Does the game of capatalism only have one winner?

  • #1

Main Question or Discussion Point

CAPATALISM "free-market system: an economic system based on the private ownership of the means of production and distribution of goods, characterized by a free competitive market and motivation by profit" Encarta World English Dictionary.

Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?

We have monopoly laws but should we have more regulations? If we could count on everyone to use common sense and abide by a moral code, laws wouldn't be necessary but obviously thats not going to happen any time soon. Do you see us moving in that direction I described? If so what are some ideas to prevent that scenario. I do believe that a free market is necessary to evolve as human beings, but only 'free' enough to continue to advance while still maintaining a more level playing field. Just interested in your thoughts.
 

Answers and Replies

  • #2
Hurkyl
Staff Emeritus
Science Advisor
Gold Member
14,916
17
Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?
If all but one person have very little money, then prices go way down to compensate, except that merchants will charge the one rich guy exorbitant prices.


Why do you think things will converge that way, by the way?
 
  • #3
Well look at walmart, if there were no monopoly laws then eventually everything would be sold at walmart. One walmart could take the place of a hardware store, pharmacy, autoparts store, grocery store, electronics store, etc. and they do and that has happened all over the country. Thats what I am refering to. I am just using walmart as an example.
 
  • #4
149
0
Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?
Not unless the individual is an immortal - they would need to acquire every conceivable asset on the planet. I think it's fair to assume that would take more than a few years.
 
  • #5
Where did I say it would take a few years? That would be a ridiculous question. But let's just say everyone IS immortal and the population is fixed for this question.
 
  • #6
The reason for making everyone immortal and having a fixed population is that money is passed down to each generation of powerful families and political power is passed to the next generation essentially creating a possibly immortal corporation. We have to create boundaries in a question like this or else you spend to much time adding up all the factors that may or may not have an effect completely missing the point, even if you are comprimising accuracy of your results.
 
  • #7
talk2glenn
What do you mean when you say one person has "all the money"? If you mean literal units of currency, with currency defined as a medium of exchange, then the answer isn't important.

Even if true, one person holding all of the currency in an economy would make it worthless; what is the value of a medium of exchange if there is nobody to exchange it with. Everybody else would find other means by which to exchange their goods and services, and the person holding all the currency would lose.

In practice, such a concentration of any good in a free market is unlikely. Abstract away from limiting it to money for a moment, and just consider anything that has value for any reason (a "good" by definition). As the amount of some good available to an individual goes up, and the amount to other individuals go down, the relative values for the "wealthy" person go down, and for the "poor" person go up. This encourages trade.

In your case, the person rich in currency may be poor in, say, grain, and has an incentive to trade some of his currency for somebody elses grain, and vice versa. This goes on until a general equilibrium is reached and all gains from trade are exhausted (everyone is as happy as they can be made without making somebody else unhappy).
 
  • #8
149
0
Even if true, one person holding all of the currency in an economy would make it worthless; what is the value of a medium of exchange if there is nobody to exchange it with. Everybody else would find other means by which to exchange their goods and services, and the person holding all the currency would lose.
In other words, they would start a new game - and the world's richest person would once again be poor?:rofl:
 
  • #9
"Even if true, one person holding all of the currency in an economy would make it worthless; what is the value of a medium of exchange if there is nobody to exchange it with. Everybody else would find other means by which to exchange their goods and services, and the person holding all the currency would lose."

I just wanted to highlight that statement. But first the original question. Let's use walmart as an example. With no regulation and no 'moral code', eventually walmart would take over every business, everyone would work and shop at walmart. Thats what I am talking about. So not really one person exactly its just the way I worded the question.
 
  • #10
Oh I was too late
 
  • #11
:biggrin:
 
  • #12
Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market.
 
  • #13
So where do we draw the line?
 
  • #14
149
0
Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market.
There is another potential outcome - after someone "wins". A dictator might emerge from the masses and nationalize all industry (probably the rich guy's butler).
 
  • #15
russ_watters
Mentor
19,296
5,325
Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market.
Though I suppose it is possible in a limited case that what you are saying could happen, the real world is so vast and dynamic it isn't really possible for one company to be so large that it supplies the vast majority of our goods/services, regulation or not.

What's your point, though? This all seems very contrived.
 
  • #16
The example I used, walmart, is already doing this in the real world. But this is not an attack on walmart, just an example. I'm not saying that walmart is bent on taking over the business world what I'm pointing out is that they could. They have the ability, the only thing thats stopping them is the law. They probably don't want to, but if they did want to they could. I am trying to point out a major flaw of the free market. Trying to point out it's nature. Which wouldn't be relevant except for that it's the system we have adopted, I was looking to start a discussion on how it can me made better. Monopoly laws exist, so that that scenario can't happen. What would you change? What laws would you impose to create a better system? Or is it just perfect the way it is? I am curious about what ideas people might have, I guess thats my point.
 
  • #17
1,679
3
Will a free market economy, on it's own with no regulation, inevitably leave only one person with all of the money, in a closed system were the currency is not manipulated?
No. The economic system will self-organize into a pattern of maximum utility of the capital in the system for the participants.


The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants.

This has always been and always shall be the capitalist system.
 
  • #18
No. The economic system will self-organize into a pattern of maximum utility of the capital in the system for the participants.


The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants.

This has always been and always shall be the capitalist system.
Self-organize?

"Companies only dictated by there inherent drive for monetary gain in a totally free market system would eventually lead to one company supplying all the work and all the services and goods that a civilization needs. That is the nature of a free market."

Let me prove that statement. Again I am going to use walmart and again I am not picking on walmart in particular.

If you own a hardware store, you buy the products you sell from a factory for a certain price. You only have a certain amount of investment capital. Now walmart wants to get in the business. They make a deal with that same factory to buy the same products. Except they can buy in larger bulk for less money than what you pay. They can then sell the products for less in their store ultimately putting you out of business. They (walmart in this case) has even more money, more investment capital. No matter what market they want to get into they can. The hardware store example can be used in any market. They have the power to buy for less allowing them to sell for less putting any smaller company out of business.

If that statement about the nature of the free market is untrue why do we have monopoly laws?
 
  • #19
"The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants."

Agreed, but thats not the free market, the free market is about making money.
Are you going to invest in a company that abides by some moral code or are you going invest in a company that wants to make money for themselves and you.
 
  • #20
russ_watters
Mentor
19,296
5,325
The example I used, walmart, is already doing this in the real world.
Doing what? Walmart isn't anywhere close to being the only good/service provider. Yeah, the're big, but they don't come close to being an example of what you described in the OP.
But this is not an attack on walmart, just an example. I'm not saying that walmart is bent on taking over the business world what I'm pointing out is that they could.
No, they really couldn't.
They have the ability, the only thing thats stopping them is the law.
If Walmart existed for a hundred years in a non-reglated environment, perhaps they could start buying car companies and oil companies, but no, it isn't the law that is preventing Walmart from doing that: they are not capable of it right now.
I am trying to point out a major flaw of the free market. Trying to point out it's nature.
Since this contrived thought experiment doesn't bear any resemblance to reality, how is it a flaw in the free market? I suppose you could say it is a flaw in some hypothetical but nonexistent market, but how is that useful?
Which wouldn't be relevant except for that it's the system we have adopted, I was looking to start a discussion on how it can me made better. Monopoly laws exist, so that that scenario can't happen. What would you change? What laws would you impose to create a better system? Or is it just perfect the way it is? I am curious about what ideas people might have, I guess thats my point.
Well, the closest thing leading down a path in the direction of what you describe would be monopolies and as you correctly note, they've been dealt with pretty effectively. So whether that flaw existed 100 years ago or some other hypothetical but nonexistent market, it doesn't exist in the real world, today. So it's already been made better than that. IMO, the market in general already has too much regulation in a lot of ways, though I think the anti-monopoly regulation is just about right the way it is.
 
  • #21
If Walmart existed for a hundred years in a non-reglated environment, perhaps they could start buying car companies and oil companies, but no, it isn't the law that is preventing Walmart from doing that: they are not capable of it right now

Right now? Of course not. This is a undetermined amount of time I am talking about. I am saying it will happen eventually by design.


Since this contrived thought experiment doesn't bear any resemblance to reality, how is it a flaw in the free market? I suppose you could say it is a flaw in some hypothetical but nonexistent market, but how is that useful?

I just gave a real world example. So your saying that doesn't happen??? That it hasn't already???

If you own a hardware store, you buy the products you sell from a factory for a certain price. You only have a certain amount of investment capital. Now walmart wants to get in the business. They make a deal with that same factory to buy the same products. Except they can buy in larger bulk for less money than what you pay. They can then sell the products for less in their store ultimately putting you out of business. They (walmart in this case) has even more money, more investment capital. No matter what market they want to get into they can. The hardware store example can be used in any market. They have the power to buy for less allowing them to sell for less putting any smaller company out of business. So this doesn't happen in a free market?
 
  • #22
1,679
3
"The most moral economic system is the one most free of coercion and the one which creates the greatest material and moral well-being of it's participants."

Agreed, but thats not the free market, the free market is about making money.
Are you going to invest in a company that abides by some moral code or are you going invest in a company that wants to make money for themselves and you.
Only the free market lives up to that definition. The free market is not "about making money." Making money is the most common but not sole motivation for trade. The ultimate motivation is survival of yourself and your family. Making money is simply the practical face of maximizing your survival.

The free market is exactly that- free because the parties making the trade come to mutually agreeable terms without coercion. It's a market because the point is to trade goods and services.
 
  • #23
russ_watters
Mentor
19,296
5,325
I just gave a real world example. So your saying that doesn't happen??? That it hasn't already???
No, I'm saying your real-world example bears only passing resemblance to the extreme picture you painted in the OP because of how extreme it is and therefore how much time it would take in an unregulated market...which doesn't exist. And you seemed to acknowledge this with what you just said above:
Right now? Of course not. This is a undetermined amount of time I am talking about. I am saying it will happen eventually by design.
Since the US already saw the effect of unchecked monopoly power and has corrected that flaw in the market, the time for a company to be capable of what you described in the OP has passed. It isn't possible anymore, even with "an undetermined amount of time".
 
  • #24
Originally Posted by BilPrestonEsq
I just gave a real world example. So your saying that doesn't happen??? That it hasn't already???

"No, I'm saying your real-world example bears only passing resemblance to the extreme picture you painted in the OP because of how extreme it is and therefore how much time it would take in an unregulated market...which doesn't exist. And you seemed to acknowledge this with what you just said above:"
RUSS

"Right now? Of course not. This is a undetermined amount of time I am talking about. I am saying it will happen eventually by design." ME

No, I said that in response to your accusation that I meant walmart was going to take over the world tomorrow to which I replied the quote above. And the example that I gave describes the steps that any company in a free market would take to get to the extreme picture I painted in the OP. Which would be the final outcome in a free market without regulation or humanity. You still fail to see the point.

"Since the US already saw the effect of unchecked monopoly power and has corrected that flaw in the market, the time for a company to be capable of what you described in the OP has passed. It isn't possible anymore, even with "an undetermined amount of time". RUSS__________________

I made a reference to monopoly laws in the OP. I am aware. My question for you and everyone was simple. First I made a statement about the design of the free market, wondering if anyone else has the same opinion. It was meant to be a critique of the free market system. How it can be altered to serve us better. I was hoping for insightful commentary. Apparently to some it's perfect the way it is. OK
 
  • #25
149
0
I made a reference to monopoly laws in the OP. I am aware. My question for you and everyone was simple. First I made a statement about the design of the free market, wondering if anyone else has the same opinion. It was meant to be a critique of the free market system. How it can be altered to serve us better. I was hoping for insightful commentary. Apparently to some it's perfect the way it is. OK
Clearly, the "immortal" requirement would only be applicable to a corporation. With that said, perhaps the debate would be more relevant if it applied to a new (future) world - such as Mars?
 

Related Threads for: Does the game of capatalism only have one winner?

  • Last Post
Replies
22
Views
2K
  • Last Post
Replies
4
Views
1K
  • Last Post
2
Replies
29
Views
3K
Replies
19
Views
4K
  • Last Post
Replies
15
Views
2K
  • Last Post
Replies
21
Views
3K
  • Last Post
3
Replies
71
Views
6K
  • Last Post
Replies
15
Views
2K
Top