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RE: Does Competition Really Guarantee a Monopoly?

in #economics7 years ago

My humble observation is that competition does lead to centralization of power. It does so by doing exactly as you said, it leads to the capture of the government. When a winner arises due to a superior product or some other means it gains financial and political power. The winner than can capture the government to form some level of centralized power. You can see this in the U.S. in almost every industry. I suppose you can argue that a system of government setup to counteract that centralization fairs much better. I would agree with that. However, when I look around the world I see that these governments are ones that implement a lot of socialist policies (Sweden, Germany, etc.). I never took economics so forgive my loose use of terms. Hopefully, you can see what I am saying. What is your response?

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But there is the distinction: Competition is part of the productive market process, while government is not. The transition from productivity to political plunder is the key point. It is no longer a market process.

You are saying that the monopolies never arise out of the competition. However, I also hear you saying that they do rise out of competition if they transition to political plunder. Those seem like contradictory statements to me. It seems to me that monopolies do inevitably arise out of competition unless the government is designed to prevent it. Maybe this is just semantics.

Not at all contradictory. It is a complete change in means and methods. And government is the monopoly that parents all other monopolies. Corporations and government are not antagonistic, but symbiotic.

Ok..I think I am understanding you. However, with or without government it seems that a monopoly would occur. Once somebody gains an advantage that allows them to gain financial power over others they then have the ability to create a monopoly. If there was no government at all, somebody would soon rise to the top to control all others. In my view government is the only thing that can prevent a monopoly through regulation. However, it is only able to do this if it designed in a way to prevent its own capture.

How would this occur? In order to gain such power, the company would need it be massive. And with size comes inefficiency and waste. That is why the costs need to be externalized through government enforcement.

Government regulation guarantees regulatory capture and cronyism. They go hand-in-hand. It is the problem masquerading as the solution. Government is as susceptible to the same greed and power thirst you see in corporate CEOs, but completely divorced from any of the economic restraints of the market.

Remember, the government is by definition a territorial monopoly in violence. Everything the government has, it acquires through extortion and fraud. Even the most corrupt companies still need to provide goods and services people choose to purchase, but government merely plunders.

I believe the East India Company is a good example. I think there are a handful of examples in which companies began operating in areas of little to no governance. As they grew in wealth and power through market dominance they began using that wealth and power to protect their monopoly. https://en.wikipedia.org/wiki/East_India_Company

They were granted an exclusive government charter. The East India Company was one of the first government-backed monopolies.