Celsus

Some nitpicking:

Not true. A monopoly is the absence of competition, in which the monopolistic firm has the ability to control prices, and attain supernormal profits. To do this, it must erect barriers to entry (which include introducing (1)sunk costs - i.e. once a firm has entered, it cannot leave without incurring more costs, and therefore has an disincentive before entering, (2)establishing intellectual property rights to their products - other firms are barred from producing similar or identical products, etc.) Perfect competition is the situation where firms have complete freedom to enter and leave the market, where the assumed maximum number of firms already exist in the market and where all firms produce at normal profits (and such a situation rarely exists in reality), which you describe:

A monopoly indeed produces at MR=MC, but the production curves are very different (and very difficult to illustrate on this bulletin board). Thus it attains supernormal profits.

Actually, perfectly competitive firms in theory have no resources to allocate to R&D. (Think of an example of perfect competition). Only firms in monopolistic competition can do so. And firms with monopolistic power, being the only ones able to conduct R&D, in theory, are the only ones able to maintain a monopolistic control.

No it makes sense for a monopoly to maintain its monopoly, exercise market control and retain supernormal profits. This is bad for society, hence anti-trust laws.

Actually, Adam Smith in no way "created" or "founded" capitalism. He was simply the first to describe the processes of capitalism (still at an artisan scale) and describe his theory of why they behaved that way.

**makTHRAX**

to Joejoejoe-

Several factors contribute to blocked entry ie economies of scale, patents, control of resources, pricing, and geography are all examples of blocked entry. They are not neccesarily erected by a monopoly as you suggest, though many of them are.

I looked up supernormal profits in the index of my econ book--nothing. Granted my econ book is elementary and I am not an economist. But just to play with the idea, and you will no doubt correct me on this, I don't see how the production curves could be remarkably different as I don't see how a monopoly could produce over the demand. I guess I don't know what supernormal profits are to argue them. Website or explantion would be helpful, I would like to know.


As you pointed out, in theory. Of course, few perfectly competitive industries exist anymore thus making R&D more reasonable.

And monopolies can best maintain their monopolies by pretending they are competitive. This will force them to be efficient and technologically progressive, not lethargic. Lethargic monopolies, as most monopolies do become are counter productive to society. You are right about he Adam Smith thing, I am clumpsy in my wording. However, joejoejoe, wouldn't you agree that a government monopoly is just as bad for society as a private monopoly?


To August--
You brought Smith up, I admit I haven't read Smith. But then why, if Smith solely wrote about small artisan capitalism, would you ever bring him up to begin with. Again, Jefferson (see Letters to Virginia, don't know much other Jefferson) was a libertarian through and through. His political party BLEEDS libertarianism. He thought the government was too bloated before he died in 1824, and it was a fraction of what it is today. You have offered no proof that Jefferson is NOT a libertarian. And further, although I am a poor economist, my analysis of monopolies was not wholy wrong nor irrelevant. Further, you simply stated it was and did not do what joejoejoe was kind enough to do. My analysis was relevant because you suggested Smith would be against monopolies and I was simply asserting that he was against monopolies because at the time they were often associated with mercantilism. The government was in many ways the monopoly Smith would not have liked. But then again, I don't read Smith. Lastly, you are leveling accusations (the Jefferson one and "libertarians are annoying") that you don't and can't support. And you never answered my other dead people co-opting, namely Madison and Ricardo, start cracking.

thx,
makTHRAX

August Spies

I brought him up because ive posted on this board for years and libertarians constantly pretend Smith would support them.

"Further, you simply stated it was and did not do what joejoejoe was kind enough to do. "

because, as I noted, it was irrelevant either way. I don't have time to go off on too many tangents. To begin with it should have been plenty clear that I was referring to companies holding vast shares of the market, not 100% of a market. While not the technical definition of monopoly, the term means both nowadays.

boy you libertarians are funny when you are angry. You rant about me not talking about jefferson, yet you have not provided a single shred of evidence to show Jerfferon is the equivelant of a modern day Libertarian. You MERELY stated he was.

for my part ill let him speak for himself:
"Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions or property in geometrical progression as they rise. Whenever there are in any country uncultivated lands and unemployed poor, it is clear that the laws of property have been so far extended as to violate natural right. "

"I sincerely believe that banking establishments are more dangerous than standing armies"

"The country is headed toward a single and splendid government of an aristocracy founded on banking institution and monied incorporations and if this tendency continues it will be the end of freedom and democracy, the few will be ruling and riding over the plundered plowman and the begger in the omenry "

[ December 15, 2002: Message edited by: August Spies ]</p>

emphryio

Jefferson thought the government was bloated in that he wanted state's rights instead. (Which is at least mostly obsolete today or should be.)

I don't remotely understand what you are saying here. Sure, pretending to be competitive will "force" them to be efficient, etc. But what is forcing them to "pretend" to be competitive?
What is stopping them from being lethargic (other than laws) even it is extremely counter productive to society?

Celsus

**makTHRAX**,

<a href="http://www.bized.ac.uk/stafsup/exams/revec_moncomp.htm" target="_blank">Here</a>'s a fairly standard economics explanation. Note that in perfect competition, average revenue = marginal revenue, and is represented by a horizontal straight line, intersecting average costs at the lowest point. Therefore the possibility of supernormal profits is excluded, and firms in monopolistic competition (obviously) make more profits than firms in perfect competition.

Joel

P.S. I don't buy neoclassical economics and you will probably find some reasons (if you look really hard) in the thread Gurdur linked.

Friar Bellows

An interesting thesis is that Libertarianism is to the State what Protestantism is to the Roman church. In both cases, the reformists want to take over and reform the functions of their enemies, but neither group questions the actual functions themselves. So the Protestant goes along his merry way brain-washing feeble minds, fleecing them out of their hard-earned money, and promoting some stupid fairytale; while the Libertarian goes along her merry way coercing her employees, indoctrinating her children with the work-ethic, and kicking her elderly tenants out on the street. Now, in the former case, the Atheist laughs at both the Protestant and the Catholic, and (hopefully) points both of them to Secularism. But what is the alternative to the superstitions of the Libertarians and Statists?

RED DAVE

An honest question from Friar Bellows:

Here is at least part of my answer and why I started this thread.

<a href="http://www.anu.edu.au/polsci/marx/contemp/pamsetc/twosouls/twosouls.htm" target="_blank">The Two Souls of Socialism</a>

RED DAVE

Rusting Car Bumper

Why would you spend so much time being against something that is so unpopular. A lot of wasted effort if you ask me.

DC

Kuu

I think that the problem is that its true believers are so vocal on the bulletin boards. I have left one bulletin simply because it was almost impossible to have a thread on most issues without the Liberitarians taking the threads over. I started one thread on an aboriginal school here in Tasmania (that were excluding children) and this topic ended up becoming a thread on Liberitarians views on education.

They are just so damn annoying when they do this.

August Spies

libertarians the most ideological people who never really do anything about their dogmatism.

At least primitivists or fascists or communists or chirstians or muslims are out trying to fight for their beliefs. LIbertarians post on message boards.