Wycliffes_Shillelagh
Sophomore
- Joined
- Aug 3, 2023
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The thesis of Adam Smith’s Wealth of Nations is that when people and companies compete, acting in their own self-interests, society reaps the benefits. Competition drives innovation and invention. Competition drives down the costs of commodities, making them affordable.
The problem that Smith did not foresee is that capitalism naturally deteriorates. The competitions within a free-market resolve themselves. They do not continue indefinitely. Eventually, there are winners and losers. The Wal-marts and Microsofts of the world come to dominate their industries by squashing competition.
When sectors of the economy come to be dominated by monopolies or small groups of closely held corporations, the benefits of competition cease. The pharmaceutical oligopoly collectively decides to stop pursuing cures in favor of maintenance medications. Top software companies stop selling programs and start licensing them for use in exchange for fees that never end. Food companies load products with additives and chemicals that are outright harmful to the public health. This is what capitalism looks like in the later stages of its life cycle. It is hard to deny that such a thing happens - we live here.
So the government gets involved in the economy. The first steps the government takes are to preserve capitalism and to hold companies accountable for harm they may cause. Antitrust suits are brought to break up monopolies. Consumer protection laws are passed. Bureaus are set up to review and approve new products before they can be sold.
These are necessary evils. When the government regulates the economy, it ceases to be a free-market. The benefits derived from competition decrease. But without such regulation, the benefit from competition decreases anyway (for the reasons going before).
Worse, these measures eventually fail. Antitrust litigation is tied up in court indefinitely by corporations with resources to stall them indefinitely (e.g. Microsoft). The Food and Drug Administration’s product approvals are bought-and-sold like commodities. Automobile manufacturers calculate the legal costs of distributing a faulty product and choose to go that route instead of making a safe, quality product. Planned obsolescence becomes the norm.
What then can we do? The conservative ideal of “if it ain’t broke, don’t fix it” falls short, because it is broken. Is there a way to put the genie back in the bottle? Can super-corporations with power and resources greater than some countries really be torn down or split up to restore competition?
Can capitalism be saved?
-Jarrod
The problem that Smith did not foresee is that capitalism naturally deteriorates. The competitions within a free-market resolve themselves. They do not continue indefinitely. Eventually, there are winners and losers. The Wal-marts and Microsofts of the world come to dominate their industries by squashing competition.
When sectors of the economy come to be dominated by monopolies or small groups of closely held corporations, the benefits of competition cease. The pharmaceutical oligopoly collectively decides to stop pursuing cures in favor of maintenance medications. Top software companies stop selling programs and start licensing them for use in exchange for fees that never end. Food companies load products with additives and chemicals that are outright harmful to the public health. This is what capitalism looks like in the later stages of its life cycle. It is hard to deny that such a thing happens - we live here.
So the government gets involved in the economy. The first steps the government takes are to preserve capitalism and to hold companies accountable for harm they may cause. Antitrust suits are brought to break up monopolies. Consumer protection laws are passed. Bureaus are set up to review and approve new products before they can be sold.
These are necessary evils. When the government regulates the economy, it ceases to be a free-market. The benefits derived from competition decrease. But without such regulation, the benefit from competition decreases anyway (for the reasons going before).
Worse, these measures eventually fail. Antitrust litigation is tied up in court indefinitely by corporations with resources to stall them indefinitely (e.g. Microsoft). The Food and Drug Administration’s product approvals are bought-and-sold like commodities. Automobile manufacturers calculate the legal costs of distributing a faulty product and choose to go that route instead of making a safe, quality product. Planned obsolescence becomes the norm.
What then can we do? The conservative ideal of “if it ain’t broke, don’t fix it” falls short, because it is broken. Is there a way to put the genie back in the bottle? Can super-corporations with power and resources greater than some countries really be torn down or split up to restore competition?
Can capitalism be saved?
-Jarrod
