I agree with where you are going but I entirely disagree with your description of Free Markets and Capitalism.
free market - an economic system in which prices are determined by unrestricted competition between privately owned businesses
There's nothing in there about consumers having accurate information. If anything, caveat emptor. Moreover, if you are a free market entrepreneur then the absolute last thing you want is fairness to your competition or fairness to your consumer. Those are costs of doing business, to be avoided if possible. Naturally, Larry is only trying to avoid them.
That's why we have regulation. That's why civilization has evolved to have government. That's why Libertaristan isn't on any maps. That's why The Fountainhead is such a misguided fantasy where entrepreneurs can do anything and it's always better and governments can do nothing and it's always worse.
Free Markets and Capitalism don't stand for anything. That's not even a criticism of them either. Civilization might stand for something although that something is a provisional something at best but then that provisional something is better than nothing.
The requirement for consumers having accurate information is a government regulation. In the United States, it's enforced by the Consumer Protection Agency. It isn't a free market requirement.
Yes, but practice has taught us that it is an important part of any functioning market.
> the absolute last thing you want is fairness to your competition or fairness to your consumer.
I completely disagree with your assertion here. I want an advantage over my competition, sure.. but I still want it to be fair. An unfair market is a fickle and unreliable one. That's not good for anyone.
Further, if my consumer walks away from the deal feeling that it was unfair then I've really done myself a disservice in the long term. It's a reason why "Goodwill and Brand Awareness" are line items in the world of corporate accounting.
> Free Markets and Capitalism don't stand for anything.
They stand for the implicit agreement that we are all created equal.
> They stand for the implicit agreement that we are all created equal.
All men are created equal is a quotation from a government document, Jefferson's phrase from the Declaration of Independence. It has nothing to do with free markets or capitalism. The colonies were royally chartered corporations and these men revolted from their owner. They kept slavery but that's another matter.
https://en.wikipedia.org/wiki/Perfect_competition#Idealizing...
"In economics, a free market is an idealized system in which the prices for goods and services are determined by the open market and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority." https://en.wikipedia.org/wiki/Free_market
The requirement is for individual trades to occurs without duress or manipulation outside of the trade. Also, prohibiting information exchange by government regulation is not allowed as that interferes with the market.
> I completely disagree with your assertion here. I want an advantage over my competition, sure.. but I still want it to be fair.
Thank you for that. I really dislike the common model of capitalism where the entrepreneur is viewed as a robot whose only goal is to maximize profit with the law being the only boundary.
In my social bubble the landlords that I know care about their renters' wellbeing even if it costs them a bit. I only know a handful of entrepreneurs personally but for all of them fairness and dignity have greater value than profit. Also the millions of small shops in cities around the world that are content just selling enough every month to make a comfortable living with no goal of maximizing anything.
Yes, huge cooperations are different than the guy selling Kebab at the corner. But still I would appreciate if people would see entrepreneurship and businesses not so statically as money-maximizers.
Sort of. They do stand for something, even though we were meant to believe they’re the natural state of affairs.
Saying free markets “stand for nothing” presumes that markets are the natural state of affairs among humans and that classical economists were merely specialized anthropologists observing behaviour in the wild. That’s not accurate though - Karl Polanyi and his great old book the Great Transformation really explores this (and the causes of WW1).
The “free market” was deliberately imposed on western society in the 18th-19th century by politicians believing classical economists WERE these anthropological soothsayers rather than just crafting a social science, secular religion (“the invisible hand”), and belief system out of what once was a niche trading technique used between communities or in actual bazaars (market trade). It was better than mercantilism which was the previous prevailing theory among the powerful, but also societally unworkable. Reciprocity was the system most used through history, not free markets. It does stand for something, or at least lassez faire does: all societal power and behaviour should be organized and controlled by price and property. This is why libertarians have such a hard on for the free market, in their view, the market IS society, the market IS human behaviour, rather than one niche aspect of it. The fact we don’t have free markets is because humans tend not to want to subordinate every aspect of their life to a number (price, wealth, property). Sometimes market inefficiency is called for.
Capitalism is different from the free market theory, as classical economics implies the markets shouldn’t actually tend towards profit, it should tend towards equilibrium. One can also have capitalism without a fully free market, as most of the world has never had a fully lassez faire market for very long. And China is seeing how far one can go down this path. Capitalism really has to do with the pattern of market disequilibrium, profit making/taking, investment and re-investment of these profits to enable growth rather than a static economy of a fixed set of commodities (the unrealistic assumption of underlying classical economics). One might consistently agree with the benefits of capitalism over say, state-controlled investments, while disagreeing with completely free markets.
For that reason I think it’s a bit misleading to suggest that all businesspeople and entrepreneurs just want an unfair playing field, as the “free market” really doesn’t care. There are many perspectives out there as to the right set of constraints on the system. There never has been a “natural” set of constraints as they’ve all been human contrivances anyway. (Bitcoin fanatics railing against “fiat” also haven’t figured this one out yet). An entrepreneur might want fairer markets regulation. They might not. It’s in the eye of the beholder.
This was pendantic, sorry. I agree, Ayn Rand is a fairy tale for people that haven’t figured out that they’re not the protagonist of the world’s story, they’re just another jackass, hopefully trying to solve more problems than they cause.
However, left to our own devices, I do think that businesspeople and entrepreneurs just want an unfair playing field. I sure do. I don't like Thiel but competition is for losers captures what I'm trying to say here. We may start with Don't Be Evil but if we can be evil, we will be evil and we can be evil. That is why we have evolved to have laws and regulations and then that is why we have further evolved to regulatory capture. It is our nature.
It's something you can do if you want to. Nobody will stop you as long as it's legal, so there will be a non-trivial amount of companies doing just that. It doesn't matter that the guy on the cornerr is trying to be fair. At some point he'll be screwed by a kebab chain which pays the minimum wage and can use the economy of scale in deliveries.
And that's even before we talk about companies that go for risk*penalty<gain situations where they can ignore the law.
the one I know too... until the definition of fairness comes from some else than them... My point is that IMHO it takes extraordinary capabilities to make money by selling someone elses's work and maintaining high moral standards when it comes to solidarity, helping others, sharing profits, etc.
No. A free market is when people freely exchange goods and services. The prices are determined by free negotiation. Force and fraud are proscribed.
Note that this does not require perfect information. But defrauding someone is not allowed.
> if you are a free market entrepreneur then the absolute last thing you want is fairness to your competition or fairness to your consumer.
The most successful companies, and most successful salesmen, are the ones that please their customers, because repeat business is necessary for long term success.
> It isn't a free market requirement.
Again, the free market does not allow defrauding customers.
This narcissistic fantasy has passed it's prime.
The endgame of any truly free market, is the sale of the market. A market that is not for sale, is not a truly free market.
This is the antithesis of 'we are all created equal'.
This being the Real World means pure free markets are impossible and in fact dishonesty and chincanery can utterly distort markets, leading to all sorts of perverse outcomes.
Ironically, for a free market to operate well, you must have reasonable constraints on market participants.
Uh, no. We are not. Both nature and nurture deal unfair cards. And markets and capitism most certainly alone do not promote solidarity. That is, in any real world scenario plaid out so far.
On the contrary, completely free markets often lead to oligopolies, monopolies and cartells.
Or is it supposed to be a bad joke in empirical economics, to start with a population with equal chances and see it tumbling into a winner takes all pyramid of distributions of wealth?
And your assertion about information asymmetry having nothing to do with free markets is actually addressed in the economic literature on perfect competition.
Between them you have : http://www.oxfordreference.com/view/10.1093/oi/authority.201...
1 A market that is free from government interference, prices rising and falling in accordance with supply and demand.
2 A security that is widely traded on a stock exchange, there being sufficient stock on offer for the price to be uninfluenced by availability.
3 A foreign-exchange market that is free from influence on rates by governments, rates being free to rise and fall in accordance with supply and demand.
So, I can see why that was used, but it's not definitive.
Those would be perfect information. I don't see how this could be a reasonable requirement, and it certainly is not necessary for the free market to function.
Consider the dealer selling you a car that disintegrates a week later. I'm not a lawyer, but there's a doctrine of reasonableness and fit for purpose going on here, and you're entitled to recompense if the dealer did not disclose this to you - i.e. it's fraud.
If a grocery store sold you milk poisoned with lead, and did not disclose it, that's fraud as well as assault.
Truth in labelling laws are merely a convenience for that, so instead of things being decided case by case in civil court, having a blanket standard on how food should be labeled, and sanctions when it is fraudulently labeled, is entirely reasonable and makes for efficient operation of the free market. It is not "perfect information", which is by its nature rather absurd, and I've never seen it listed as a requirement by any free market economists.
I do wonder why people go out of their way to misrepresent libertarianism. This shouldn't have to be pointed out, but libertarianism != anarchism. To have any kind of working market, you need a functioning government that can protect property rights, provide for compensation if a contract is broken, etc, etc.
This is incorrect. Free markets rely on enforcement of contracts, property rights, and prohibitions on force and fraud. This requires a government.
For example, stealing from your neighbor is not a free market operation. Neither is delivering someone a Ford when you sold it as a Ferrari.
> The requirement for consumers having accurate information is a government regulation. In the United States, it's enforced by the Consumer Protection Agency. It isn't a free market requirement
Yet, when Oracle prohibits publishing benchmarks you can find benchmarks about MySQL, Mongodb etc on the web
But there are many areas where self regulation works better than government regulation. Print media is a prime example. If one newspaper accepts a bribe for promoting a product, the bribe could come to light and destroy the trust the newspaper has (an intangible asset).
To get back to the topic of databases: This is bad press for Oracle. Are they hiding some edge cases where the performance is unacceptable ? Mission critical systems should rather be built on open source databases, which have been properly scrutinized.
You can find all the benchmarks you want here http://www.tpc.org/default.asp including Oracle.
The thing is, a skilled DBA, given two databases and told which one should be the winner, can easily construct a benchmark that seems perfectly plausible, but favours one over the other. The MongoDB guys did it very blatantly e.g. by comparing Postgres writing to disk with them writing to memory, but that's because they don't know anything about databases and lacked the skill to do it subtly, e.g. by finding pathological edge cases in query optimizers. That's what the commercial vendors are most worried about.
I heard way too often from them how "government does everything inefficently" and "everything would be better off served by private for-profit entities" or even "taxes are theft", when in reality they just want a bit smaller taxes and a bit less regulation.
Those might be extreme statements even for libertarians, but it's hard to recognize them as such when they infect almost every discussion about the topic.
In a completely fair game we could choose not to do business with known unfair players. Real world does not work this way. As soon as there is capital surpluss, someone will get an upper hand in negotiations. The wealth allows the other party more negotiation tactics. Hence, anyone who can use the full leverage of their wealth will come on top. In the average case.
Money isn't the only route to power, of course. Politics and violence are an inseparable facet of the negotiation dynamics of our species, even if they don't affect every business deal. For example, by imposing dominion over supply trade unions can increase leverage of employees over employers, who then may under some situations use government sanctioned violence to increase their leverage - or vice versa. Etc.
I don't have a formal proof of this. It just seems to be the way the game is played.
> [in free markets,] price and demand are set by the market, free of any government interference
I said nothing about contract enforcement, property rights or prohibitions on force or fraud.
How do you mean? Many of them are direct competitors, they all have a vested interest in not allowing any other to game the benchmark.
> pure free markets are impossible and in fact dishonesty and chincanery can utterly distort markets
My point stands. Dishonesty and chicanery are not condoned by the free market, because they're fraud and theft.
I doubt many people who consider themselves libertarian would say something so absolute as "everything would be better off served by private for-profit entities" much less "taxes are theft".
>...when in reality they just want a bit smaller taxes and a bit less regulation.
Most libertarians would likely also consider this incorrect. For example, the 2 major political parties share major policies that libertarians are opposed too and would like to reform or stop. For example, both republicans and democrat parties support: the war on drugs, the increasing militarization of police, the national surveillance state, the Patriot act, registration for the draft, the TSA, etc, etc. I suspect that the average voter is opposed to at least some of these policies, so that is maybe why the those invested in the two major parties will try to stifle any discussion of these topics and why groups that oppose them are mischaracterized or attacked with straw man arguments.
And I don't think government does everything inefficiently, at least in our country (cz).
So what do libertarians represent really? Quick search for "libertarian manifesto" shows https://mises.org/library/new-liberty-libertarian-manifesto which talks about abolishing nation state and such. That is hard to reconcile with your PoV.
I think smaller government is often more responsive. The Czech Republic is closer in population to some of the US states.
>...So what do libertarians represent really? Quick search for "libertarian manifesto" shows https://mises.org/library/new-liberty-libertarian-manifesto which talks about abolishing nation state and such.
I think Rothbard is probably promoting anarcho-capitalism there. Many libertarians would probably consider themselves closer to classic liberals. For example, here is a quote from a professor at NYU:
"...I consider myself both a libertarian and a classical liberal. … So there are important differences among liberals and libertarians but I view these are differences along a spectrum. Some are principled (“Never, ever, initiate the use of force”) and some are empirical (“Many public goods can be provided privately”) and some are hard to classify (“The NSA should not collect masses of meta data”). Some people will want to take these differences and harden them into different political philosophies with different names and so forth. But I suggest that libertarians and classical liberals have too much in common for any divorce."
https://thinkmarkets.wordpress.com/2014/02/05/libertarianism...
More practical ideas can be found in the works of groups like the Reason Foundation. As I mentioned in a different reply, at reason.org and you can probably find hundreds of pages of commentary, practical solutions, reviews, etc. The top story on the site looks like it is on the details of the current state of the air traffic control system. You can read the digital version of their magazine for free and in fact every issue they have ever published for close to 40 years. Another group is the The Institute for Justice (ij.org). IJ is a libertarian non-profit law firm that in their words:
>...Since 1991, IJ has come to the aid of individuals who want to do the simple things every American has the right to do—including own property, start and grow a business, speak freely about commerce or politics, and provide their children with a good education—but can’t because they find the government in their way.
IJ have brought 5 cases to the US Supreme Court, winning four. The case they lost was the Kelo case but there was a big enough outrage on that decision, that a number of states put in protections to their eminent domain laws.