It never matters whether or not a given product or service is superior; a small business could be outdoing Wal-Mart in price (and, in my experience, Wal-Mart's prices aren't lower, at least for what I used to buy there), it doesn't matter though, as Wal-Mart is "known" for low prices, just like Uncle Bill's Snake Oil is "known" for curing baldness, scurvy, and depression.

Advertising is a part of any successful enterprise, and I do not believe that if company X sells product A for a cheaper price than company Y, that company X will not have enough money from people flocking to that place for the lower prices to advertise on a larger scale! That's how all companies start out, and that's ultimately how retailers become successful. Minimal advertising attracts a basis for future advertisement. In fact, the only benefit Wal-mart has in advertisement is that it's on a national scale. That kind of advertisement would be useless to a local business that only really requires fliers and a newspaper spot.

Big businesses have other advantages that small businesses (in their industry) cannot compete with.

The only tangible advantage big business has is the sense that they're successful and have a reason that success. That's like saying "successful businesses have an advantage over unsuccessful businesses, insofar as they're more successful." That suffers from conspicuously poor logic. As I said, ultimately the consumer decides, and they in the mass, always decide toward the company that gives the best quality and quantity for the least cost (which is usually the larger businesses). This is the nature of competition, and very basic economic theory.

When certain markets or regions take an economic downturn; say the state of Missouri sees a major economic slump and consumer demand plunges. Wal-Mart and other major stores can continue to operate off of the profits from other areas of the country. Small businesses, however, don't have the luxury of a vast supply of income from a variety of regions and sources.

How is that a bad thing? Companies like Sears and Wal-mart etc. have been the last hope for many regions hit with disaster. They're more resilient, and that is a very good thing for people who need food, clothing, and shelter immediately after a natural disaster or economic downturn. Once people are back on their feet they can, with the same ease, reopen their enterprise without any resistance.

Also, big corporations can go into a developing area; drop their prices way below the competition (taking a loss) and use the profits from other areas of the country (or world) to wait for the other businesses to go under, close, and then put their prices back up to normal.

It would have to be a very developing area, because the places with the most people unusually have many big retailers like Chapters, Futureshop, Target, Macy's, Barnes & Noble, Old Navy, Winners, and down the list that are all in a sort of competition for the best retailer. In smaller developing areas, where there are admittedly less people effected, what you describe is possible. Again, though, as in my hometown where we basically only have a Wal-mart when it comes to big name suppliers, businesses can always (and always do) reopen once the prices are low. This is a necessary fact for the simple reason that towns need employment -- more than Wal-mart can satisfy. Nevertheless, the stores that Wal-mart ends up shutting down are stores that sell like-goods for higher costs. Niche markets remain open unabated. Again, however unfortunate you wish make this out to be, it was completely determined by consumers democratically moving their business to Wal-mart.

People will buy discount poison drops if they said "quality pain killer" on it.

Hopefully not without suing the making for fraud.

Just because people are making bad choices doesn't mean it legitimizes the choice.

Why are they bad choices? Over all, the existence of a Wal-mart or like business in small communities is indicative of local wealth. In other words, it's a sign of economic health. Just because a few business owners get hurt along the way doesn't make it a bad choice, nor does it negate the fact that it is completely determined my the consumer. All you are doing is describing facts of competition -- a positive trait of capitalism.

Just because people are willing to buy cheap goods made from children in sweatshops doesn't mean that choice is legitimate and shouldn't be taken away.

Why not? Because of capital flow and economic globalization have caused poverty rates to drop dramatically in places like China, compared to areas less affected by globalization, such as Sub-Saharan Africa, where poverty rates have remained stagnant. I understand the desire for good working conditions in these developing countries, but the simple fact is that if it weren't for the "sweat shops" they would be completely jobless. Capitalism with reduced trade barriers stands alone in it's ability to raise people out of poverty, sweat shops being a starting point (in the last 20 years the number of people in developing countries living under $1 a day has dropped from 40% to 20%).

"The percentage of people living on less than $2 a day has decreased greatly in areas effected by globalization, whereas poverty rates in other areas have remained largely stagnant. In East-Asia, including China, the percentage has decreased by 50.1% compared to a 2.2% increase in Sub-Saharan Africa." So you see what you are characterizing as the problem is in actuality the beginnings of the solution.

People don't have the economic right to preference slavery over freemen factory goods. Are you saying we should legalize slavery and let the market decide?

What a horrible misunderstanding you have of libertarian philosophy. Libertarianism is the anti-thesis of slavery and states that you should be able to express your freedom to the utmost, only so long as your freedoms don't infringe on the freedoms of others. Libertarianism is not a state of anomie. It is not lawless. That state and local governments still define laws within the context of human relation with individual rights being cardinal. The starting rights are your right to life, followed by liberty and the pursuit of happiness, each depending on the preceding right to exist. I have no right, however, to infringe other peoples rights, and that includes through coercion, forced labour, or slavery. Exceptions are abound, but this is the foundation of any free society.

Keynesian, socialist, economics has done wonders for our economy and our standard of living.

HA. The only thing Keyne did was misunderstand what caused the great depression! The great depression was caused by there being a run on the bank and the Federal Reserve's inaction. The Fed had the responsibility of printing more money to avoid a depression and it failed to do so, mostly because of new leadership.

Cause of the depression

Since that time government has only grown bigger and bigger, with devastating effects.

How can this be? How can wages be going down by .3 per cent (that's not even factoring in our ever rising inflation) while our productivity, as individuals, has increased 8.4 per cent? Why isn't the market giving back?

I don't quite understand what you're asking, nor does that link you gave me give nearly enough details. However, here are some (i think) relevant things to bare in mind. 'These statistics do not tell the whole story. Taken alone, they portray workers’ living standards in the most negative light possible by ignoring almost a third of what workers earn. Benefits are an increasingly large component of worker compensation and now account for 30 percent of workers’ pay—and this proportion has risen sharply in recent years. Ignoring benefits misses much of what workers actually earn, but that is what the eco­nomic pessimists do.'

'Another of the pessimists’ claims is that workers are being shortchanged because wages have not kept pace with productivity growth.[21] Since 1995, worker productivity has increased rapidly. Employ­ees now produce far more per hour than at any time in the past. According to economic theory, competition should force companies to pass on productivity gains to their workers as higher wages and compensation.'

'However, the current lag in wage growth is not unprecedented; in fact, it is familiar. Wages and productivity often diverge during the course of the business cycle. For example, pro­ductivity grew faster than compensa­tion for several years after the recovery from the 1991 recession. The last reces­sion ended in November 2001, five years ago. At this same point following the end of the 1991 recession, productivity had risen 8.4 percent, while compensation had risen only 5.2 percent.'

'Earnings growth did not match productivity growth in the 1990s until 1997, when the unem­ployment rate fell and companies faced competi­tion to hire increasingly productive workers. As a result, incomes shot up. By 1999, employee com­pensation had fully caught up to the productivity gains of the early 1990s. In the end, income and productivity did move together, but that result took several years to reach.'

source

I read the beginning of that Forbes article and question whether you actually read it all. The article prefaces the theory that bureaucracy stifles innovation, and then the author of the article goes on to show categorically why this is false. It's almost like what creationists do when they quote Darwin talking about the improbability of the eye evolving... right before he goes on to explain how the eye evolved. Talk about tunnel-vision! In fact, the header on the second page of the article reads "HOW BUREAUCRACY AIDS INNOVATION".

Not exactly anti-business organizations, yet they both talk about how large corporations tend to stagnate when it comes to innovation.

Do you have any credibility left? You should that you have no desire to read past the first paragraph, when the last paragraph in the preamble states: "In the following passages, I will take you through several examples of how bureaucracy and tight controls are facilitating, contributing to, and supporting the innovation efforts in some large, diversified, and well-known corporations."

Innovation may very well work with bureaucracy, but incentives to innovate are a market force. That's why America has the best health care technology in the world, and why countries with socialized medicine ride on America's back for new advances.

Your other link from portfolio doesn't seem to contradict this either. The author is in fact praising companies like Apple and Wal-Mart. He goes on to explain how companies take over a market they plateau. They have no real reason to innovate, just like a species adapted to its environment has no need to evolve. "The reward is that they get big. The punishment is that when they get big, it gets harder and harder for them to grow," says Grove, which is in essence exactly what I said earlier. It is undesirable for a company to have an absolute monopoly.

The main purpose of that article is to discuss the theory of "cross boundary disruption," where a corporation diverges from it's normal industry "with an innovative product or service [to] shake up the status quo and reap big profits." He cites many examples of this. This is a positive aspect of capitalism and is the opposite of "yet they both talk about how large corporations tend to stagnate when it comes to innovation."

Commentarymagazine reports, "The amount Grove is spending is a fraction of what the Gates Foundation has, but you do get the sense that his “creative capitalism” is far more rigorous than what Gates has in mind. For Grove, the problem isn’t the nature of capitalism, it is the lack of contrarian second-guessing within business and governments that is the real enemy of innovation."

I'm happy to see the things you are citing against capitalism are in fact for capitalism.

First of all, a small government would give even greater power to corporations; without a strong government most decisions would be left up, directly, to those with the most economic power; not indirectly through bribes, lobbying, and campaign funding.

I think I already covered, and indeed economic theorist settled this decades ago, that a companies interest is the consumers interest so long as market forces exist. Big government takes away these market forces, making a company immune, and thus removing the incentive to lower prices and increase quality for market share.

Tell me, how on earth is a politician supposed to get elected without campaign contributions? How on earth are they supposed to get elected without the assistance of mass media? Without support from big business and the media another candidate would simply get in who is.

I agree. The political system is very corruptible in terms of the shady exchange between special interests and politicians. That wouldn't be an issue though, if politicians didn't have such power. It's only under a Keynesian frame of mind that government has exploded in size, especially so under the Bush administration. A limited government would have, of course, limited powers. In my dream world no one person in America would have the power to bomb Iran, or invade a country, or to wire tap, or execute, and so on, thus making it nearly impossible for a single corrupt soul from ruining the country. Of course it is still possible, but much more difficult.

In other words, there are plenty of honest politicians or people who want to be honest politicians. The problem is that the system rewards the dishonest.

Completely agree. Ironically, this is an argument against decreasing government size and powers, and increasing government transparency.

We cannot have a Democracy with a small government, we would end up in a true Plutocracy; a society government exclusively by the rich.

You mean like Russia, or China, or North Korea, or Cuba, or Venezuela, or Briton, or Norway, or, pardon me, the United States of America? Do you honestly think the Obamas, Kennedys, Bushes, Clintons etc. are poor?

No, in a limited government the ruling class is the average citizen. I also, like most libertarians, advocate power being allocated to the 50 states and the states being sovereign. They should be able to create their regulations and bylaws without overruling by federal law (except the constitution) or supreme court ruling, and the "executive branch" should probably be removed all together.

This would open up a multiparty system because ideologies are typically geographical (bible belt, North East liberals, etc.). The only reason we have a 2 party system in America now is because the Democratic platform and the Republican platform are vague enough to make all other potential parties (communist, green, libertarian, marijuana) conform. This would make the representative government truly representative. Of course, this is going off topic from capitalism, and I do not speak for all capitalists.

I also wonder why you only see fit to blame politicians and never corporations. Are corporations small children who are just swept up in political corruption by accident? They know exactly what they are doing, they are doing it for their bottom line, and to blame politicians only is to, again, be intellectual dishonest.

I beg to differ. Corporations always want to appeal to three things. The stock holders, their employees, and their customers. This is the break down of the profit motive. So they pursue not technically "their self interest". The corporation isn't a person. It is made up of those three parts. So who is to blame? The corporation for pursuing the bottom line for it's components (which runs the economy), or crooked politicians for enabling them to now follow the rules. When discussing cause and effect, it is the new condition that is usually attributed to the cause, be it the finger that pulls the trigger, or the congressmen that opens the door for the special interest?

No matter what political system, big government, small government, monarchy, theocracy, dictatorship...the people who hold economic power hold political power. It's beguiling that you don't seem to recognize this.

What political power, under the system I have described, does the "big corporation" have? They don't hold power. They do under the current system. In my system it is the individual who has the power. The citizen.

People cannot make good, logical decisions when their information is controlled by either political or economic entities with a vested interest in their deception.

Deception is fraud, and there is room under my system for class action law suits. Simply saying "they will lie for profit" is not enough. You have to prove that it is feasible that they will lie when the law prohibits it.