dek wrote:
Actually, I do think it mostly fails by ignoring human nature, and generally in the same way.
If the unhindered market pushes those in it to find the most efficient means of making profit, it doesn't actually lead to honest business. I might be able to sell you a better product for profit, but it is more profitable to sell you a cheaper product for profit, which generally means it isn't better. I do this through lying to you. It is even more profitable still to tell you I'm selling you something but actually defraud you entirely for profit. This is what a lot of finance firms did recently. And it is even more profitable still to not even bother defrauding you, but to simply steal your money through brute force.
It is therefore the ideal market solution to rob you. The costs to myself are simply the overhead of a weapon to wield against you, and the intangible cost of the danger involved. But the profit margins are rather good.
An unhindered market will trend more and more along the line from inferior products with more deceitful marketing, to fraud, to theft. The consumers can't do much to stop it, because they are less and less willing participants in the process, as well as the simple fact that there are enough ignorant consumers to find a way to turn a profit on even the most dishonest business plan if you're good at what you do.
That's where the law needs to come into the picture, but Randian economics views the law interfering as inherently evil. It simply takes as a matter of faith (and in this regard, I mean faith in the same sense I use it in discussions about religion, because that's what it is) that the market is a perfect machine that, if left untouched, will find a balance that is equitable and ideal. It presents no evidence for this claim, it simply says it is true.
I'm no expert on Randian philosophy, but the idea of theft as participation in the market seems contrary to what I have read. As I said, unless you're citing something I've not seen, I don't think you can say that Rand states that there is no place for government. If anything, I think the case can be made that the formation of governments reflects a reaction by the market to thefts and assault. Those impacted freely associated to protect one another from those that would do them violence. Rand is very clear that the market really only exists when two or more parties voluntarily contract with one another for goods and/or services. Theft doesn't reflect a voluntary act for at least one of the parties involved.
Even in the absence of government or any other regulating force, many of the problems you describe would somehow be addressed. Those who commit fraud or misrepresent their products may see a larger profit than others, but for how long will they see those profits? Are you going to continue trading with someone who takes advantage of you, or start trading with someone who has earned a reputation for doing so? If you're being preyed upon by thieves, and there is no recourse from an outside authority, wouldn't you pool resources with others who share your predicament for mutual protection of your person and assets?
The market is not a perfect machine, which is why order has to be imposed upon it, but like many things in life, less is more. Theft and fraud must be prevented in the market, and the fact that the market has few inherent qualities that actively and effectively deter those activities is a flaw. That is why rules with enforceable penalties are necessary to deter people from stealing from and/or defrauding others. The government exceeds its proper role and distorts markets when it mandates the use of one product over another without any reasonable concern for public safety (hello, Ethanol), when it forces businesses into transactions that aren't in their best interests (hello, Housing Bubble), when it props up one company but lets other similar companies fail (hello, Bear-Sterns) instead of letting them all fail, when it give waivers to one business but denies them to others (hello, Obamacare waivers), and when the government taxes or subsidizes certain behaviors to discourage/encourage them, among other things.
Your Pal,
Jubber
