Ask Prof Wolff: Free Markets & Monopolies

A Patron of Economic Update asks: "In college many years ago I took a couple introductory courses in economics. There I learned that a free market was a market with perfect competition where buyers and sellers could freely enter the competition. From this definition, it followed that a free market would set the price on a good so that supply equaled demand. And there was enough of a discussion on this definition to conclude that a monopoly or oligopoly could not exist in a free market; moreover it was generally understood that government oversight and regulation was needed to maintain a free market. Today, however a free market has been re-defined as a market without government interference of any sort.  My question then is how economics is taught today; it would seem that with this new definition of a free market, just as with perfect competition, any significance of the supply and demand curve intersection would be irrelevant."

This is Professor Richard Wolff's video response.

_________________________________________________________________________

“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”

_________________________________________________________________________
Follow Wolff ONLINE:

[lindascanlan]

Good morning Professor Wolff...our go to guru of all things economics and what not...xx

[adams]

doing away with government interventions returns us to competitive capitalism that then destroys itself 7:10 thanks for the solution prof

[PoliticalEconomy]

The prize for winning the game of monopoly should be nationalization.

[robertbentzel]

Sadness at the Edge of Town. Great Springsteen album

[plastictouch]

Free markets result in unfree markets. There are winners and losers in the competition. Markets keep scarce resources in short supply. A centrally planned economy doesn't have these problems.

[lindascanlan]

I understood the power of advertising after reading "From Those Wonderful People Who Brought You Pearl Harbor" back

[Gigika]

Wolff said it best, the system is the problem. ✅

[lidstrom-ydpb]

I wonder what Professor Wolff thinks of an economic philosophy like distributism? It focuses on keeping economic activity as family-based and community-based as possible. Distributism envisions economic life as being primarily a local and regional system that also recovers artisanship and craftsmanship as much as possible. I would love to hear Professor Wolff's thoughts on an economic philosophy like distributism...

[olafsrensen]

Third volume of Marx"s Kapital Monopol Kapitalism is a must !

[Jay...]

A good explanation of why free markets & completion are fiction in the US today.

[GhostOnTheHalfShell]

A diverse market of buyers and sellers is a kindred of democracy but the nature private ownership by a few concentrates economic power.

[cheri]

Thank you Professor Wolff. I have been listening to you for years. You teach us so much about how Capitalism works. It is not working. New ideas now. 💡

[vineetsoni]

In every country it is always and everywhere in the interest of the great body of people to buy whatever they want from those who sell it cheapest. The Proposition is so very manifest that it seems ridiculous to take any pains to prove it. Nor could it ever have been called into question hadn't the self history of merchants and sellers confounded the common sense of mankind. There interest is in this respect directly opposite to the great body of people.

[haroldt.]

What is Wolff's opinion on the inefficiency and corruption in government? I am not against the government, I love roads, education, and health care. Just thinking critically

[rebelwinds]

another assumption when I was taught economics here in the US (for our analysis of the perfect functioning of capitalism), is that all these multitude of buyers and sellers have "perfect information", i.e. everyone knows what everyone else does ... hmmm, I don't know.

[lindascanlan]

The terms winners/losers is grotesque...says all one needs to know about capitalism as pure evil.

[edc]

A Human Fist With The Middle Finger Extended…oh, wait! That’s THE INVISIBLE HAND!
P.S. Markets were Never "Free". Even Adam bozo Smith analyzing the behavior of Capitalists will tell you that [from **The Wealth of Nations**, end part of Book I]:
"The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market, and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can only serve to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."
>>>AND LIKE ALL GOOD BRITISH IMPERIALISTS Smith spoke out of BOTH SIDES OF HIS MOUTH and went on to spend many *many* more words defending or overlooking that "dealers interest".

[sakarikaristo]

1) Wolff should be careful about definition of a market. The limit where a market extends is illusive. Also information about prices is important.
2) Mr. Wolff surprised that perfect competition does not exist.
3) Inefficient producer loses to the more efficient one, no problem. Maybe it’s because there was excess capacity in the starting point.
4) Efficient firms must keep reinvesting and deploying capital to bring about more efficient and better forms of production and technology. Great, that’s a plus for society. Unless a) it does not really happen (how to improve upon barbershops or arcade halls) b) companies earn excess profits c) subsidies preventing competition from weeding out inefficient firms.
5) Auto market not limited to US. 4 US producers, but they don’t dominate the GLOBAL auto market. Plus no auto has excess profits in terms of returns on capital. Their profits are average in terms of returns on capital.

[jamesmorton]

As our industrial output Plunges it is bad. redistribute the wealth, worth less dollars

[Jim]

Profesor Wolfe is correct but his solution is not. A centrally planned economy also does not work because it cannot react fast enough to keep up with the market. What is needed is a stronger set of basic rules to govern the market such as: 1. No company can but another company in its same market if the resulting company will have more than 10% of the market share. 2. All regulations must apply to companies in accordance to their size. Small companies should not have to comply with all the regulations that big companies do. Big companies use these regulations to snuff out the small competitors since they have the ability to comply while the small companies do not. 3. Under no circumstances should the government itself compete in the market. 4.And finally the business taxes should be graduated so that the larger the company becomes the larger the tax bill becomes until the top tax bracket exceeds 100%. To sum up: BIG is bad. A proper solution prevents companies from getting so big that they can manipulate the market.