| 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. |
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.