Amazon.com Widgets

Is Laissez-Faire Capitalism good (yes) or bad (no)?

  • By all means.

    Two points: Prisoner's Dilemma, and new entrants.
    The Prisoner's Dilemma is game theory where two suspects are taken to two separate rooms and told that if they fess up and testify against the other, they will go free, and the other will get a year. If they testify against each other, both get six months. If they both stay silent, both get three months.When RAND Corporation's (Research ANd Development) 1950 testing was done, betrayals were the most common behavior.
    The second point is new entrants. Existing institutions would want to keep prices low to discourage entrants into the market, more than when they have big government protectors. Coercive monopolies are only possible in regulated industries, as they often need some government patron to discourage new entrants into a field.
    An exception would be for companies sitting on some rare resource, they can charge whatever they want, and are free to collude all the day long, until one of them figures that one of the others might be dropping their prices, and preemptively drops theirs. Companies exist to earn profit, and they have a duty, first and foremost, to earn their investors the biggest possible profit. This falls back into the Prisoner's Dilemma above.

  • Weeds the Chaff

    Leaving an economy alone with free market principles is good in that consumers ultimately decide what is good and what isn't. Companies that take care of workers and consumers will thrive, whereas companies that don't will flounder. Laissez-Faire capitalism means we would now be in a second Great Depression because AIG and American automakers would have been allowed to fail, causing massive job layoffs and huge unemployment. However, that means those companies simply didn't adapt to the economic climate fast enough and should be allowed to fail because they did it to themselves. Laissez-Faire means buyer beware in a free market economy!

  • No, today there must be some constraints on capitalism.

    Unfettered capitalism sounds like a good idea and in principle it might be or it might have been at certain periods in our nation's development. However, now it is a matter of a few big corporations aligning themselves with government by a form of bribery and deciding what goods and services cost. Some regulation would probably be in order.


Leave a comment...
(Maximum 900 words)
No comments yet.