Does Capitalism Inevitably Produce Inequalities?

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13. true capitalism requires vigorous competition, which requires oversight and regulation

in order to have true capitalism:

there must be vigorous competition, so that suppliers compete to offer the best products at the lowest prices (allowing for a modest profit). to the extent that there is limited effective competition, suppliers can reap unfair profits, which distorts the markets and leads to further inequality.

externalities must be internalized (companies and/or their customers must either not pollute or must pay the cost of their pollution -- no fair making third parties suffer without compensation). to the extent that companies are in a position to reap benefits at the expense of the commons or their neighbors, again, they can reap unfair profits, which distorts the markets and leads to further inequality.


more generally, all negotiation reflects the power relationship between buyer and seller as well as the buyer's power among other buyers and the seller's power among other sellers. walmart is in a strong position as a buyer and can screw its suppliers with impunity. consumers generally are in weak positions as buyers and generally get screwed by big companies.


all this requires the government to step in as referees in order to make what actually happens more closely resemble true capitalism, as opposed to economic anarchy (which is what republicans actually preach). the government is normally in a position to do this effectively, but over the last 35 years or so, inequality became sufficient to corrupt government out of its necessary role in overseeing true capitalism, and the forces of economic anarchy have all but won. consequently, the powerful are free to increase inequality to dangerous levels.