The only monopolies and trusts that existed for any length of time always had the backing of state government. Whether it's the royal crown establishing the east india company or local governments awarding exclusive access to local cable companies monopolies have always depended on state government.

The problem with sustainable monopolies in a free market is that there are a hundred thousand ways to skin a cat. Even if a particular business has a lock down on a particular resource it can't control alternatives. The only way a monopoly can be sustained is that businesses price things so low that there isn't any profit in competing against them with alternatives. And that is not really terrible and is not likely sustainable anyways.

Most people seem to operate under the misconception that somehow large corporate interests and large governments are opposing and balancing powers.

This is untrue.

Large businesses and large government are interdependent and complimentary. They feed into each other. They need each other. If you want bigger business you need to have bigger government.

The sort of ultra concentration of capital in the hands of a tiny minority of businesses and individuals wouldn't be possible without the government creating a regulatory environment to ensure that it happens first.

Well said.

And it should be noted that even when the monopoly does not exist, regulation and government intervention almost always favors the larger players in the market. In many cases, they are the ones writing the regulations. Those regulations make the barrier of entry more difficult and discourage new competitors from entering a marketplace.

Big business and big government are symbiotic.

It's not about the small/large government dichotomy, it's about plutocratic/democratic. '

>Even if a particular business has a lock down on a particular resource it can't control alternatives. The only way a monopoly can be sustained is that businesses price things so low that there isn't any profit in competing against them with alternatives.

This is empirically false, there are many ways a large business can lock down a market/resource, or very nearly so, and prevent competition from smaller upstarts. Look no further than two-billion-dollar-a-day-revenue Walmart, whose signature practice is running competitors out of town by undercutting them and sustaining the losses until they close.

> This is empirically false, there are many ways a large business can lock down a market/resource, or very nearly so, and prevent competition from smaller upstarts. Look no further than two-billion-dollar-a-day-revenue Walmart, whose signature practice is running competitors out of town by undercutting them and sustaining the losses until they close.

The Rise of Amazon as a serious threat to Wal-mart is a great example of the aforementioned principle in action.

In what way is the hope of liberty much advanced when one empire replaces another?

Amazon and Walmart are fighting each other, which is better for you and me. Also, it isn't all giants fighting it out. The rise of the dollar stores signals the return of the local small store that was once filled by the local mom-and-pop shops.

I'd think of dollar stores more like Queen Anne's lace - a hardy but not very worthy weed that quickly recolonizes disturbed regions, replacing but not reconstituting the diverse ecosystems that previously existed there, and easily outcompeting any attempt those plants might make to reestablish themselves.

Granted, Queen Anne's lace is a good source of nutrition for bees and wasps - a trait which dollar stores sadly do not emulate, cf. https://www.cbsnews.com/news/dollar-stores-and-food-deserts-...

So I have to say that, in my estimation at least, the plant comes out ahead. But even so, it's a mistake to confuse a thriving mass of Queen Anne's lace with a thriving ecology.

>This is empirically false, there are many ways a large business can lock down a market/resource, or very nearly so, and prevent competition from smaller upstarts. Look no further than two-billion-dollar-a-day-revenue Walmart, whose signature practice is running competitors out of town by undercutting them and sustaining the losses until they close.

A better way to word this is this: consumers chose Walmart over its competitors because they believe they get better deals there than the alternatives.

Walmart is not a monopoly.

I, and millions of other Americans, shop at alternative grocery stores and department stores every day.

In fact with online retailing and hyper competition things are cheaper and easier and choices are more plentiful then at any other time in the past.

The problem faced by smaller retailers is that people really don't like going to them. It's charming and romantic to think about small hardware stores and local grocers, but the reality is that before Walmart came along and before internet retailer a lot of retail shopping was extremely expensive and downright miserable. Stores took advantage of people's lack of information about goods/services and lack of alternatives all the time.

The growth of internet retail and big box stores and big grocer chains like Costco/Walmart/Kroger/etc have actually done a lot to keep prices low and keep the economy healthy.

So, no. Picking on Walmart in this situation is pretty much proves the exact opposite of what you are intending.

> "Walmart is not a monopoly."

not if you're definition is that there must be one, and only one, market participant to be a monopolist.

but monopolies, in practice, are defined by market power (and monopsonies, by supplier power). you can control a market without 100% market share. that's the defining feature of a monopoly (market power), not market share.

walmart has both monopolistic and monopsonistic power in the US, despite thousands of small alternatives and a few big ones (like costco, target and amazon, which together form an oligopoly, that individually and collectively have market power).

I think you’re confusing monopolistic behavior with unethical behavior. As the parent said, the existence of a strong (larger!) competitor means Wal-Mart isn’t a monopoly. My local Wal-Mart has a Super Target and Kroger right across the street, for goodness sakes. It’s not a monopoly.

Undoubtedly, and the examples are numerous, Wal-Mart has used its market position to exploit its suppliers and to use their suppliers to creatively sell their own products.

But these scenarios aren’t the product of Wal-Mart exercising monopoly power, but rather exploiting those suppliers who violate rule #1 of manufacturing: don’t be dependent upon a single customer or that customer effectively owns you.

> "I think you’re confusing monopolistic behavior with unethical behavior."

no. and besides, that's a false dichotomy. i literally described the foundational understanding of monopolistic behavior by economists and regulators (that it's predicated on market power, not market share). this is a basic tenet taught early on in business schools and economics programs.

such clarifications are needed because many commenters fail to avail themselves of even a baseline understanding of the topic, which can be gleaned from just reading a wikipedia page let alone by having experience or even cursory training in the field.

it's tiresome to read the same shallow misperceptions over and over again. let's establish the basics quickly and move on to the more meaningful discussion that can be had.

Agree, let’s establish the basics. Here is the definition of monopoly:

the exclusive possession or control of the supply of or trade in a commodity or service

Dress it in as much nuance and confident language as suits you, it doesn’t change the reality that there is ample evidence Wal-Mart is not a monopoly.

Can you give an example of a monopoly that has been brought about and maintained by capitalism - i.e. not maintained by organized crime or the power of the government, but by the principles of free market capitalism alone?

Would-be monopolists don't particularly enjoy playing by the rules of the game. To crib a quote, it becomes the art of saying "good free market" while you look for a stick.

If there's a state, it's natural to try to corrupt it to use its political power. If there is no state or that option looks unappealing, the alternative is to get some political power of the sort that grows out of the barrel of a gun, i.e. to be organized crime.

The implication of the question, that the state is necessary to produce a monopoly, fails to give the full picture. It's not as much that the state is necessary, that economic power can eventually be translated into enough force to subvert the rules. In the absence of a state, that force just takes the shape of an authoritarian proto-state, itself.

I wonder if the Varsity Brand's hold on the cheerleading industry satisfies this? Like all big corporations they use legal means as leverage to suppress competition but other than that it seems like a classic case of one business using dirty tactics to completely take over.

https://mattstoller.substack.com/p/this-is-not-a-democracy-i...

Got any examples of capitalism that aren't maintained by a government?

[EDIT] OK that was a bit glib. My point is things are a lot more complicated than "capitalism does this, government does that" and the two are essentially inseparable. Further this entire thread is full of "markets = capitalism" which is missing the mark—tendencies toward free market policies are a defining feature of capitalism, but free markets per se aren't identical to capitalism.

Good point, and we need to recognize that every so-called free market still relies on governments to enforce the rules (to enforce contracts, to issue currency, to protect against fraud, etc). If governments disappeared tomorrow, we would not have a free market utopia spring up in it's place. Instead we'd have a no-rules situation where the powerful could take advantage of the weak. Some other system, potentially worse than what we already have, would fill the power vacuum.

Well I agree that governments can do some beneficial things. But there's a few problems with what you're saying here (and I hope I'm not taking you too literally): firstly, all the rules you list can be handled with alternatives. Secondly, the fact that the sudden disappearance of government would not lead to a utopia doesn't mean that governments are fundamentally needed (although they might be). As an analogy: if crude oil disappeared tomorrow, we would not have a renewable energy utopia - we'd have a disaster. Does that mean that there's no alternative to crude oil? Of course not. Finally, a "situation where the powerful could take advantage of the weak" is really just the situation that we have now, and must always have. It's really a tautology.

I apologize for not being clear enough, and I think I misread your intentions. There are people on HN who believe the government could be abolished tomorrow and replaced with private services, including a private military force, and that this would make everyone more free, since the invisible hand of the market would do the job of protecting the rights of the ordinary people. I mistook you for one of those people.

Governments aren't fundamentally needed per se to create a free market. But rules are needed. And whatever system we have to enforce those rules would resemble a defacto government. How that governments power is distributed, who's interests it represents, and how far it goes in regulating the market may vary.

Without someone enforcing rules to keep monopolies in check, I think those monopolies would become defacto governments. And they wouldn't be democratic. This is what I mean (but did not carefully express) when I said that some government intervention in the markets are needed to prevent the powerful from take advantage of the weak. (And it can go the other way too... governments tilting the scale in favor of existing powerful interests.)

Amazon today is another example seeing how they account for 90% of online shopping.

Do you consider Microsoft's monopoly in the 90s to be maintained by the power of the government?

Would that be different from the way that governments normally maintain a regulatory environment for businesses to expand?

Can free market capitalism even exist without the property enforcement that what we'd consider as organized crime or governments provide?

Well my first response to this is that I understand "monopoly" to mean a single supplier. That is not the same thing as having a massive share of the market just because a huge majority of people prefer your product to the competition. I believe MS's main products in the 90s were Windows and Office. All these had alternatives (Mac OS or whatever it was called then, StarOffice etc, Lotus Notes etc.) Microsoft products were simply more popular. So what exactly did they have a monopoly on?

My second point would be: monopoly or not, it's not clear that they would have maintained the advantage they had. Of course we know that the government intervened, and some people will say that's what broke MS's alleged monopoly, whlile others will say it made no difference, and still others will say that they couldn't have maintained it for long in a free market anyway. We'll never know, since it happened the way it happened, but personally I don't see how the government's actions made the success of Linux, Apple and Google products possible where they weren't before; therefore I find the last argument more convincing - that is, that Microsoft had the jump on everyone, but it was never going to last. A free market doesn't guarantee that there won't be a clear front runner in any given competition.

Natural monopolies, by definition, arise from natural market forces, and thus do not rely on government intervention or unfair business practices to suppress competition. (That doesn't mean natural monopolies always compete fairly or never engage in regulatory capture. Only that these are not necessary for them to become monopolies.) Railroads are a commonly cited example. Today, the network effects of digital platforms are thought to give rise to monopolies (or at least high market concentration).

People who usually ask "give me an example of a monopoly not maintained by the government" are usually not asking in good faith. Many laissez faire capitalists explain away natural monopolies, or pretend they don't exist. So perhaps you expected this answer, and are already prepared to dismiss it.

> "I'm not sure laissez faire capitalism if there is such a thing has proven it doesn't consolidate into monopolies or cartels."

capitalism isn't uniquely prone to monopolies or cartels. all economic systems face problems of gaming, because humans relentlessly probe weaknesses in systems to gain advantage.

and capitalism doesn't attempt to address monopolization head-on and instead relies on competitive dynamics and invisible hands to control the problem. and to be sure, in many cases, it's been enough, but runaway market dynamics like network effects do occasionally overwhelm those mechanisms.

we now have enough practical experience to realize that those occasional runaway trains accumulate and we no longer have very free markets across the economy.

that's why governments step in with regulation (yes, regulatory capture is a problem too) and laissez faire capitalism simply isn't viable long-term.

we should iterate on market-based economies beyond capitalism to reach a more resistant economic system (capitalism =/= market economy, which is a commonly misunderstood).

edit: note that you can have a market-based economy featuring choice and competition without it being capitalism, who's defining feature is putting the means of production into the hands of the (moneyed) citizenry.

Can you expand please? From my observations the last thing capitalism provides is choice, considering most people I know who aren't fortunate enough to have passions that translate into big money (like software) absolutely despise their jobs.

Dude. Just open your eyes and look around you. Go to a super market. Look at the shelves.

Go to github.com. Look at all the different software languages, operating systems, shells, web servers, and so on and so forth.

Tool manufacturers. Housing choices.

All that stuff only can possibly exist in a capitalistic system. There is no other way. People have tried. We have massive amount of historical precedent on this sort of thing. At this point it should be self-evident.

I've gone to a supermarket before. In fact when I was young I was forced by the system to work as a cashier at one, and to this day, a decade and a half later, I can't think of a worse feeling than sitting 8 hours a day doing absolutely nothing. It was a small town, so there weren't many customers, and all I could think while I looked at the shelves full of useless products was that I'd much rather be doing anything even slightly intellectual stimulating. This was around the time when I started getting into programming, so you can imagine how miserable I was that I couldn't spend that time learning / producing.

It's easy to see this from the perspective of the customer only, but think of how many lives and brilliant minds are being wasted away in the system.

The only one of these that has anything directly to do with capitalism is tool manufacturers. Fortunately, that's a great example! Let's dig in a little.

Go to Home Depot. Lots of tool brands to choose from, right? Ridgid, Milwaukee, Ryobi, Makita, maybe a couple of Hiltis over in the contractor section. Amazing variety thanks to capitalism, right?

Wrong. The first three brands I listed all belong to the same company, TTI. The only significant difference among them is in build quality, and it's minor; other than that, all that changes is the injection molds for the shell, and the price - which varies out of all proportion to the quality of the product.

That's not a true choice. That's an illusion of choice, deliberately promulgated by a near monopoly in order to gain access to as many market segments as possible, and exploit each to the maximal possible extent - by pretending to compete with itself, TTI makes a lot more money than if it didn't, because that means it can sell three kinds of differently shaped boxes of 18650 cells, and in the modern consumer/prosumer power tool business, that's where all the margin is.

That's great for TTI! For everyone else, not so much, because only the Milwaukee line doesn't actively suck, and even then you're better off spending more for Makita, precisely because that's not a zombie brand, and is still competing.

So, TTI's a great example of capitalism, sure. Is it a good thing? One of the major complaints about Soviet communism, after all, was precisely the lack of consumer choice that it imposed. If that's really the crux of the problem, then why isn't it a problem when capitalism produces the same outcome? Is it only a failure when the Reds do it, but an example of freedom and apple pie when the same exact thing happens under capitalism? Why?

I think many of your examples are illusions of choice. Most brands in the super market roll up to a handful of players, the "choice" for many items ultimately lines the same pockets.

Housing choices? Is that the choice to buy / rent vs live on the street? Capitalism has given us the homeless crisis which was non-existing just 70 years ago.

> I think many of your examples are illusions of choice. Most brands in the super market roll up to a handful of players, the "choice" for many items ultimately lines the same pockets.

So don't buy the big brands. Buy local.

Are you telling me that there is no possible way that you can go to a farmers market and buy food? That the only choice you have is one of Conagra's food brands?

That you can't go one the one of probably hundreds of grocery stores and restaurants that are probably within driving distance of your house?

This is what I mean by 'Open Your Eyes'. Like just go outside and look around! If you live is in a developed western country and you are complaining about lack of choices it's very likely that the problem is you and your own choices.

> Housing choices? Is that the choice to buy / rent vs live on the street?

Since when in human history has people never had to work for housing?

There is only a thin band of habitat in the earth that humans can survive and thrive without housing and technology and work. Too hot and we die. Too cold and we die. Not wet enough and we starve. Not dry enough and we starve.

To spread across the rest of the planet we had to work our asses off.

If you think life is harder for a 20-something having to deal with the indignity of living in a un-hip part of town because they can't afford a nicer place... then it is for a frontier family that has to grow their own food and build their own house from supplies they had to drag behind mules from hundreds of miles away? If so, I have some bad news for you.

"Having to work" is not evidence that capitalism is terrible. You are going to work no matter what. Whether it's socialism or capitalism or if you live in some monastery somewhere. It's not optional. It's never going to be optional.

So you get a bunch of meaningless choices for consumer goods?

Great.

Meaning(value) is subjective, under capitalism, what's demanded by people is what's produced. Sure speculation can mislead people into valuing the wrong thing but that's hardly a problem inherent with capitalism itself.

Whenever I analyze arguments against the free market, it almost always seems that the person speaking thinks the market should give people what the person speaking thinks they ought to want.

No, what's produced is what the system wants people to think they want. Nobody wants 100 slightly different brands of the same thing. That said, I'll concede that sometimes we don't know what we want (the iPhone for example was a net positive).

You'd be surprised. I live in a country with only a couple brands per product (talking groceries here) and it is abysmal.

Even if they make all the different kinds of, say, cheese (and they don't), the quality is terrible, because they don't have those 99 competitors.

I'm in a similar situation, though to be completely honest I don't mind it much. I lived in a big city with significantly more choices and while it was undeniably better, I don't really miss it.

Meaning is subjective no matter the economic system. Trillions of dollars spent in advertising also misleads people into valuing the wrong things. I see this as a problem of capitalism.

People valuing different things differently is a result of culture. Advertising influences culture, to some extent, but it only wishes it was as powerful as people assume it to be.

Most notably, people are not "misled" into valuing the "wrong" things. You just have a different opinion of what people should value based on your own culture, values, etc. It doesn't mean they're wrong, brainwashed, or anything of the kind.

You can try seeing what the known alternative generates in terms of options.

"The alternatives are worse" tends not to be a good refutation of "this option is bad".

To find the best option it is enough to weed out all the rest.

I don't see how that changes anything. Sure, the alternatives might be worse (which I disagree), but that doesn't mean the current system is good.

Can you?

What does China tell us about Republics, given that it is the Peoples Republic of China? What does North Korea tell us about democracy and repulbics, given that it is "The Democratic Peoples Republic of Korea"?

No? But we are willing to take at face value oppressive regimes using "socialist" language?

The main argument for Capitalism is the NAP and the removal of physical force or threat of it.

As for cartels and monopolies, if you take a look at late 19th to early 20th century USA, where business could in fact form cartels and monopolies -- they were formed, but didn't last. They were ruined by both new competition and by "price busters", the cartel equivalent of a "scab".

That is one of the origins of "progressive" legislation. It seemed that the most efficient way to preserve monopolies and cartels was to use government. Indeed, the original meaning of the word wasn't a "large share of the market", but "exclusivity given by government".

EDIT: Show yourselves, downvoters. Give a rebuttal.

Cartels of the late 19th and early 20th centuries were busted up by the federal government by in large, you are making ahistorical statements.

Government only got in late in the game, and if you take a look, a lot of the policies that look good on the surface actually hurt the same people they claim to help.

For example, the minimum wage is clearly helping out skilled workers. Imagine an experienced railroad worked earning $5 an hour laying tracks. To match his productivity, you'd need at least 3 unskilled workers, which are worth it at $1 each. The railroad union, to guarantee long-term work for its members, lobbies for a minimum wage, and now when it's, say, $2 an hour, those 3 unskilled workers are too expensive and no one hires them.