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Comment by Stranger43 | Hacker News Reader

But doesn't that either disprove capitalism as an realistic working system or make an argument that the state have an obligation to protect the market by destroying large corporations before they become dominant.

A lot of the traditional critiques of capitalism have been that it will inevitable degrade back into mercantilism if the capitalist are not challenged by an democratic state and functional trade unions, but alowed to merge into large powerfull entities like google, Boeing, microsoft and Facebook.

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There are a couple of ways to look at it:

1. If another player(s) are able to start and freely operate as a competitor then talented engineers will have more options for employment and each entity will have to compete on both price AND quality in order to win business. This requires continued investments.

2. If the original player is able to use regulatory frameworks, lobbying and other tactics to enforce a monopoly, then the state has a duty to break them up to ensure competition.

Option 1 is more free market where the problem solves itself. Option 2 involves use of the government to both create and resolve the problem.

I don’t personally take issue with either because the solution is still competition. Whether Lockheed, SpaceX, a Boeing breakup or some company we haven’t heard of gives it to us isn’t a big concern. We just need competition.

We all know that the Boeing mess will end up with everyone involved in creating the mess walking away richer as the state goes in an cover whatever bill to keep boeing from collapsing as the alternative will be for non-american companies to take over the entire commercial airoplane manufacturing sector.

The problem with the just more competition argument is that it never actually works once a market reach a broken state it never self correct as too many people is going to be affected for that to be allowed to happen, which is exactly how mercantilism keeps creeping back, as the nation state behind it falls into the trap that protecting whats working is preferable to allowing the chaos of creative destruction to take down an entire sector of the nations economy.

It can work as long as we're willing to let companies fail. Typically, a huge company shouldn't fail quickly, it should slowly downsize as it loses revenues to a competitor while it has time to react.

The government stepping in to just hand out money will preserve the broken status quo because the failure incentive has been removed.

Potential sudden failures due to outside factors like the collapse of the banking system are certainly different situations though.

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