Wednesday, October 08, 2003

Capitalism contradicts Free Market!!!
We normally use the term capitalism and free-market in the same breath -- in fact, often interchangeably.

If one really thinks about it, the "Free Market Capitalism" (or "Capitalistic Free Market") is a contradiction in terms. Capitalism is based on an economic doctrine which concentrates the power to a few., while Free Market is based on assumption of equal distribution of power across markets.

Also Adam Smith's Free Market Theory was based on some assumptions:

(1) player are not large enough to influence the market dynamics
(2) there are no "information assymetries" (or trade secrets)
(3) trade across nations/ regions is balanced
(4) sellers are also producers, etc.

Clearly, none of these holds in the present day real world: World's largest 200 corporations earn sales revenues which are greater than the combined GDPs of 48LDCs; IPR regime blocks free flow of information; trade barriers and subsidies by richer nations do not allow balanced trade across regions, and sellers are often out-sourcers... etc.

So one can either support capitalism or support free market!!!

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