[economy] for and against the free market [2]

If you read my rant about free marketeers, you’d be au fait with the arguments. Though I believed in what I wrote, still, it needed to be bounced off an economist or two and so I sent the link to two of the best going just now, mentally preparing to be torn into strips. One replied and as he says:

There are several things to quibble with. I'll pick three:

1 Do free markets really tend towards monopoly? I'm not sure. They do, if increasing returns to scale are widespread. But in practice, monopolies often get lazy and inefficient, or fail to attend to niche markets, thus providing opportunties for smaller firms. Or monopolies can disappear with technical change; Polaroid had a monopoly on instant photography, that got wiped out with the growth of digital cameras.
And how bad are monopolies anyway? If there's the threat of competition, a monopoly can be kept efficient. Everyone talks about Wal-Mart - but this is an exception.

2. You say "I still support a market society for the reason that I can’t see the obligation to help those who won’t help themselves." This is a different thing. You can have free markets with redistribution, as long as the redistribution doesn't affect prices. The economists' ideal here is lump-sum taxation. And you can have no redistribution but no free markets - think of feudalism.

3. "The market becomes a goal in itself, replacing spirituality as the summum bonum." I'll grant this has happened in many places. But it's an argument against the crass materialism of much of human nature (which politicians encourage). It's no argument against the market. The market is just a tool for allocating goods. How much we use that tool is up to us. In theory, markets can coincide with spirituality - imagine monasteries trading with each other.

Interestingly, Chris Dillow is also running a piece on the Beeb just now.