Tuesday, September 9, 2014

Peter Thiel: 'Capitalism and competition are antonyms'

I'm not a fan of Peter Thiel, but in his rich guy's hubris he doesn't mind shattering a few conservative, pro-business myths when warmed up by an interviewer. Such as this one [emphasis mine]:

One-of-a-kind companies are monopolies. Every successful zero to one company that achieves a breakthrough is by definition going to be a monopoly. Monopolies are great companies. Super competitive ones are not.

In my view, capitalism and competition, which are said to be synonyms, are really antonymsIn a world of perfect competition, all the capital is competed away. Capitalism is really about the accumulation of capital.

Google is a very capitalist company. They have had no competition since 2002 when they definitively distanced themselves from Microsoft or any other competitor.

On the other hand, if you were to open a restaurant in San Francisco, it would be a very competitive business, but not a very capitalist one.

For this reason, some more thoughtful conservatives such as Pat Buchanan prefer to use the distinguishing term "free enterprise" instead of capitalism, because capitalism is not really something that most people on Earth will ever really participate in as free agents. (HT: Karl Marx). 

Moreover, capitalism requires constant growth (return on capital) or it will die, whereas free enterprise does not necessarily, hence capitalism's endless hunger for technological innovation, new markets, tax gimmicks or anything to give a return on capital to investors. 

In contrast, by opening the 10th lemonade stand (or Starbucks) on the block, somebody could be said to be participating in the system of competitive free enterprise, even if their chances of success are slim to none. The lemonade stand's owner could hardly be considered a "capitalist."

By Nathan Gardels
September 8, 2014 | The WorldPost

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