by Jim Rose
The normal market system runs itself – Ronald Coase’s favourite quote
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Correct. As force and fraud are not part of the “normal market process”.
As for government “anti trust” or “competition policy” – this is based on the false principle of treating the “perfect competition” model as if it should exist in the real world (actually the “perfect competition” model is a theoretical construct – trying to make the real world confirm to it, by government interventionism, is a terrible blunder).
In the past we were told that government should intervene – but on the basis of clear and straightforward principles (this is bad enough). The new “Nobel” Prize winner has rejected even that – he wants arbitrary power for all-powerful and all-knowing government regulators (absurd – utterly absurd).
The understanding that systems can run themselves- whether economic ones or social interactions- is the hardest thing for people to accept, it seems.
Perhaps it is a mistaken form of language – after all it is not a “system” that runs itself, it is PEOPLE who run themselves (without need of “nudges” from the clubs of the state). As a friend of mine is fond of saying “market forces are human choices”. When (for example) people choose not to shop in Tesco (and to shop in a different store instead), Tesco contracts over time, and the other store expands.
There is no “market power” – or rather the “power” is with the CUSTOMERS.
Slight caveat: The power is to a large extent with the customers — and only with a subset of them sufficiently large to support the business. And, as an aside, I’m not convinced that in the free market people generally spend their money wisely.
(Which is NO reason why anyone should dictate to a business what it should make or how it should make it, nor to a customer what he should buy. If pink plastic Mary Janes are all the rage this year, well…it’s your money, Miss or Mrs. Fashionable.)
But when Business X can get by without giving customers what they want rather than what it wants (or thinks desirable, or thinks is best in terms of its own business-interest for that matter), it (“it”–whoever makes the decisions for the business) will do so.
And at some point it will either shape up, or fail. Which is why no business lasts forever.
[I’m not arguing with the quote. I love the quote! Consider me free-market through and through, and unlike some, there’s no rider attached to that. (If force, fraud, or coercion is involved in a market transaction, that transaction is by definition NOT a free-market transaction.) But, as I just posted in another discussion here, Everything has a downside™, and the free market is no exception, and we don’t advance peoples’ understanding of the economic value and MORAL NECESSITY of the Free Market if we brush off the downsides.]
. . .
Back on topic, since at least the days of the Efficiency Expert — you guys old enough to remember him? He was all the rage in the 50’s at least, and I think going back to thirties, and I think he was invented out of the kind of love of System and Planning that drove the Progressivism of German-trained Richard Ely; bolstered by the assembly-line methods of Henry Ford, which is of course an example of the Division of Labor … and which was, if I remember right, instituted to point of ridiculously minute divisions in some factories, where it turned out that the resulting workers’ jobs were so boring that they couldn’t focus their attention well enough to do that minute job well.
Of course, planning is big in the bag of Human Survival Skills, as it is one of the major ways of coping with whatever Reality may decide to throw at you down the road a ways.
Likewise, control itself. Humans need to be able to control Nature to a degree. We cannot be strictly reactive. Nor are we the only ones. Birds and beavers and creatures that burrow do the same. So do ants, although as Ian has so eloquently explained to us, not very well. *g*
Anyway, as a result of that, System and Planning are the order of the day in our day. Although if people remember, part of the pop-psych methodology of the Human Potential Movement in its heyday of the 60’s-80’s (at least 30 years) was to stress the importance of Spontaneity to the health of the psyche. Perhaps backlash against the hyper-planning of the Efficiency-Expert era? Maybe.
What is spending money wisely Julie?
My big belly would tell Dr Cass Sustein that I have not spent my money wisely (too much eating).
However, being trapped in a box every day at work, and then being trapped on the (accused) internet when I am not at work, means that I get no exercise.
I suppose I could have spent the money on self termination – would that have been wiser?
Perhaps it would – but then I would not be around to type this.
Still back to the topic.
About the only “power” a big company has is over its suppliers – by buying in bulk it can get a discount. But even here the power of the company is as a customer.
Paul,
What is “spending your money wisely”? It’s spending your money in a way that will further your long-term self-interest. This could include buying yourself a Pepsi after school (sue me, I hate Coke) if you don’t need the money to pay the rent or to set aside for college. That is, it’s entirely possible that your short-term self-interest IS in your long-term self-interest. To the extent that we can afford them, there’s nothing wrong with buying ourselves little unnecessary but desirable treats. I say Coke, Pepsi, real ginger beer, and steak-and-kidney pie are between you and yourself. Cass has nothing to do with it.
Cass Sunstein is not empowered by the gods to make those decisions for other people. (That is, he lacks the wisdom.) Nobody is. Frequently enough, people don’t even have the wisdom to make them for themselves. Cass probably wants me to spend my money wisely by buying 150 copies of his foul book and giving them gratis to schools and churches. Personally I’d prefer to do the same with Atlas Shrugged. Or even to buy myself a lobster dinner, with you and Lucy and the Cat invited to share.
As to the power of a “company”: I had something specific in mind when I wrote that, but I may have gotten two things mixed up in my head. If I can untangle things and find something intelligent in there, and a way to say it, I’ll be sure to let you know.
Fair enough Julie – nothing for me to dispute here.
Although watch out for the invisible cat – he tends to eat everything.