The Holy And Devine Free Market, Savior of All

The Holy And Devine Free Market, Savior of All

Actually and all sarcasm aside, Rev is quite correct. Back in University I did a year of Econ 101 from Paul Samuelson's classic text. One of the best courses I ever did. After the second semester's final, our instructor was "Congratulations. It may sober you to realize that you have now acquired more formal economic training than 95% of all persons who have ever served in the U.S. Congress."

But I digress. One thing I did learn is that Smith's "Invisible Hand" is no more than Newton-type optimization working against local market parameters, and it only works optimally (for the consumer) where you actually have a free market. Where there is "sufficient competition", goods providers optimize their own profits by providing the lowest cost to the consumer of those goods.

Likewise, you can also show (maths) that a monopoly or oligopoly, acting to optimize its profits, will end up selling its goods at a price higher than what would be obtained from more competition. This is the basis of laws intended to promote competition, and while some of the econ staff on the committees that drafted those statutes may have understood their basis and limitations, such was most likely lost on the majority of those who actually voted them into law.

In the classical econ sense, the "higher price" exacted by monopolies is measured in dollars (Newton optimization). But its not hard to visualize the concept as extending to other forms of "higher cost" to the consumer society as well.

And as our instructor also pointed out: "The reason we economists always hold up the winter red wheat market as the poster child for free market economics is because by today ('74)the winter red wheat market is probably the only market that remains, in the classical sense, free."

As Rev alludes, the absolute worst excesses of Capitalism were perpetrated by unregulated monopolies and oligopolies. Standard Oil, meat packing in the presence of essentially unlimited labor supply (Upton Sinclair), the Irish potato famine. From which resulted Karl Marx, the Sherman Antitrust Act and its offspring, child labor laws, railroad and mining safety laws and their latter-day OSHA and EPA offspring, and government protection of workers' right to unionize. No, today's market is in no way "free", and we are all better off for it. Doesn't mean capitalism can't, shouldn't, and doesn't act to (locally) optimize profits and wealth. But it is, and must be, a constrained local optimization.

Government must (and does) set at least some of those constraints. And as for long-term global optimization? Not part of classical Adam Smith economics. Requires foresight and willingness to sacrifice short-term profit for long-term gains, both of which a classical "free" market abjectly lacks.

And in the sense that all these optimization concepts are eminently subject to computer modeling, they remain in that sense "on-topic" at LWN. Whether or not they're worth hijacking a Bruce Perens thread is a matter of subjective opinion. :-)