- Capitalism and Alternatives -

It's called marginal analysis

Posted by: Joel Jacobson ( none, USA ) on March 24, 1999 at 11:30:24:

In Reply to: Bouncing it around a little. posted by Red Deathy on March 23, 1999 at 13:46:38:

: : No, in such a society what has happened is taht the intra-societal "rules of engagement" have changed. Before, coercion was limited through "legitemization" and relegated to what we call government. In anarcho-capitalism coercion and the potential thereof are completely legitimate in all situations. Resorting to force is no longer considered the quasi-mystical property of what we call our government, and the cultural mores, rules, and customs that are what really holds society together will reflect as such. Also, see below.

: I fail to see what this has to do with 'wealth will out' since that implies that when it comes to teh lawyerly bit, the one with the most money will win- its like a giant game of poker, the entire of society is inveted, but as ever, the one with teh money bags will allways win- just bet them off the table.

Again the issue of competition is completely turned on its head. No money-bags man wins a competition, except marginally. If he puts in a million dollars to gain $100 then he has a very poor rate of return on capital. Unlike sports, in business I only gain if I finish with an amount higher than I expend. For instance, if I gross negative $20 while you gross negative $30 then we have both lost, regardless of the fact that you have lost more than me. A company that spends $25,000 to take my $5,000 has lost even though they've taken my house.

: : Absolutely true. And this amount would have to exceed the potential profits from another firm's entry. The amount spent would always outweigh the potential gain from such an expenditure; now that's not very profitable, is it? Artificial monopoly NEVER works; only natural and state monopoly are efficient.

: Erm, your first premise is flawed, I can actually spend a small amount, just enough, say by owning a straetigic patch of land, buying out the occiaisonal worker, or occaisional spectacular smashings, to make otehr investors wary, just increase the odds of no return a little, and most folk would back out- people prefer safe investments. 'I am holding a magnum .45, teh most powerful handgun in the world, and you're thinking to yourself, has he fired 5 bullets, or 6, well punk? do you feel lucky?'

1) I suspect that if a person was acting in such an anti-social manner as you describe, for no particular reason, then the community would institute coercive action so that the whole would be better off. (values are based on opinions)
2) In a society of commerce, based on the profit motive, people who rise are those who are trustworthy and, thus, social. I would consider it highly unlikely that such a person would obtain property and then go do something like this. At any rate less likely than in comparison to the anti-social behavior exhibited through our current political system.

: : Here's a market analyses of how the private law market would look:
: : 1) it is a fairly homogenous market w/o differentiation -- violence

: No, this is one of your fundamental errors, tehre is differentiation, the quality of teh violence- theres a world of Differnce between hiring the Sherif's department of Asshole Indiana, and the SAS. This differentation would make a mockery of your whole 'mexican stand-off scenario'

Quality for different quanitities. A disgruntled person with a pipe bomb can do more damage than a company could make up through military action. Like I said earlier war is the hell of it and would probably be very scarce. If SAS is paid $10,000 and wipes out AssInd but incurs $40,000 worth of damages then SAS has "won" but really lost. Please, re-assess you definition of 'competition' and you'll see what I'm talking about.

: : 2) entry and exit is almost costless -- guns

: Training, insurance, Hellicopter gunships...

These are instruments of large-scale conflicts and would have much more limited usage in the conflicts we're refering to. Handguns and automatics would probably be the staple. And, again, a $10,000 force could stand-off a $40,000 force per the above analysis.

: : 3) high price transparency -- consumers swtch costlessly in reponse to producer actions

: Except, as we can historically see from Medieval italy, sometimes a disgruintled mercenary can be a bad foe....

1) times have changed, especially with the wide availablity of information.
2) Medieval mercenaries had pikes and halbards which were expensive to train with, create, and maintain. A simple handgun can be used immediately and effectively w/ little training.

: : Thus, the market would have numerous smaller firms competing with each other on price and with a great need for committed customers. What would likely happen is firms would segment themselves into specialties ie. large corps, working-class neighborhoods, traveling professionals, etc. Since law enforcement is mainly used as a deterrent to some intrusion, contracts will be signed with a specific period predetermined. For instance I would sign with Jim's for $100 to protect me for the next year with some sort of escape clause should Jim not live up to his agreement. Finally, Jim would have this same contract with many other such individuals, say 10,000 bringing his total revenues to $1,000,000. On the other hand, JoelCorp is a wealthy company with a large amount of assets; the size of JoelCorp requires a much larger presence of coercive powers in order to deter potential harm to the corporate property. Bob's would contract with JoelCorp to provide protection for a year at the price of $1,000,000. Funny, the total assets of JoelCorp are pretty much equal to the total assets of those protected by Jim's.

: Yes, but the Total individual price paid Jim, is less than Joel Pays in total, his cover will be less. Further, joelCorp could hire a special group, on a one off mission, at a high cost, the elite group.

The first part was answered by my prior post already; Jim loses everything unless he fulfills his contract. Second, such strike missions would be massively expensive as they would be the most hazardous jobs on the market; such teams, as evidenced by your own post would, be offensive in nature and highly dangerous for the soldiers. I'm guessing that such teams would cost more for one mission than a whole security agency for a whole year. What I really suspect is taht they would exist solely to eliminate individual's who had personally pissed off someone else (another reason to behave socially) and not some massive invasion force.

: : Amazing. Why? How can this happen you ask? It must be some sort of magic. No. Because we assume, reasonably, that the cost of protection is directly proportionate to the effort required to maintain said protection. If the gain from encroaching upon a "property" outweighs the cost then there will be incentive to do so. Otherwise, not. Suppose taht Bob already has a contract with JoelCorp. Jim can evaluate entry into the market based upon potential profit margins and chooses the most profitable. Bob is already receiving $1,000,000 from JoelCorp and Jim can underbid Bob and offer $950,000 or he can contract with numerous smaller holders; he chooses the later. Now Jim has to set his price at the same profit margin as Bob, any higher and Bob or another supplier will simply expand into the market and take away Jim's business. Profit margins will stabilize across the industry according to level of performance and assets protected.

: erm, but Bob could have 4 or fice such contracts, worth umpteen million each, jim would find, due to teh relative constriction on the poor folk's purses, that he would have to find many millions of small time contractees to deal with, his cover would be much further stretch.

This was really answered by my prior post but I'll clarify. If we're talking profit here then 4 to 1 odds is probably enough to deter violence. And, further, let's say Bob has JoelCorp, SethCorp, AbeCorp & JohnCorp. JoelCorp asks Bob to go to war with Jim. Well, if Bob exhibits a tendancy to go to war and continually use violence for JoelCorp then courts in the area will recognize this and develop a pregidous against Bob. Most likely, the other corporations would drop Bob and go with another agency if they felt Bob was acting against their best interests by engaging in unjust behavior. It's actually in Bob's interest to break the contract with JoelCorp and go with the peaceful corporations. And if you look at what happens today the poor need protection from the poor. If the poor in an anarcho-capitalists society have little money then what's the motive for large-scale crime? Small blocks would probably get together collectively and organize a small 3-person force pertaining to particular people. They would protect against the only one's with interest in the poor, petty criminals.

: plus, all of this assumes a third party, always, why cannot JoelCorp maintain its own security force, tailor made and dedicated to his profits, and not available on teh open market, a preaetorian guard?

Let's put the emotive references to 'preatorian guard' aside, shall we? The economic anlysis takes place regardless of the economic products indiscussion. If an in-house security force is more efficient then the company will maintain one. If not, they'll outsource. It's no difference then a maintenance issue (I just realized it Deathy, you're under the mystical spell of "coercion" too aren't you). Working for a security force where the company sent its soldiers on missions would drive wages through the roof. If a company "won" $10,000 and incurred $40,000 in damages then, in reality, they have lost. Potential soldier-employees would seek employment elsewhere or ask for massively inflated wages.

: : Now if we add in the factor of the demystification of violence we approach a situation making said violence virtually untenable. Force is no longer the 'sanctified' domain of 'the government', 'big brother', 'the state', etc. and is simply another action such as selling lemonade or writing software programs. Added to such analyses of Bob and Jim we will have individuals protecting their own properties with their own gun, grenades, and rocket launchers. Most likely they would never see use. War is always bad for business -- except for government and the arms industry; as someone once said, "War is the health of the State". Companies will always lose given socially 'unjust' actions based upon the morals and values of the individuals, including capitalists, inhabiting a particular region. Suppose a corporation makes the irrational decision to start a war. Businesses in the area will see this as a signal of the particular corporations lack of desire to 'play by the rules', as well as see the danger to the properties surrounding the particular martial actions. Other capitalists will, most likely, be the ones hurt greatest by such immoral actions and such renegade companies will find themselves discriminated against by other companies.

: Erm, this sounds rather like teh Mafia to me, occiasional wars would happen, when teh gains outwiegh teh poetntial losses.

True. Halleluia!!! You understand competition, marginal revenue and marginal cost. The mafia provide law (the drug trade) where currently there is none. Despite the rage against druge dealers economic analysis show they behave just like entrepreneurs. Legalize drugs!!! and bye-bye mafia.

: Plus, teh different quality of armed forces would determine how successful they would be in achieiving missions (An SAS team deccends on Asshole Indiana's precinct, will they botehr trying to stop them? I think not). the whole point about standoff's leading to peaceful arbitration is undermined by such differences, and by personal armed force, without teh reach of market forces 9save teh mercenary labour market).

Already answered in full above.

: : As David Hume memorably pointed out "all values are governed by opinion" -- individual opinion influenced by social interaction, I might add. And that's always the way it's been.

: And opinion is subject to PR budgets, plausible deniablility, secret black-ops.

Which are functions of a globe darkened by the spectre of politics.

: : Interestingly enough, the whole analysis and success of all parties depended on their trustworthines and, thus, the desireability to do business with them.

: Assuming of course that Violence remains the province of businesses.

And business is the province of everyone.

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