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Author Topic: Anarchocapitalism leads to Minarchism with Monopolies?  (Read 11341 times)
thldmz
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« on: June 26, 2012, 05:03:18 PM »

i am new to anarchocapitalism and am a former ron paul supporter, so i apologize if this is a dumb question.
how would an anarchocapitalist soceity stop monopolies? if, for example, a dro/pda company grew and grew and become a monopoly, would this not lead to minarchism? i have heard the counterargument that consumers would boycott a monopolistic company and it would go out of business, but this fails to account for income inequality. in the united states, the top 20% of americans own 85% of the country's wealth (http://en.wikipedia.org/wiki/We_are_the_99%25). if the top 20% are fine with the monopolistic dro/pda, than the other 80% boycotting the company would only result in a 15% loss in profit, so the company would continue to expand, run the other companies out of business, and become a government. would measures could/would be put in place to stop this from happening?
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Seth King
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« Reply #1 on: June 26, 2012, 05:12:19 PM »

The top 20% of wealth owners may own 85% of the wealth, but how often do they agree? Besides, if you're really worried about monopolies, then you should be boycotting the state. I do!

Welcome to the forum!
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When are you moving to New Hampshire?
JustSayNoToStatism
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« Reply #2 on: June 26, 2012, 05:14:38 PM »

Welcome. You should introduce yourself in the Introductions section of the forum. I'd like to hear about how you got into the RP movement, and what made you leave. Background info like that will also help me decide how to structure an answer to your question (or list of questions). I look forward to conversing with you.
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« Reply #3 on: June 28, 2012, 12:41:28 AM »

I had forgotten about my promise to respond on this thread:

Anarchism comes with the risk of going back to statism, yes. But is that really an argument? Paraphrasing stef: Would you decide against cutting out the tumor, because it might come back in 30 years? Of course not!

There are reasons to think it would be difficult for a decent-sized anarchist society to be overtaken in this way.

Some measures that would be in place include:
profit motive--> If you want to get customers, you need to be the cheaper service. Stockpiling weapons to raise an army isn't going to help keep costs down.
Ostracism-->Good luck getting a bank loan, or raw materials, or anything else from anyone if you're suspected of building an army.
Feasibility--> As mentioned before, even a team of billionaires couldn't raise an army powerful enough to conquer a significant population. The central bank is the lifeblood of the modern warfare state. The tax base is another requirement.
Free mentality-->Imagine if instead of brainwashing in government indoctrination camps, people had lived their entire lives in freedom. You aren't going to fool these people easily
Arms-->Without restrictions on individual firearms, households will be fairly well armed. Remember the principle of a gun behind every blade of grass.
Decentralization kicks ass--> There is no tax structure to take over, so by invading and trying to take over the territory, you would have to set it all up on your own, against a civilization that is hostile to you. Armies lose against pissed off people willing to engage in guerrilla tactics...(Afghanistan, Vietnam, Afghanistan, Iraq, Afghanistan). Some people cannot be controlled. Can you imagine second or third generation anarchists submitting and giving in?
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thldmz
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« Reply #4 on: June 29, 2012, 09:40:29 AM »

thank you for explaining that kind of transition to minarchism is impossible, but i wasnt thinking about armies. perhaps i didnt word my question well, but what i was trying to ask was what measures would be in place to stop monopolies from being formed in general, in any industry. im not an economist, but it seems to me that all businesses exist to make money, and they will make the most money if there are no other businesses in that industry, therefore all companies will try to create monopolies.

monopolies in the pda/dro industry lead to statism, but monopolies in other industries are also detrimental. suppose this hypothetical pda/dro company becomes a monopoly without an army? suppose it is just better than its competitors and makes them go out of business without any violent use of force? how would anarchocapitalists stop this from happening?
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JustSayNoToStatism
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« Reply #5 on: June 29, 2012, 07:29:03 PM »

There are two ways monopolies could come to exist.

1) A company is actually just so much better that no one can compete with it. Then it will reap monopoly profits for a while. But whatever type of advances it made to become so strong will eventually trickle down to everyone else. No company grows quickly forever, and the technology eventually gets to everyone, including those who didn't develop it. So this isn't really a big deal. Consumers get low prices for a while (just because it's a monopoly doesn't necessarily mean high prices if marginal cost is low enough compared to before). Note: A common misconception is that monopolies can just charge whatever they want. This is not true.

2) One bigger firm tries to temporarily sell below cost to drive out the competitors. The big firm thinks it can sustain losses for a while, and that the longer term benefits of being able to set monopoly prices will make it profitable to do so. ..... Well, good luck. It's been tried before. I believe it was an american chemical company that was competing with a german giant and the company that tried to undercut got absolutely destroyed. The smaller firm called them on their pricing bluff, and BOUGHT the underpriced goods, stocking up on cheap inventory. Do some searching online or read FA Hayek's compilation "Capitalism and the Historians" to get more details. It's possible someone could pull this off, but what if we're operating in a global economy, where the number of entrepreneurs to come in and compete is pretty much endless. The big company can't credibly commit to undercut everyone, and so the new firms expect the big one to accomodate them. And the big firm pretty much has to do so. You can't run at a loss for very long.

Monopoly is really arbitrary in some sense. What if there's only one grocer in a small town? Is that monopoly? What if there's only one coffee shop in a one mile radius, does he have "monopoly" over that territory? The real world isn't so discrete. Competition runs on a continuum. Distances, transport costs, absence of government...all these things play a role in how a competitive market will look, and how many firms there will be. More firms isn't always a better situation.
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"I like to eat. Instead of a monarch I propose we have a Chef be final arbiter in matters. We'll call it anarcho-chefism."
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« Reply #6 on: June 29, 2012, 09:48:44 PM »

 Welcome to the forum, dude. Fellow Ron Paul supporter and traveler. I made a wrong turn and ended up here. Tongue

 It amazes me at how touchy some people get at the idea of monopolies. This is especially true among liberals, who are constantly stuck in the paradox that in order to keep corporations from taking over government, you have to increase the size of government.

 Monopolies, by their very nature, exist in the world because governments exist with them. As long as you have government, businesses will always try to gain an upper hand by manipulating politicians to their own selfish ends. One example of this is Monsanto, the hated GMO complex. If you look at the company, they've been able to push their agenda to introducing poison into our food supply for yrs. How do they get away with it? If you look at most of the individuals that sit on the FDA's board, you'll find that--surprise!--most of the individuals running the FDA had elite positions within Monsanto's inner web of power.

 All around bad ass and author Tom Woods goes over monopolies in his recent book, Rollback. In it, he outlines that any company that has ever attempted to monopolize an industry without the use of government on its side has gone down the path of economic suicide. Take J.P. Morgan, for example. Though Morgan was one of the most powerful men alive during his time, he almost crippled his business when he tried to single handily monopolize the agriculture industry without the use of government intervention.
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thldmz
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« Reply #7 on: June 30, 2012, 07:43:41 AM »

thank you! you have answered all my questions about monopolies (except the one below). glad to see that will not be a problem in an anarchy! Smiley i have another question about money supply, but i will post that later in a new topic.

but just out of curiosity, why is it not true that a company that holds a monopoly can set obnoxiously high prices? if a power supply company is the only one in an area and sets a ridiculous price, arent the people in that area forced to pay?
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MAM
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« Reply #8 on: June 30, 2012, 10:17:26 AM »

thank you! you have answered all my questions about monopolies (except the one below). glad to see that will not be a problem in an anarchy! Smiley i have another question about money supply, but i will post that later in a new topic.

but just out of curiosity, why is it not true that a company that holds a monopoly can set obnoxiously high prices? if a power supply company is the only one in an area and sets a ridiculous price, arent the people in that area forced to pay?

Until an innovative competitor comes along and destroys him.
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JustSayNoToStatism
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« Reply #9 on: June 30, 2012, 11:57:22 AM »

thank you! you have answered all my questions about monopolies (except the one below). glad to see that will not be a problem in an anarchy! Smiley i have another question about money supply, but i will post that later in a new topic.

but just out of curiosity, why is it not true that a company that holds a monopoly can set obnoxiously high prices? if a power supply company is the only one in an area and sets a ridiculous price, arent the people in that area forced to pay?
They could set a ridiculous price, but they're rational, so they won't. The goal of the firm is not to maximize prices, it's to maximize profits. The amount of goods that people will buy is a function of price.

But I haven't said anything too interesting here. All of this applies to ALL firms. Anyone can charge whatever they choose. But we assume that people want to make as much as possible. For simplicity's sake, think of the profit maximization problem as finding the top of a parabola whose leading coefficient is negative. Now imagine profit on the vertical axis and price on the horizontal. If you set prices too low, you'll lose money. If you set prices too high, you'll lose money also. Depending upon the demand curve you estimate, and depending upon the competitive environment in which you operate (supply), you'll come up with different parabola-ish curves to maximize, and end up with different optimal prices. If done correctly, it is not arbitrarily high. If done incorrectly, the firm makes less money.

Summary: Monopolies (and all firms for that matter) will price in such a way that maximizes profits. If prices are set too high, the firm will make less money, because we won't buy as much.
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« Reply #10 on: June 30, 2012, 06:42:05 PM »

  You have to consider that in a free market society, people would have options available to them to openly reject what electric companies offer to them. I'm talking about the motives to live self-sufficiently. A lot of people already do it right now with solar panels. Perhaps in an openly free market, there will be more work done in the field of zero point energy. 
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« Reply #11 on: February 03, 2014, 04:04:49 AM »

 You have to consider that in a free market society, people would have options available to them to openly reject what electric companies offer to them. I'm talking about the motives to live self-sufficiently. A lot of people already do it right now with solar panels. Perhaps in an openly free market, there will be more work done in the field of zero point energy.  

Yes it is a free  market society but many countries have applied taxes on use of solar energy which is very wrong..
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« Reply #12 on: February 03, 2014, 10:35:15 AM »

Bienvinidos

I agree with JustSayNoToStatism.

Peace be with you.
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« Reply #13 on: February 21, 2014, 02:43:30 PM »

True monopolies (beside the state) aren't that common even in this economy... the real danger is from cartels. The Coca Colas and PepsiCos of the world colluding together as Frenemies to root out the Royal Crown's and the Double Colas from the market.

Of course consolidations and mergers will also remain a significant problem... especially when taking the cartel factor into account.

The greatest danger however is that a monopoly entity does not have to raise a private army to become an oppressive de facto state. When you have a lock on resources that other people desperately need you can be quite coercive without needing to resort to (direct) physical violence.
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« Reply #14 on: February 28, 2014, 09:15:25 PM »

True monopolies (beside the state) aren't that common even in this economy... the real danger is from cartels. The Coca Colas and PepsiCos of the world colluding together as Frenemies to root out the Royal Crown's and the Double Colas from the market.

Of course consolidations and mergers will also remain a significant problem... especially when taking the cartel factor into account.

The greatest danger however is that a monopoly entity does not have to raise a private army to become an oppressive de facto state. When you have a lock on resources that other people desperately need you can be quite coercive without needing to resort to (direct) physical violence.

What? 

Are you suggesting there is a potential cartel of Pepsi and Coca-Cola that would be an oppressive de-facto state, with resources that others desperately need? 
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