It seems to me that free market theories depend to a considerable
degree on the thesis that the state will enforce laws and contracts.
The unfortunate fact is that no state is completely efficient at this
task, and some states are abysmal. As the size and economic power of
a corporation increases it’s opportunities to “cheat” the system with
bribery, fraud, corruption and theft increase. It is easier for
CitiBank to bribe a state legislator than it is for Joe’s Deli to do
so. Where the corporation has more economic resources than the state
the situation is exacerbated as is the case in Africa in some
countries.

Does any of this have any theoretical impact on free market theory?
If corruption is rampant and the state is unable or unwilling to
combat it, is it still the case that competition in a free market is
the optimum solution?

On Sep 16, 12:56 pm, Ed earthlink.net> wrote:

Ed earthlink.net> wrote in news:ebe3273e-4e29-4c62-86c7-
2b8b90052cf5@p25g2000hsf.googlegroups.com:

A free market presupposes a framework where in property rights are widely
understood and respected, and laws protecting those rights are effectively
enforced. Enforcement need not be perfect in order to be effective,
however; it need be only consistent and predictable enough to shift the
expected gains from violations into the "loss" column for would-be
violators. (Free markets also assume that the market is comprised primarily
of rational agents).

Indeed, there is a diminishing-returns point, where further expenditures on
law enforcement will yield no further gains in compliance, and will thus
divert resources from more productive pursuits.

tg earthlink.net> wrote in news:3144ddd3-62bb-4e41-a19a-
dc5d64acd320@79g2000hsk.googlegroups.com:

Tsk, tsk. States are created to protect rights, and are granted sufficient
power to accomplish that task. But they quickly metastasize into "power
wells" (similar to gravity wells) attracting all power with their reach
into themselves.

BTW, what is "scarce" and what is a "resource" is defined by markets, not
States. But States do seek to control whatever will extend or enhance or
consolidate their power.

Absolutely right!

On Sep 16, 12:56 pm, Ed earthlink.net> wrote:

On Sep 16, 12:56 pm, Ed earthlink.net> wrote:

If corruption is rampant then you don't have a free market.

However corruption is not much of a problem when the state has
relatively little power over the economy to begin with - which of
course it shouldn't. Corruption is a problem when the state can
determine...

On Tue, 16 Sep 2008 09:56:18 -0700, Ed wrote:

Taking the questions 'as is', if law is to ensure a 'free market' but the
law can not be enforced, it would be reasonable to say that a 'free
market' would not exist if the laws are being violated.

The direct connection between corporation and state has a history too
long to ignore this aspect in your questioning which basically sets up
the two as opposing forces. I refer to the headlines of this very day and
go back as far as the economic favors bestowed by the various Crown-heads
of Europe that created Europe's 'nobility'.

There is Chimp video showing some who try to deceive others, steal food,
hide it, pretend they dont know. The Chimp was not raised in a ghetto.
He had the same nurturance as any other. His proclivity for theft and
deceit is WRITTEN ON HIS DNA. its an obvious survival technique.

Some cultures have more social predators in the gene pool and need more
careful case management to deal with that. Course they are exploited by
transnationals, but that's a two way street. There will be those inside
the corporation who are ripping it off, and the deals signed with the
local establishment are not well met.

Its useful to consider the world's first transnational free market. The
Silk Road, an interlaced network of parallel routes in which each city
was in competition with the others. Whatever the government was, the
cost of that management was calculated by the traders, who if they did
not like it, went some other way.

Machiavelli speaks glowingly of the German city states he saw, where a
competent craftsman could, and did, vote with his feet to those which
were better run. A city in Bavaria, whose name escapes me, stood without
invasion for 1000 years. It produced the finest armor that the power
elites wanted to wear. Nobody fucked with their shit.