[vezzy-fnord]

A "free market" means lots of buyers and sellers participating on even playing field.

I've never seen this definition used before. Even playing field is a grossly inappropriate and unattainable normative ideal. Even playing field means homogenization, which is completely antithetical to a market as a vehicle for coordinating entrepreneurial plans, necessarily implying imperfections and heterogeneity.

Even Adam Smith acknowledged that government regulation is necessary in order to ensure that the market remains free.

Regulation is certainly necessary, at least in the sense of property rights enforcement and dispute adjudication. Government regulation it need not be, and it need not be anything more than a minimal legal institutional framework.

Left to their own devices, however, capitalists will naturally (and rationally) try to tilt the playing field in their favour.

How did you reach this conclusion? It makes no sense whatsoever. If anything, we would expect this behavior to occur only where there are large amounts of government regulation. That is to say, when there is more opportunity to exploit the political method over the economic method. Otherwise, how will they tilt the playing field? By forming cartels? Those are brittle. Any attempt at trying to use market power leaves you vulnerable to undercutting in some way in the absence of special privileges.

I am against capitalism, however, under a completely laissez faire economy.

Your taxonomy is worthless.

[xg15]

> Even playing field means homogenization, which is completely antithetical to a market as a vehicle for coordinating entrepreneurial plans, necessarily implying imperfections and heterogeneity.

There is a difference between random variations and the extreme differences in capital and power we have right now.

The benefit that a free market is expected to give to society is, as far as I know, that it will cause a "survival of the fittest" scenario in which the best solutions for a problem gain widespread acceptance and bad solutions die out. But that of course only works if there is actual competition - which in many fields isn't the case in our current situation.

> Otherwise, how will they tilt the playing field? For example by becoming powerful enough that you can control certain market segments instead of just being a player. This power can be reached by becoming a de-facto monopoly in another related segment. One example of this are smartphones and the "app economy". Apple and Google provide OSes of the vast majority of smartphones on the planet - this gives then the power to create their own controlled markets for apps. No government interference necessary, yet if Google decides tomorrow to block your app to protect their own competing product, you couldn't do anything about it.

Similar thinks can happen with large-scale accumulation of property. You agree tgat property enforcement is necessary - but if one entity owns enough property, then even the simple enforcement can be a tool to stifle competition. (See the problems with patents and intellectual property)

[vezzy-fnord]

The benefit that a free market is expected to give to society is, as far as I know, that it will cause a "survival of the fittest" scenario in which the best solutions for a problem gain widespread acceptance and bad solutions die out.

Not at all the case. You're injecting Social Darwinist assumptions. The benefit of a free market is in having individuals coordinate their plans most efficiently based on their subjective preferences and valuations, with prices as an epistemic vehicle for conveying notions of scarcity, opportunity for arbitrage or other criteria. It is thus a continuous and dynamic disequilibrium process that one cannot anticipate through outside observation, as optimal outcomes are by definition always being revised, renewed and discovered endogenously.

But that of course only works if there is actual competition - which in many fields isn't the case in our current situation.

Competitiveness is one aspect, but a much more important one is constestability. Free markets are by definition ones allowing for the greatest degree of it. And I absolutely agree that our current situation is far from optimal. We are not discussing our current situation, however. Monopolies are a multifaceted subject, many of them based on rents obtained from IP law and hardly "natural".

Similar thinks can happen with large-scale accumulation of property.

There are things called diseconomies of scale that put upper bounds on the profitability and viability of being too big. Economic calculation issues set in, principal-agent inefficiencies, coordination problems and so forth. It is only through the subsidy of an exogenous body such as government that one can hobble along in inefficacy for exorbitantly long times.

[goodcanadian]

I've never seen this definition used before.

I don't know what to tell you. The definition (admittedly paraphrased) comes from Adam Smith. The gist is that anyone can freely participate in the market on an equal or fair basis without artificial constraint. There is sometimes a need for strong regulation to prevent larger participants from using their size to gain an unfair advantage in the market.

Government regulation it need not be . . .

Can you give me an example of effective non-governmental regulation that doesn't ultimately derive its authority from the government?

How did you reach this conclusion? . . .

I am currently reading a book about the so-called "Robber Barons" of the later half of the 19th century. If you want to see what truly unconstrained capitalism looks like, I suggest you read up on this period: fraud, price-fixing, market manipulations, extortion, bribery . . . they even resorted to armed conflict with their rivals on occasion. The fact that capitalists continue to try to exploit any advantage that they can in the face of strong regulation is precisely my point. Heck, even in my own comparatively small investments, I seek to exploit any advantage that I can. It is not rocket science; it is acting in one's own best interest. The job of regulation is to ensure (as much as is reasonably possible) that no one gains an unfair advantage.

I've talked a lot about regulation, so I want to make clear that I am not in favour of endless reams of red tape. Regulation should be as complex as it needs to be, but no more complex. What regulations there are should be strongly enforced. The current reality does not really live up to this ideal; there are many ineffective or unnecessary regulations, and there are regulations that are missing entirely. Nevertheless, I am talking about an ideal vision that we should strive toward.

[vezzy-fnord]

There is sometimes a need for strong regulation to prevent larger participants from using their size to gain an unfair advantage in the market.

The Coasian revolution and public choice schools have since challenged this narrative quite significantly, and have had an impact on economic discourse, though not on mainstream discussion.

The job of regulation is to ensure (as much as is reasonably possible) that no one gains an unfair advantage.

George Stigler devastated that interpretation, as well.

Nevertheless, I am talking about an ideal vision that we should strive toward.

Indeed, this is an ideal discussion. Hence I can't give you a straight example of a "non-governmental regulation that doesn't ultimately derive authority from government," though in fairness this is ambiguous. It happens that the judicial branch is governmental, but the very act of informal bargaining between property owners is endogenous, non-governmental regulation. You could also argue that private certification and standards agencies are endogenous regulators.

I am currently reading a book about the so-called "Robber Barons" of the later half of the 19th century. If you want to see what truly unconstrained capitalism looks like, I suggest you read up on this period: fraud, price-fixing, market manipulations, extortion, bribery

The so-called "robber baron" era was not one of truly unconstrained capitalism at all. The "robber baron" era had the strict mercantilist and interventionist policies of Alexander Hamilton, Friedrich List and the American School economists in full effect. Above all, it was driven by a complex interaction of tariffs (people keep forgetting how important tariffs were in United States history), land law acts and railroad subsidies, with heavy political collusion.

After you're done with that book, I suggest you read Gabriel Kolko's Railroads and Regulation, 1877-1916 to get a fuller picture. Ironically, the author was a member of the New Left.

[nikdaheratik]

>The Coasian revolution and public choice schools have since challenged this narrative quite significantly

And yet, Microsoft in the 90s and early 00s still happened. And there doesn't seem to be anything in what you've said that would demonstrate that we no longer need anti-trust laws (which are one form of regulation).

>The so-called "robber baron" era was not one of truly unconstrained capitalism at all. The "robber baron" era had the strict mercantilist and interventionist policies of Alexander Hamilton, Friedrich List and the American School economists in full effect.

A "No True Scotsman" response at its finest. But it doesn't really respond to the point: removing regulation without putting some other constraints into the market is basically asking for a return to the 19th century market. And no one has come up with something that really works any better than regulation for many of these areas of the market.

>I can't give you a straight example of a "non-governmental regulation that doesn't ultimately derive authority from government," though in fairness this is ambiguous.

But, again, the entire point is that lassez faire supporters can't even give an "ideal" replacement for the government's role in regulation, consumer protection, anti-trust, or even dispute settlements that doesn't basically do exactly the same thing as government. Only being less transparent, and more costly to new players in a market (e.g. "binding arbitration").

[vezzy-fnord]

I never voiced a categorical opposition to all forms of regulation. I just have a general preference for endogenously emerging one over exogenous statute. Remember we are discussing theory, not the actually existing mixed economy. Of course a Microsoft can and has happened under the latter, though legal action also took place.

Nor was that a "No True Scotsman" reply. It's straightforward history. The Hamiltonian program prevailed over Jeffersonian democracy.

Granted, you're failing to draw a distinction between the state and government in the abstract sense of having governance. I would dispute alternate forms of governance being less transparent. If anything, the principle of subsidiarity by which issues of governance should be handled at the most localized and decentralized level would ensure greater transparency and a more effective participation.

"Consumer protection" has been handled by trade associations, private standards bodies and other institutions for centuries. Modern states have largely not devised any particularly new or innovative approaches, merely shifted the ownership thereof.

[bigger_cheese]

Personally I think the major problem with capitalism is it ignores sustainability and assumes there is always an unlimited potential for growth when in reality we live on a planet of finite resources. Growth isn't a bad thing but unsustainable growth is. When the system is geared around maximizing profits it leads to a drive to dig up more, consume more and emit more at the lowest cost and damn the consequences.

Thus you get things like Sweatshops, Ok Tedi disaster etc.

Without regulation there's a good chance we'd still not have catalytic converters, we'd still be living with CFCs, Asbestos and DDT. I'm sure you can think of a dozen other examples the market has repeatedly shown it is not capable of regulating itself.

[zardo]

when in reality we live on a planet of finite resources

There's an awful lot of matter and energy in our lightcone, there's no fundamental reason we can't keep growing for millions of years.