Most corporations have more purchasing agreements than sales agreements, so the total risk of corrupt markets is worse on the expense side of the ledger than on the income side of the ledger. Assuming the situation is less than hopeless lets say 10% of markets are corrupt or are corrupt 10% of the time, 10% of the time your revenue will be "lucky" but not the other 90% of the time, while you've got maybe 100 supplier contracts for everything from drinking water to strange electronic components and 10% of 100 means at least 10 suppliers will be destroying your company from the expense side of the ledger 100% of the time.

Its sort of like claiming corporations love the idea of abolishing contract law, forgetting that no matter how much they'd make in revenue, it would never make up for their expense side going crazy.

Another interesting comparison is in an extremely simplistic manner a company would appear to greatly benefit from dumping all their toxic waste out an open window where it blows 10 miles downwind at some city; however the only thing that could be worse than living in that downwind city is working in the same building next to that toxic open window... I was cool with my local nuclear power plant when it was owned an managed by a corporation 10 miles downwind, not melting down would be very enlightened self interest, but not so cool about the plant when it got sold to someone 1000 miles upwind.

The name for this is crony capitalism. Policy that benefits businesses instead of policy that benefits markets. Luigi Zingales's book "A Capitalism for the People" is a good read on the subject.

Nah, there are lots of ways to get that unfair advantage. Network effects are a big one. Facebook is only facebook because everybody is on it. MS Office is only MS Office because everybody has it.

Are they superior products? Meh.

Would you particularly miss them if they were destroyed? Unlikely. Somebody just as good would come along by and by, or one of the other ones would rise to replace them.

Are you gonna pay for them anyways? Bet your ass you will.

>Why Socialism for the Rich, Capitalism for the Poor?

A simple, if specious answer: The Golden rule - she who has the gold, makes the rules.

An examination of all current and historical implementations of capitalism quickly leads to the conclusion that all capitalism eventually becomes "crony capitalism", and playing the "no true scotsman" game with regards to capitalism does not demonstrate anything meaningful.

He`s not talking about policy. Most capitalistic businesses are anti-competitive regardless of policy.

That is patently ridiculous. The vast majority of firms that you give your dollars too have direct competitors. They may not prefer to have competitors, but neither do you when applying for jobs or bidding on a house, that is pretty basic human nature.

Wait, so you say 'that is patently ridiculous', then completely agree with me while trying to add your own little spin on it? Okay bud.

They have what is generally considered an unfair advantage though.

Typically at least effects of scale and cartel-like contracts with other major players.

> Anybody worth their salt is always always always looking for unfair advantages, cause that's where the money is.

Those people aren't capitalists in the proper definition of the term. Capitalism is voluntarism, which manifests as free markets in practice.

> Those people aren't capitalists in the proper definition of the term

There are two definitions of "capitalist":

(1) A holder of capital,

(2) An adherent to "capitalism", the dominant economic system of the industrialized West in the mid-late 19th Century (which has been diluted by subsequent reforms, but remains a core element of the structure of economy in most of the modern developed world), named "capitalism" by its 19th Century socialist critics for the ways in which it systematically served the interests of capitalists (by the preceding definition.)

The GP post seems to be accurate whether using "capitalist" in sense (1) or sense (2).

Ok. It sounds like we're using the same word to describe two separate ideas. Your definition sounds like what I'd call "crony capitalism", or the rigging of the game (i.e. government policy) in one's favor. I'd bet that I'd consider some of the "subsequent reforms" you've described as fundamental corruptions of the system. For example, political donations as corporate free speech (Citizens United v FEC) doesn't make much sense in a world where shareholders aren't engaged and active participants in company behavior. In other words, corporate governance is broken, something that Reich gets right.

> Your definition sounds like what I'd call "crony capitalism",

"Crony capitalism" is the only kind that has ever existed, and definitely the kind for which the term "capitalism" was coined. The idea of any other kind of "capitalism" is, well, highly implausible. To avoid cronyism, you are going to have to take out the core features that make it capitalism.

> I'd bet that I'd consider some of the "subsequent reforms" you've described as fundamental corruptions of the system.

Thing like establishing labor rights are certainly "corruptions" if you view the 19th Century system initially labelled "capitalism" as pure.

I don't see "corrupting" the purity of capitalism as a problem, though.

> For example, political donations as corporate free speech (Citizens United v FEC) doesn't make much sense in a world where shareholders aren't engaged and active participants in company behavior.

Citizens United is a move back in the direction of a pure 19th Century capitalism, and a reversal of reform efforts aimed at constraining the dominion of the capital-holding class (which is what campaign finance reform efforts that seek to limit the influence of wealth on politics to protect democracy from capitalism are.)

Whether shareholders are personally active or find it most useful to give management free reign is immaterial to this.

> In other words, corporate governance is broken, something that Reich gets right.

What Reich gets wrong is embracing the idea that capitalism is betrayed by the various failures, rather than the source of them. His idea of supporting a "share the gains" capitalism is amusing: "share the gains" is not, and has never been, capitalism (though it's occasionally a lie that capitalists use to justify capitalism, as in "trickle-down" economics.)

The free market in the United States is celebrated by the mouth of those who pass the laws, but often gets beaten by the hand.

I don't think my ISP choice is a result of free market capitalism. It seems an awful lot like collusion against the free market, against competition, locking me down to one ISP depending in which region I happen to live.

That's basically what Reich is talking about. The people with money (power) make the rules. The label is still "capitalism", but the reality is otherwise.

The US definitely does not have a free market. I would venture a guess that most of the regulations are actually designed to benefit a select few at the top of some company or investment system.

> The people with money (power) make the rules. The label is still "capitalism"

Which makes sense, since that's exactly what the label "capitalism" was created for.

Lots of people have, however, bought into propaganda that capitalism is something else that was created by capitalists after the criticism in which the system was named.

Perhaps it should be mentioned where power and rules came from in other economic systems.

Blood lines (either real, or "Roman-style" (meaning voluntary adoption)), outright whim or military power (either individual, or organized), or otherwise advancement within a rigid hierarchy.

None of those seem to me even remotely preferable over a system where making money means advancement.

Even Marx viewed capitalism as a step forward from its immediate predecessor, which was itself forward from what had come before. Your post would be perhaps relevant in the context of a challenge to capitalism that favored reverting to some previous system rather than continuing to build on the progress made by capitalism relative to previous systems, but such criticisms are, at best, extremely rare even among criticisms of capitalism.

Communism is not "a previous system", and power in communism obviously came from advancement within a rigid hierarchy.

Unless communism/socialism is not what you mean with "continuing to build".

However, there is no universal arbiter of the difference between a 'fair' or 'unfair' advantage.

And consequently, in practice, there are no capitalists and no free markets, by the proper definition of the term.

Capitalists exist, free markets do not. The markets that exist are highly imperfect therefore inefficient.

(As in holders of capital and people following the competitive philosophy.)

But this is just the power of "no". Like the robot's dilemma

If you're a car careening down a road. You're going to fast, and an accident is about to happen, but you can, say, either hit a group of male toddlers or a slightly smaller group of female toddlers. How do you choose ?

Your answer is simply "No", and that's just not acceptable. Does that mean anarchism ? You must choose, because the real world needs to exist and the economy must keep working. Without it, we wouldn't be fed, wouldn't be able to move any significant distance, wouldn't be anything.

The problem with the "no" answer is that a this refusal to choose, in the economy, would match in the dilemma with first hitting all the boys, driving back and forth a few times to make sure you've got them all, and then get going on the girls. That's what shutting down the economy would do. One might assume this is not in fact what you intend, so what are you going to do ? What is the superior alternative to capitalism ?

Wouldn't you consider monopolies like Standard Oil to be in line with voluntarism? Because it seems like to me, but their dedication to avoiding fair competition is the stuff of legend.

^ That's called ideology.

Please, haven't we all grown past No True Scotsman?

Conflating "free market" and "competition" won't get you far analytically.

Please explain?

I too thought "free market" was all about competition. Explain pls?

I think the overall thrust, which I don't necessarily disagree with, is that there are many ways to enact barriers to enter a even in a perfectly free capitalist market. Think CPU fabrication. You'd need literally billions in tooling and R&D to start manufacturing modern CPUs. That's a formidable barrier to entry. Anybody could in theory but very few can in practice. Which means Intel and a few others make a tidy profit on their market position. And that's economically pretty functional, since the risks of investing billions of dollars over decades are not currently poised to offer significant enough returns to entice investment.

There are a lot of other, less savory, ways to manipulate free markets to stifle competition, however. Your friendly neighborhood cable company, for one example.

There is a free market in search engines. There's not much competition going on.

There is a market? Someone is selling search engines?

Depends on how you define capitalism. You'd most likely love Peter Theil's book 0 to 1. Recommended read if you got time!

Read it and got it at two startups as sorta a bible kinda thing. It's not good. There is no actionable advice in the entire book and just ends up rehashing what he and his friends did and the qualities they happened to have when they made it big. It's basically the classic survivor bias in book form.

Interestingly, I just happened to read yesterday this book was basically the Trump campaign's Bible.

http://www.cnbc.com/2017/02/27/peter-thiels-tech-book-became...

Which is a summary of:

http://www.politico.com/story/2017/02/donald-trumps-shadow-p...

That's a bit savage. Did Apple look for unfair advantages or did they design products that people loved and bought in preference to others? Ditto many other industries. Traders (capitalists) should indeed look for monopolies if they don't want a race to the bottom but that monopoly can be based on unique value to the customer if crony capitalism isn't involved although sadly it's all too prevalent. Markets are dynamic. Conditions change. People's needs and desires change. The monopoly of today will eventually dissolve and at best become one of many equivalent options, tomorrow. That's one of the messages of zero to one, Peter Thiel's recent book.

Apple, pretty much singlehandedly, invented an entire category of computing (the smartphone), and reaped the market rewards for it. They were ready, saw the opportunity, had the business chops to make the most of it, and got fabulously rich in the process. An example of the system working does not mean the system always works. There's been a lot of dirt done over the years.

That's not to say I'm anti-capitalist by any means. I think it's a great economic engine and a tool for great good. That we can never turn our backs on, lest it devour us. ;)

Not quite smartphone per se, but the new big touchscreen phone form.

Yes, Apple didn't invent the smart phone by a long shot. But they were smart enough to know how to make the smart phone consumer friendly, which is where a lot of tech companies fail. Look at PocketPC which proceeded iPhone, not friendly at all. Even my new Android phone is still pretty clunky UI wise compared to the iPhone it replaced.

I guess I'd characterize it like Henry Ford inventing the Model T. He was not the first man to make an automobile by any means, but he invented the auto industry. I've used pre iPhone smartphones, and there is a reason they're all dead now and Apple is rich beyond imagination.

You don't have to do it first if everybody before you couldn't close the deal.

It should be noted, the LG Prada predates the original iPhone by about 6 months, with largely the same design (to the degree that LG sued Apple alleging that the design was copied). Apple managed to capture the market, however, whereas LG didn't.

I have some comments and thoughts, sorry for the long read!

> Did Apple look for unfair advantages or did they design products that people loved and bought in preference to others?

They made cool products, but they're the most valuable company in the world, at least in part, thanks to the unfair advantages too. The most blatant of them being the $14.5 billion in unpaid taxes in Ireland. And this is Ireland! Imagine if they paid the taxes proportionally in each of the countries where their operate, or in the US at least.

> Traders (capitalists) should indeed look for monopolies if they don't want a race to the bottom but that monopoly can be based on unique value to the customer if crony capitalism isn't involved although sadly it's all too prevalent.

Never have I heard of an industry that benefited from having a monopoly by a for-profit company more than not. Precisely because they are for-profit. These companies work to increase revenue; as much as they market otherwise, the "value to the customer" is but a means to grow this revenue. If they can grow this revenue without providing as much "value to the customer", or in fact, if they can increase revenue by providing less "value to the customer", they will.

And this is not me vilifying them, it's sadly the way things work. Otherwise, we'd have super cool stuff but companies would go out of business. Take every example of a monopoly though, and since they don't need to provide as much value, they all end up decreasing it.

> Markets are dynamic. Conditions change. People's needs and desires change. The monopoly of today will eventually dissolve and at best become one of many equivalent options, tomorrow.

Except when they don't. I think you're thinking of this only from the tech lens, right after a period of rapid growth and lots of marketing, and he staple child for this claim is probably Microsoft, and how Apple went from the underdog to the beamoth. I have two comments on this;

1. What really broke Microsoft's monopoly? I don't think it was new companies innovating, or people's demands changing. It was a change in the system and ideology. Tech went from being your standard capitalist industry to an interesting beast thanks to the emergence of the Free Software Movement, which shares many ideologies with socialism/marxism.

2. Would Standard Oil or the Bell Telephone Company have "eventually dissolved"? The problem with this system is that it's easier for the rich to get richer; if you have a monopoly and the conditions are changing, easier for you to buy out competition or R&D into the next thing than for any other company. Even now that Standard Oil and the Bell Telephone Company have been artificially split the companies that came out of them are still the biggest ones around; not some new ones, though the times have changed a lot.

> That's one of the messages of zero to one, Peter Thiel's recent book.

Haven't read the book, but Peter Thiel is a businessman after all. I'd take his views more as opinions, since he's not really a full-time economist researcher.