Capitalism and Free Markets

I am not against capitalism and free markets. I believe that in theory all truly voluntary transactions produce social value. I also believe that the natural paradox that arises from competition and collaboration is one of the most dynamic and powerful forces towards innovation and creativity.

However, when people begin to exploit and protect comparative advantage by actively impeding competition and access to information is when neoliberal theory begins to break down for me. If the various actors in free markets maintained their comparative advantage through further innovation and creativity then I might buy into capitalism; however, inventing one thing then patenting it and keeping the information from competitors and the public, not only impedes progress, it calls into question economic theory, which relies upon rational theory and equal access to information.

Take business negotiation as an example. The person with access to more information has a much better chance of receiving a larger share of the value from any agreement. Yes, the net impact is often positive in this situation, but one party certainly gains more at the direct expense of the other party involved. Simple thought experiment: if all parties involved in a transaction shared all information AFTER the agreement were made, would both parties still be satisfied with the outcome? I suspect that this answer most likely would be no. If I negotiate with a first grader, I can probably get a lot more than I am giving up. Hopefully, most people would agree that this is unfair, but why? Is it the age difference, or that the 1st grader doesn't have the same cognitive abilities, or base of information? If it is the latter scenario, then we should apply the same judgment to anybody that exploit unequal access to information to gain a more favorable outcome for themselves.

When economic activity isn't voluntary, is often irrational, exploits inequality, and is primarily dictated by a small portion of the population, then the framework of economic theory begins to erode. Then what is left is rhetoric that is consistently exploited by those who want to protect what they have.

I tend to agree with John Mackey that we need to embrace a concept of "conscious capitalism" and begin to disassociate the market from the practice of ripping people off and hiding behind flawed theory.