post 2:

The market will correct rancid meat, child labor, slavery, women’s suffrage, desegregation, and a DDT-free food chain without the imposition of government. If the consumers choose to not patronize businesses who abide by said practices, those businesses cannot flourish. It is the ultimate “will of the people”. There is, of course, a role for the government in these issues, but the extent of government intrusion and whether or not that role is for the national government or state governments is the real issue to be addressed.

Brian

Post 3:

This is the stickler, the other two posts were for context purposes:

SweanyLike I said, the fallacy of free market capitalism is the belief in self-regulation and the primacy of the people’s will. The market might correct things given time, but history shows its timeline is neither expeditious nor too concerned about the consumer. If not for the government, would Philip Morris or RJ Reynolds have ever self-regulated? Thank God the government kept its hands out of the automotive business in the early 20th century, allowing domestic carmakers to buy up and liquidate all the light-rail manufacturers just so they could dismantle a country’s entire mass-transit infrastructure and force Americans to buy cars. Phew! What would we ever do without these humble corporate sematarians in our daily lives?

The people who have blind faith in free market capitalism are just as naive as the people who have blind faith in the government. Both have had their bright moments, and both have had their dark moments. The solution is somewhere in the middle.

Can someone link me to some information or otherwise explain Philip Morris/RJ Reynolds and more importantly car makers vs. light rail manufacturers.

I am assuming the latter at any rate has a thorough explanation (in our favor), I don’t see how Ayn Rand could have written a book heavily focused around the railroad industry and not have realized there was an inconsistancy if what Brian poses is in fact true.

Thanks again for the assistance, it is much appreciated.

2

SweanyLike I said, the fallacy of free market capitalism is the belief in self-regulation and the primacy of the people’s will. The market might correct things given time, but history shows its timeline is neither expeditious nor too concerned about the consumer. If not for the government, would Philip Morris or RJ Reynolds have ever self-regulated? Thank God the government kept its hands out of the automotive business in the early 20th century, allowing domestic carmakers to buy up and liquidate all the light-rail manufacturers just so they could dismantle a country’s entire mass-transit infrastructure and force Americans to buy cars. Phew! What would we ever do without these humble corporate sematarians in our daily lives?

The people who have blind faith in free market capitalism are just as naive as the people who have blind faith in the government. Both have had their bright moments, and both have had their dark moments. The solution is somewhere in the middle.

First, I think you should point out that you are vehemently against faith. You base your support of the free market on reason.

Although I have never heard of this whole car makers/light rail thing, I can immediately tell that it is bullshit. Domestic car makers could not force anyone to sell their light rail company to them. Remember that the only reason a rail company would sell to a car manufacturer is that it is profitable for them. Even if car manufacturers did buy up rail companies to liquidate them, other rail companies would be formed. Especially since the car manufacturers would be offering a new incentive to start up rail companies: immediate and profitable buy outs. If I saw car companies buying out rail companies, I would simply create a new company and aim to sell it to them. And then I would do it again. and again. Does this really look like a profitable move for the car manufacturer? Of course not.

Getting into this sort of practical discussion gets to be quite tedious. If I were you, I’d focus on the more fundamental parts of his argument.

He says “the fallacy of free market capitalism is the belief in self-regulation and the primacy of the people’s will.” Free market capitalism does not require a belief in self-regulation. Fraud is illegal as are other uses of force. Capitalism is the only social system that outlaws the initiation of force. And Capitalism is not about “the people’s will.” That would be communism. Capitalism is about the individual.

One more piece of advice, don’t fight for capitalism by claiming that it is the greatest good for the many. Fight it by supporting the individual rights of life, liberty, property, and the pursuit of happiness. Hope that helps.

3

Thank you for the excellent and hasty response eficazpensador. I would agree with your suggestions for argumentation and you also make some excellent points about the rail vs. auto event. Unfortunately it is a bit difficult to analyze it without getting to the specifics, although it is quite libertarian minded it is a relatively useful source for free-market related articles, I went about checking mises.org and was not able to find something specific to this. The other articles I have found have been very short and useless on the details or otherwise are quite left leaning and the language shows obvious bias in their effort to make it a scandal of capitalism.

If someone else is more familiar with this time period being referenced and essentially this whole competition of auto and rail then I would very much appreciate some clarification here. The general gist I get from my research is that rail was basically exploding at the time (much like in Atlas Shrugged) however the Auto Industry sprouted up and went about systematically buying out the rail businesses (I am unsure if the reason for them accepting in this was via unethical means, pure profit motive as eficazpensador suggested, or because for some reason or another the rail business was having troubles of some sort. Essentially the idea many of these articles are trying to pass along is that the auto industry preyed on the rail industry, bought up the ventures and then liquidated them (i.e. destroyed them) so as to eliminate competition.

I do agree however this analysis is suspicious as I don’t see how there could have been any real coercion, no less to make such an industry wide impact, as the government wasn’t exactly like it is today, where it can force businesses to do just about anything for personal or other private interests. My best guess is that there was a lack of profitability/some sort of downturn for rail which led to its demise via purchases among other things. What caused the downturn in that industry I would have no idea.

4

You should begin by defining what “free market capitalism” is. Ask if there has ever been a time in history when free market capitalism has existed. The answer is: Never. You can then move on to ask where he’s getting evidence that free market capitalism [insert effect here]. When I debate people on this topic they always refer to certain events in history as evidence of free market capitalism’s failures when, in fact, everything they can point to is evidence of government interference in the market.

Until you’ve established the definition for “free market capitalism,” you’ll both be going round and round in circles - neither of you talking about the same thing.

5

Excellent point Jeff. I will admit, and it may also be surmised from my new forum account, I am a new objectivist. I am still learning the ropes but I have yet to find any disagreement with the philosophy. I have watched Peikoff’s intro to Objectivism lecture, read Atlas Shrugged, Anthem, and I am just starting into Capitalism: The Unknown Ideal.

However, it seems that this is a shut case more or less if my information is valid, if we are to argue Capitalism in general and not Laizze-Faire.

This credibility of this site is questionable but the information seems to be pretty detailed/etc.

Apparently, GM made concentrated efforts to destroy public transporation. This explains what happened:

Whole Article is here:

http://www.lovearth.net/gmdeliberatelydestroyed.htm

You get the main gist in the first few paragraphs, the rest goes into the real details.

This is the *main part* of the conclusion at the end by the writer:

The streetcar did not die, as Wilkins contended, because of demographics or economics or disinvestments or evolution; it died because GM in 1922 made a conscious decision to kill it and, for the next several decades, pursued a strategy designed to accomplish this objective. Yet, by reason of timidity or negligence or ignorance or cowardice, Wilkins simply cannot bring himself to admit that a powerful corporation would seek to maximize profits by eliminating its competition.

From what I am understanding from reading the first few paragraphs and the conclusion I don’t see how at least some of these activities would not be ruled fraudulent or unethical in some fashion by the Government (monopoly on force/regulation of fraud/etc). I am reading the rest of it now.

6

Brad

Post 2:

The market will correct rancid meat, child labor, slavery, women’s suffrage, desegregation, and a DDT-free food chain without the imposition of government. If the consumers choose to not patronize businesses who abide by said practices, those businesses cannot flourish. It is the ultimate “will of the people”. There is, of course, a role for the government in these issues, but the extent of government intrusion and whether or not that role is for the national government or state governments is the real issue to be addressed.

Poster Brad is wrong that slavery is an economic option that can or should ever be left to the market. Capitalism depends upon the existence of a government that strongly defends an objectively defined rights. No political or economic system incorporating slavery can ever be capitalist by definition. What the market could ever possibly have to say about suffrage, I have no idea.

Brad also says the market is the ultimate “will of the people”. That is no basis upon to which to argue as the role of government in the economy can also be a expression of the ultimate “will of the people”. This is rhetorical fallacy of appeal to authority assuming the “will of the people” could not be wrong.

It really is a fallacy to assign to “the market” powers which it does not and should not have.

7

I am also curious as to people’s opinion of the cigarette industry. Let me know if I am on the right track here, keeping this brief. Why does it need to be regulated? Does the consumer not decide such things? You may say that the cigarette industry should be regulated for ethical reasons, as these companies incentivize bad habits. However is it not the consumer who decides whether or not to partake in such habits?

Again it was a little difficult for me to wrap my head around these specific examples he suggests as I am not familiar with either of them. I am familiar with a fair amount of these types of things and have found they have been due to government regulation, however as you may notice these people often tend to use relatively the same arguments, and out of general curiosity I would like to know the specifics of these cases as they tend to interest me.

8

I am also curious as to people’s opinion of the cigarette industry. Let me know if I am on the right track here, keeping this brief. Why does it need to be regulated? Does the consumer not decide such things? You may say that the cigarette industry should be regulated for ethical reasons, as these companies incentivize bad habits. However is it not the consumer who decides whether or not to partake in such habits?

No industry should be regulated. Many people this to mean “no laws”, so emphasize that fraud should be illegal for any and all industries. It is up to the consumer to decide. If people want a product, let them have it. It does not matter they create an incentive for a “bad habit”. What matters is if a company violates rights, i.e. commits fraud. You are correct in saying that the consumer decides whether or not to smoke. The same idea applies to recreational drugs. Even if you think using drugs is an immoral thing to do, it should not be illegal.

9

I am also curious as to people’s opinion of the cigarette industry. Let me know if I am on the right track here, keeping this brief. Why does it need to be regulated? Does the consumer not decide such things? You may say that the cigarette industry should be regulated for ethical reasons, as these companies incentivize bad habits. However is it not the consumer who decides whether or not to partake in such habits?

No. What is the basis for the cigarette industry to be regulated? What is the basis for it to be taxed? There isn’t any basis. Individuals should be free to make choices for themselves and to accept responsibility for the consequences of the choices they make. No individual may initiate force or fraud on another. Individuals must be left free to use their reason to live by their own judgement. This includes the freedom to choose to use cigarettes, alcohol, or drugs. Prohibition or regulation violates an individual’s right to own and control his own body and life. An individual has a right to make choices, whether or not they are healthy or whether or not others necessarily agree with those choices. As long as the result of those actions do not result in the initiation of force or fraud, then he may take those actions. If they do result in the initiation of force or fraud, he may not take those actions.

With respect to the free market, individuals have the right to offer goods and services to others on the free market. The only proper role of government is to protect individual rights, which means to prevent theft of property, fraud, adjudicate contract disputes, and provide a legal framework in which voluntary trade is protected and involuntary coercion is outlawed.

10

However, it seems that this is a shut case more or less if my information is valid, if we are to argue Capitalism in general and not Laizze-Faire.

There’s no difference between “capitalism in general” and laissez-faire, that’s what I wanted to get across in my first post. Perhaps this quote from Ms. Rand will help.

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.

In order to have capitalism you must recognize individual rights, including property rights. Rights can only be violated by means of force. Therefore, once force is applied, individual rights are violated and capitalism is no longer in practice. It doesn’t matter if that force is applied by another man, or by the government (which is really just another man in the cloak of “the collective”).

Laissez-faire is not a “special kind” of capitalism, it is capitalism. You can’t have capitalism “lite” where the government only applies a little force, only violates a few rights. That’s a mixed-market economy, not capitalism. It’s the system we’ve been using since the time of our founding.

This credibility of this site is questionable but the information seems to be pretty detailed/etc.

Recognize that this author has presented no evidence of rights violations. He’s alluded to a few actions which he uses to imply some wrongdoing, but gives no concretes.

This stood out:

“And where rail systems were publicly owned and could not be bought, like the municipal railway of St. Petersburg, Florida, GM bought their officials instead, according to FBI files, providing complimentary Cadillacs to those who converted to buses.”

You’ll find this sort of thing throughout our history, yet it’s ironically held up as a flaw of capitalism’s: government officials being bought off. How successful do you think GM would’ve been if it didn’t have the force of these government officials behind it?

This is the *main part* of the conclusion at the end by the writer:

By this standard, and the evidence he provided, the author could just as easily have written, “The buggy did not die because of demographics or economics or disinvestments or evolution; it died because Henry Ford in 1908 made a conscious decision to kill it and, for the next several decades, pursued a strategy designed to accomplish this objective.” Or, “The pencil and eraser did not die because of [insert mindless drivel here], it died because Bill Gates made a conscious decision to kill it.”

We need more Henry Fords and Bill Gates. The only people who would argue are Luddites.

11

You’ll find this sort of thing throughout our history, yet it’s ironically held up as a flaw of capitalism’s: government officials being bought off. How successful do you think GM would’ve been if it didn’t have the force of these government officials behind it?

This is the most crucial element of the entire argument, in my opinion. If the government didn’t have the powers that it held, companies would not be able to “force” anybody to do anything. It is by pull-peddling that they are able to do these things.

Also, if the government didn’t manipulate markets through “social programs” we might have a better setup of infrastructure these days. If anything killed the light rail industry it would be Eisenhower’s Interstate system (or just: government ownership of roads in general). Think about it, what is more economical to build? Roads or Railways?

12

Post 1:

The fallacy of free market thinking is its inherent humanism–i.e. its belief that man is ultimately good, that a happy employee and happy consumer translates to a happy bottom line and that therefore the corporation and the “free” market will ultimately do right by those it serves. This book says the government is an unnecessary evil. Great, then how about after we’re all done reading The Market for Liberty, let’s go pick up Upton Sinclair’s The Jungle. Or maybe some Charles Dickens or Mary Wollstonecraft. Or my personal favorite, Rachel Carson’s Silent Spring. I always enjoy reading how free market capitalists, when left to their own devices, strive so earnestly for the greater good. (Note: I am a capitalist, but I happen to think non-rancid meat, child labor laws, the abolition of slavery, women’s suffrage, desgregation, a DDT-free food chain, and other similarly tyrannical impositions of our government were pretty okay.)

Rachel Carson’s book has long been shown to be filled with misinformation and unreliable data. You might want to point that out to him. Every attack on capitalism has been based on the false understanding of situations that are typically thought of as existing in a free market system. There are always instances of government failing to protect individual rights and businesses taking advantage of that situation. Those arguments do nothing to validly criticize capitalism. As others have said, the defense of capitalism needs to be rooted in something other than “the greater good”. That is irrelevant.

13

What bugs me mostly about this debate is, that it mostly consits of predictions about the future that are no where certain. And as JeffS said: “We’ve never had a free market”, so we don’t have any reference.

Just to give you an example:

A: “A free market health care would be best, because bad care by a company would cause them a loss of costumers and therefore cause that only the best health providers would stay in the market in the long term.”

B: “No, only the most profitable companies will stay in the market, which does not necessarliy mean, that they provide the best health care. Denying care or only giving the cheapest will be more profitable than always providing the best treatment, which is why a non-profit solution will be best, because then the aim will not be to do well at the stock market, but to provide good care”

A: “That is not true. Health-care companies do want to make profit, but they have to do it by providing care. They sell a product and if theirs is bad, people will soon notice and switch to better products and in order to always provide a good product most of the profit has to be reinvested anyways. So the main-focus will be providing good health-care _through_ profit.”

B: “That is not true. The maximum profit is achieved by selling the most profitable product, not the best. People don’t necessarily have to notice a bad or mediocre product, when the company invest enough to create a positive image of the product with advertising, lobbying and combating critics. Since health-care is a huge industry, big companies can create an enormous pressure on media-companies who intended to broadcast / print negative feedback about their health-care. People who are denied expensive treatment often times don’t live very long anyways, which reduces their danger to affect the public opinion negativly”

A: “That is not true […]”

And so on and so forth..

I think the only way to find out, is to simply try it out and see if it works. We do have models, but they are noway close to give a prediction of the enourmous complexity that todays economy is.

I wouldn’t be surprised either if it works very well or if it fails terribly.

14

What bugs me mostly about this debate is, that it mostly consits of predictions about the future that are no where certain. And as JeffS said: “We’ve never had a free market”, so we don’t have any reference.

There are more than enough examples from which to draw lessons. These exist in industries other than health0care, in health care at other periods in US history, and in health care industries from around the world.