Obstacles to capitalism

There are, as I see it, two obstacles to the perfect capitalism—that is, where quality wins. First is lack of access and open information. This creates situations where low quality wins, merely because people don't know about, or can't get access to (often because the low-quality businesses have tried to block that access & information, or override it with noise) higher quality products.
Second is the shortsightedness of man. This is why Standard Oil did so well; even though people must have known what could happen, they didn't believe it would, or didn't think they could make a difference, and went to the cheaper place and let the older places go out of business. There are other effects, as well, but mostly along these lines. This is primarily a cultural thing.

Update: 7/9/2007: I’m not really going through my journal entries to comment on them at the moment; I’m just republishing them on my blog. But I can’t let this one sit. I wrote this long before I had an Economics education, and it’s not bad. The first part I definitely still agree with; information access is a major economic problem creating many disequilibria. But I’m not so sure about the second. The problem that was obviously foremost in my thoughts when I wrote this was the Apple/Microsoft problem. But first, that may not be as big an economic problem as I had thought, however I may dislike the outcome. Peter Klein has some interesting insights on this subject. Second, the Standard Oil case I refer to—where Standard would come into a small town across from a local gas station, drop their prices, drive the local station out of business, and then hike up their prices higher than the local station’s ever were—is apparently apocryphal. So much for high school History class. Third, I now think that the other major obstacle to a properly working capitalism (besides artificial constraints imposed by government) is externality problems (a topic that deserves its own long post, so I won’t elaborate here).

Work

Most people only want to worry about whether they’re doing their job well, not how much money they’re going to make. To put it another way: People want to focus on providing or creating value, not what reward they will get for it. Let them. Institute systems which reward hard work, dedication and value, not grubbing for money or jockeying for position. The greatest reward should go to those who provide the greatest value. Although it is every person’s job to look out for themselves, and no papa-knows-best system should presume to usurp that duty, nevertheless a person should not have to think much about it; they should just receive what they’ve earned. In other words, the honest man should not have to worry about unjust treatment. He should be on his guard and be able to protect himself, of course, since no system with any freedom in it can be perfect in that way, but when the upstanding members of a society (without whom there would be no society) band together to create the rules which govern them, they should be intelligent enough to achieve their goals, while being flexible enough to change them if they are incomplete or wrong, but only then. Our present systems fall somewhat short of this mark.