Can free markets exist without legal intervention to guarantee competition?
If not, are they truly free markets?
If so, how?
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Feel free to reply to any comment by clicking the "Reply" button.You definitely need regulation for all sorts of reasons.
But the main reason, is that an unregulated free market economy becomes communism in all but name.... it is inevitable.
What happens if no monopolies or mergers are prevented, with lobbyists influencing policy more and more and enough time passes? You get all the means of production concentrated in one shady all powerful network, with everyone else on the outside excluded from realistic chance of rewarding democratic participation. Sound familiar? We are almost there. In most of the west now, you can't work hard after school to become a butcher baker or candlestick maker. All markets are controlled by big money now, and emerging ones are quickly snapped up likewise. Soon Disney, Virgin, Google and Exxon etc merge. At the same time Coca-Cola, Microsoft, Nestle and Amazon do likewise. Then the two super merged entities also merge.... Then throw in attacks on free speech, demonetizing and deplatforming various speakers, and we really aren't that far away from 1984, its just we didn't see the free market part of the equation as leading to a similarly tyrannical end as communism, it wasn't quite as obvious.
hariseldon
Level 5
Mar 24, 2019
0
The answer to this question depends upon your definition of “free market”, as there are several.
If your definition of “free market” includes “free from regulation”, then any form of legislation interfering with commerce and/or trade would mean the market, by definition, is not free.
DeplorableMe
Level 4
Mar 20, 2019
0
Yes, free markets without government interference do fine except in isolated instances
Isolated instances like cable television.
For the longest time the cable companies had the monopoly. In a very rural place like I live in (6,750 ft in Big Bear Lake, CA) they have one TV station that's kindofa joke.
So there was cable, you subscribed (and paid for) 100 channels but only found a ½ dozen worth watching
Then along came the Amazon Firestick, Roku, and other streaming services that is now putting a major hurt on cable providers.
So the market fixed itself
Eventually
Source:
Thomas Sowell
Phrankhs
Level 7
Mar 20, 2019
0
The market didn’t fix itself for about 3 decades though?’¯_?_/¯
@Hoosurdaddy Same as paying a vastly marked up price per text message on a phone. Just a wee little bit of data but they charged so excessively
Then people were able to get unlimited texting and that money cow up and died
Every monopoly seems permanent. The Vanderbilts and railroads. Rockefellers and oil. IBM and computers. And then, suddenly, they're not so permanent after all.
Facebook and Google have one now. We're using one of the alternatives right now.
timon_phocas
Level 9
Mar 19, 2019
0
It's important to understand your history in this regard.
Those monopolies thought they were permanent too. It got to the point where these companies pretty much chose the president - they used their money to get McKinley elected.
Lucky for America someone killed McKinley and the VP became president - possibly the best president you ever had: Teddy Roosevelt.
He did a great job busting monopolies such as Standard Oil and the Northern Securities Company ( a railroad monopoly).
The USA is in a similar position with the likes of Microsoft, Facebook, Amazon & Google. These billionaires have too much power and another Teddy R is is needed to break them up.
Howdy @andrewo,
As monopolies crest in market power they all try to control political power, too. Google basically operated Obama's digital marketing. When he was elected they opened what amounted to a branch office in the West Wing to provide marketing and research services for his administration. Obama was very kind to Tech Titans. Coincidence?
But the point of my post was that monopolies cannot be permanent. Railroads couldn't stop autos and airlines. Standard Oil couldn't stop Texas oil fields and refineries. IBM couldn't stop Steve Jobs and Bill Gates. Bill Gates couldn't stop the internet from becoming the focus of personal computing.
Facebook/Google/Amazon are on top right now. It won't be permanent.
It's a fairly easy question to answer: Free markets need regulation to define the boundary conditions within which they can operate.
Let's take the example of ice cream salesmen. They each have a van and drive around selling ice cream. Everyone makes a living. The hardest working and most innovative person makes the most sales so the others have to stay sharp in order to stay in business. Salesmen make a living and people are served good quality ice cream at sensible prices.
So why regulate? What boundary conditions are required to make this market work?
The regulators need to define what constitutes 'ice cream' so that the products are not adulterated to save costs. One ice cream salesman may not threaten or attack the other in order to stop him operating in an area. The vans have to comply with road rules. The ice cream making machines need to be cleaned to remain hygienic. and probably a dozen other rules and regulations I've forgotten.
The regulations need to be logical and well written in order to clearly define the boundary conditions for a successful free market.
andrewo
Level 3
Mar 19, 2019
0
It seems that the only example you listed that actually deals with "guaranteed competition" is: salesmen can't attack or threaten other salesmen in order to deny them access to territory - and I'm pretty sure that one is covered by regular laws that prevent assault and threatening behavior. All of the others examples are not directly related to competition.
@andrewo Silly. Obviously In this context, 'regular laws' are laws that don't deal with economic regulation in any way. For example: laws against murder, rape, assault, theft, etc.
Or, as you pointed out: traffic laws.
Again: none of the "examples" you listed have anything to do with guaranteeing competition, except for the one that would be "regular law" in any civilized society: a law against assault and threats.
That's a fair enough analogy for me. 2 questions though.
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"The regulators need to define what constitutes 'ice cream' so that the products are not adulterated to save costs".... assumes that cost is the only factor that consumers consider. I can freeze a cow patty and sell it as ice cream for little to no cost and significantly undercut the competition. That doesn't mean the consumer will buy it. Is it your point that consumers of incapable of determining quality?
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What protections are in place if the top ice cream maker lobbys the regulators to make overly strict regulations that only he can afford to abide, forcing the competition out of business?
@jesseshelton4 no, in may cases consumers cannot assess quality. An ice cream that looks and tastes nice might well put them in hospital a couple of hours later. A car that looks and goes well might have a fatal flaw in the brakes.
We live in an ever more technical world and nobody can have a deep understanding of every technical facet of consumer goods and most consumers have none.
Let me answer your question with a question.
Can you name any examples of companies that were able to maintain a monopoly, while increasing their pricing, reducing their quality, or doing anything else that harms consumers, without then losing their monopoly, and that did so without direct government support?
I’ll help. It has never happened. Monopolies have been broken up, and/or penalized for anti-competitive behaviors, but never for anti-consumer behaviors. Microsoft, for example, got in trouble for giving away too much for free.
Everyone worries about the great harm a monopoly will do once it does not have to worry about competition, but even the threat of a new competitor entering a market has always been enough to prevent those behaviors from occurring.
So one has to wonder why we worry about it so much...
wgarneau
Level 5
Mar 19, 2019
0
Thanks for your response. Assuming Government intervention/curruption at the legislative level is responsible for the creation of monopolies, from a pragmatic stand point, would not the executive branch(justice department) be the appropriate check to that corruption?
Also what about Oligarchy and virtual monopolies colluding to social harm like with Facebook, Twitter, You Tube?
very hard question to answer, companies are in the interest of profit margins and doing what's best for the customers. Which doesn't always relaying to what's best for the employees, in the work conditions for the employees. I think the best goal is to have very limited regulations in the market. An open concept of some basic rules to apply. The market should operate within them, but try not to bring the level of involvement down to the microscopic level. You can never a factor in for every potential hazard or what ifs.
Phonics
Level 6
Mar 19, 2019
0
What's the narrow-minded options in the choices I would say no laws because the market will determine in the best ideas
Rus-T-Balls
Level 7
Mar 19, 2019
0
Okay, for the sake of discussion, I voted no. Here’s why. First, in regards to the U.S., there’s no provision in the Constitution giving congress power to regulate private business. As we’ve seen, anti-trust isn’t so much about ensuring a vibrant and competitive market, it’s more about centralized economic controls. In fact, it resembles mercantilism or fascism. “The more laws, the less justice.”-Cicero. There’s no freedom when it takes a team of specialist lawyers to navigate the arcane variety of regulations imposed. Then there’s the licensing. From what we’ve seen, these laws have worked more towards stifling innovation and competition, and allowing for a handful of Conglomerates to secure their hold on the marketplace through crony-capitalism.
Harpoon
Level 6
Mar 19, 2019
2
What about Oligarchy and virtual monopolies colluding to do social harm like with Facebook, Twitter, YouTube? Florida just introduced legislation that would require these platforms be a space for free speech and penializes them if the ban people for wrong think. Given that social media platforms are essential to run a political campaign and business would it not be within the public interst to prevent these platforms from colluding to ban people/organizations for wrong think?
@Hoosurdaddy Where you have a point, most of the problems you describe are perpetuated through government cronyism. This was apparent when Facebook and Twitter executives were mollycoddled during congressional hearings. As it is, the collusion, or monopoly, amongst these platforms is creating a free market response in how customers are leaving.
I wish I could answer it but I can not make it that black and white.
BrunosDad
Level 6
Mar 19, 2019
1
By all means don’t. Can free markets exist without legal intervention to guarantee competition?
If not, are they truly free markets?
If so, how?
Is there a middle ground?
@Hoosurdaddy Okay then
Can free markets exist without legal intervention to guarantee competition. Yes by all means, Exhibit 1: Shakedown Street at every Dead show I went to. Vans and cars all in a line basically selling all of the same product, most of it illegal and therefor free of governmental interference. If any entrepreneurs product was subpar, fraudulent or unsafe the market acted swiftly. Short of the fact that it was completely illegal there was no need for intervention. I wrote one of my best economics papers on it, thought my professor was going to have me thrown out of school. Ended up giving me an A. Wish I still had it.
Neither. The poll is too simplistic.
Anti-trust as an idea is bad law. However there are some things that a trust can co, usually because it has government power behind it, which should be illegal.
VonO
Level 7
Mar 19, 2019
1
Thank you for your response. The pole by design was meant to be overly simplistic. The overly basic binary of the question was meant to spark conversation fleshing out the nuance lacking in the poll. Also what are your thoughts questions in the header - Can free markets exist without legal intervention to guarantee competition?
If not, are they truly free markets?
If so, how?
VonO:
@Hoosurdaddy
I think the question is a bit off. Let me try: what is the role of the government in a 'free market'? (Keeping in mind that I don't believe in a 100% free market, but not in the modern way 
)
My answer would be: force and fraud. The government should punish violations of force and fraud. Thus if a company forces someone to buy something, or to work... using actual or legal force... then that is an issue for government (not modern government, but still)
And fraud. If someone sells something fraudulently, then that is not free market, and there is a role for government.
There always will be a question of the commons as well... and that is difficult. But modern governments tend to go the wrong way in that area.
@VonO Assuming the government will be effective(I know thats a big assumption) Do you believe the government should step in to ensure competition in markets and prevent monopolies?
VonO:
@Hoosurdaddy Only in the sense I list above.
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