KlutzDio I Wrote:If you really think about it, capitalism is a flawed economic system. The capitalist wants to make more, control more and put the smaller competition out of business. The call it survival of the fittest (business). But the whole system collapses upon itself at that point. Say business X sells a certain kind of washer that all manufactured products must have to operate. Business Y sells a similar washer but they aren't as big and don't have as much financial backing as does business X. Business X makes Y an offer they can't refuse, or simply take them over hostily. After that X takes up all the smaller businesses that buy the washers from them and sell the manufactured products. Soon, over years and years, business X owns a little bit of everything and they can set the value of their goods and services. At this point the system has broken down because business X is a monopoly and they own everything. At that point capitalism ceases to provide private, free ownership and choices, something we value greatly in this country.

In general, I'm not opposed to natural monopolies. I am opposed to monopolies maintained by government force and fiat. To maintain this type of monopoly requires the aid and abetting of the state.

In your example, Business X evidently makes washers efficiently and keeps its costs down. Meanwhile, Business Y evidently makes washers inefficiently and is watered down in overhead costs and little revenue (or, as you said, "without much financial backing"). Free-market economics dictates that if Y can't compete or improve its processes, they will succumb to the much more efficient X. If X is the only business left standing selling washers, and maintains its efficiency & quality while keeping prices at a level that meets consumer demand, it's a winning situation. If X raises its prices beyond a market point and/or begins to "slack off" on its quality, then Businesses Z, P, and Q are waiting in the wings to join the party and make X pay. The free market exchange is in place.

In a collectivist society, government extracts public funds from workers' paychecks to prop up the inefficient and shoddy Business Y in an ill-advised attempt to keep unemployment down (which doesn't work, but that's a whole 'nother story). At this point, Business Y certainly doesn't have the motivation to improve if they are receiving sweetheart funding from the state to stay in business. Results: Worker malaise, poor quality, high prices, long lines at the supermarket. This is one of the key contributors to the collapse of the Soviet Union and Eastern Bloc. They taxed the public so much to protect disfunctional corporations that it went beyond the breaking point.

A systematic prevention of free exchange can only be carried out by governments, since only those individuals claim a monopoly on force.