[nickik]

Please quote where Smith says markets are inherently centralising.

Also, Smith is not correct on everything. He is reviewed because he had the right intuitions on most things.

Also, the paper you linked is literally by one of the left wing economist that exist today.

[simonh]

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." - From 'The Wealth of Nations' by Adam Smith.

What a Marxist!

[nickik]

Smith was actually right. Every economist would agree that he is right. The problem is just that you don't understand him.

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self-interest. We address ourselves not to their humanity but to their self-love, and never talk to them of our own necessities, but of their advantages”

The point is that they conspire as long as they want, they will not succeed. Smith understood that.

Also, Smith was quite a bit more sophisticated when it came to human behavior, see his other book "The Theory of Moral Sentiment".

[dragonwriter]

> The point is that they conspire as long as they want, they will not succeed. Smith understood that.

No, actually, Smith understood that they regularly did succeed, and wrote directly in warning about that; from the conclusion to Chapter 11 of Book 1 of The Wealth of Nations:

“The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

[nickik]

What are you talking about, he is making my point exactly.

> any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined

He was afraid they would use the state to create laws in their benefit. Not that they could use market power to beat competition. Nothing in this paragraph indicates that he thinks markets by itself were centralized.

The AntiTrust law is an exact example of what Smith is talking about. Its a proposal that looks like it would help markets but actually its a tool for the weak competition to beat the stronger competition.

[Joeri]

Please provide any evidence that unregulated markets are not centralizing. Any market with economies of scale will naturally tend to fewer players, just like political systems that favor large parties (like the US system) will favor fewer parties.

[nickik]

Economics of scale is not a universal law that means bigger is always better. There is also the opposite effect where larger is bad.

The point of having a market is to find the balance between economics of scale and limit of the firm. The reason why economist want markets in the first place, is because that's how we find if it is more effective to have a few large players, like Airplanes, or millions of small players like Restaurants or Hotels.

The Soviet Union built the biggest Truck factory ever (or at least at that time), but it did not produce cost efficient Trucks. Why? They clearly had economics of scale.

As for evidence, I would start with "The Theory of the Firm" witch founded a hole new branch of economics and from there you have 60 years of research. There is a hole branch of economics called 'Industrial Organisation'.

The simplest bit of evidence is that you can literally just count the amount of companies that exist. If Marx was right we should observe fewer and fewer companies in a predictable linear process.

> just like political systems that favor large parties (like the US system) will favor fewer parties.

The US system may favor large parties but it not inherently centralizing. There is no tendency to a monopoly party.