Sanding our assholes with 150 grit.

I believe in free enterprise. I hate capitalism and...

... most allied brands of corporatism.

To me the concepts are antithetical except in that the former, if left to operate wholly without regulation, tends to give rise to the latter... which generally amounts, in practice, to a weird form of tyranny.

Please discuss.

Some past post from Phil made me want to highlight this as a straight-up topic rather than an obliquely referenced issue. Let's blame Phil.

I once suffered through a Commerce degree and was taught the doctrine of the many Business Schools of Theology. Actual experience and observation has turned me to more sceptical or heretical views.
Permalink John Aitken 
January 23rd, 2006
Explain the difference.
Permalink Flasher T 
January 23rd, 2006
Yeah i'm not exactly sure what you're saying either...?
Permalink Phil 
January 23rd, 2006
The difference is that corporations try to lock out competition, free enterprise means just that - compete or die.
Permalink  
January 23rd, 2006
Well, Free Enterprise tends to suggest an environment where individuals might have opportunity, whereas capitalism gives those with accumulated wealth or entrenched power (amounts to the same thing) control over pesky challengers?
Permalink John Aitken 
January 23rd, 2006
So how would a country have one without the other? Take away all money when you reach a certain point of power?
Permalink Phil 
January 23rd, 2006
Um, well no. I think there could be reasonable controls that stopped short of gross confiscation of property.

The problem (of overwhelmimg market power) was generally recognized in North America at least 70yrs ago, and reasonable first steps to address it were legislated in the form of Anti-Trust legislation in the U.S. and the Canada Competition Act by its northern neighbor.

The Canada Competition Act has not, so far as I know, ever been used to prosecute, or even threaten, any one of the many deserving "should have been" defendents who have abused their power since the act's inception.

Anti-trust prosecution in the U.S. has been lax and rare. The only cases that come readily to mind are Standard Oil and AT&T. Arguably, cheap polical opporturnism drove these few instances where the law was enforced, and insufficient public outrage buried the hundreds or thousands of cases where it was not.
Permalink John Aitken 
January 23rd, 2006
Anti-Trust doesn't solve everything though John. Take Google for example. They have not bought out any competitors, and really havn't done many anti-competitive practices, but they have "accumulated wealth" and "entrenched power". But at the same time, Google was a tiny 2-man company 7 years ago. Lets say Google keeps gaining market share, to say 95%. Do you suggest we break them up purely because they are sucessful?

I'm genuiniely curious what you're thinking, I agree the anti-trust litigation has been somewhat lax lately, but I think that the "entrenched power" and "accumulated wealth" issues would still remain.
Permalink Phil 
January 23rd, 2006
Free markets quite often break down to two large competitors owning most of the market with a handful of others sharing the dregs.

Look at Coke & Pepsi. Together they have the vast majority of the market yet there are dozens of little niche brands that have the rest.

A few years back, I would have said the same about McDonalds and Burger King, but then chains like Subway and Wendy's stepped up their offerings and decided to distinguish themselves.

I firmly believe that one year's star could be next year's joke...
Permalink KC 
January 23rd, 2006
> So how would a country have one without the other?

Execution by firing squad for the Board of any company behaving badly.
Permalink  
January 23rd, 2006
I would have assumed that "Free Enterprise" and "Capitalism" were allied. That is, you need Free Enterprise in order to practice Capitalism.

And as has been pointed out, completely un-regulated Free Enterprise can lead to one company dominating a market, using its monopoly position to perform anti-competitive practices against potential competitors.

That's why FDR said, in the 1930's, "I'm trying to SAVE capitalism, not kill it!" when he instituted the controls he put in place. Even though those controls were seen as Socialist "State control of enterprise" at the time by the pure Free Market believers.

So, Anti-Trust laws came into existence to limit a large corporation's ability to act in anti-competitive ways. This leaves the niche markets open -- like with Coke and Pepsi, if one tried to buy out the other, or negotiate price with each other to drive out smaller competitors, those activities would either not be approved or would be illegal.
Permalink AllanL5 
January 23rd, 2006
Corporations are synthetic entities granted power by the state. They don't exist without the state and should be disbanded. That is, if you want true free enterprise.
Permalink son of parnas 
January 23rd, 2006
"Corporations are synthetic entities granted power by the state. They don't exist without the state and should be disbanded. That is, if you want true free enterprise."

This is not true. There is no need for a state to approve a corporation in order for it to function.

The 'oldest modern corporation' was the Dutch VoC - United East India Company, which was a joint venture of a large number of Dutch Traders. It's legitimacy came from the trust traders put in it, and their willingness to do business with them. It's shares were traded at the Amsterdam market.

What 'the state' did with corporate legislatian was regulate an existing practice.

Even much older examples are the North German Hanze trading ventures. They evolved into an almost federal state, not by legislation by any state, but by internal power.

High risk high profitability ventures lead to sharing of risk and the foundation of corporations. When 3 out of 10 ships wreck, but the remaining 7 make up for the losses, and you can only afford one ship or part of a ship, it makes sense to join forces.

The administration of such a corporation is not an individual, but a collective, and the collective _is_ the corporation. No need for a state sanctioning this.

It is the other way around: a state is a particular kind of corporation, one that has acquired a monopoly in many areas.
Permalink Erik Springelkamp 
January 23rd, 2006
> There is no need for a state to approve a corporation in order for it to function.

The point to a corp is limitted liability and other preferential threatment which only the state can grant.
Permalink son of parnas 
January 23rd, 2006
The liability is only limited to preventing the shareholders from personally being sued. Therefore if you take that away it would only keep people from investing in corporations. And make John's original problem worse....rich companies can handle the liabilty better because they are ran by rich people, but a small company would be even more venerable.

This limited liability is also a "deal" with the state because in exchange for this limited liability, the corporation has to "act" like a corporation. If you take away that deal there is no reason the "fat cats" who own it to simply act on their own wills and pocket even more money, and look out for their interests over that of the company.
Permalink Phil 
January 23rd, 2006
"The point to a corp is limitted liability and other preferential threatment which only the state can grant"

Only because it regulated unlimited liability in the first place. Stating that certain transactions may only be conducted by natural persons.

But there have always been exceptions to this rule.

The Church, almost any level of government.

A lot of what is now considered government grew out of collectives for a special purpose, often commercial. Think of guilds, polder-boards.

The problem with Americans is that they don't have a sense of evolution of government: suddenly they exist with a full system of laws right in the middle of the age of individualism. And that system is like a set of axioms beyond wich everything is false.
Permalink Erik Springelkamp 
January 23rd, 2006

This topic was orginally posted to the off-topic forum of the
Joel on Software discussion board.

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