Or do they? It seems that Objectivism relies on utopian self-delusion (or is that faith?) more than anyone is admitting.
Case in point: an open and freely competitive market will always result in the best products.
Three words: VHS versus Beta.
Three more words: Mac versus PC.
The only possible way you can judge VHS video systems or PC computer systems as superior products is if you consider advertising, market leverage, and distribution as part of product quality - in that sense, these products did prove superior. A capitalist accounting always takes into consideration the excess detritus that makes up the whole of the thing as it appears in the market (the thing + its production + its marketing + its initial position in the market as determined by the market strength of the entity that owns it), not simply the thing itself.
Since capitalism deals only with the quantitative, not the qualitative, the products cited are judged superior, since they are the ones that took over the market. This is the destructive reductive central aspect of capitalism: because it does not deal with the qualitative, it can not judge "good" in any meaningful way.
Sometimes the best product takes over the market. Sometimes it doesn't. That's a long way from the "cream always rising". It's a long way from the understanding that the Objectivist publicly projects about the market.
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And what exactly is a "free market" anyway? Is it a market which is naturally allowed to evolve on its own without interference, or is it a competitive market?
"Unencumbered" markets (markets which are allowed to evolve naturally) tend toward monopolies. Strong corporations become stronger and more dominant in the market as markets become more complex and difficult to master. There are, of course, some markets which don't readily lend themselves to monopolies, but wherever monopolies are possible and desirable, they will occur unless there is interference from the outside.
Monopolies per se are not the problem; rather, it is the tyranny of the bottom line that is given primary importance by the capitalist system that causes the problem. Monopolies allow corporations the ability to focus solely on their own bottom lines without having to answer to competitive challenges . . . again, the primacy of the quantitative wins out, and in the case of a monopoly, the qualitative is wholly subservient to the quantitative. Monopolies are built to control markets; the production of goods is secondary.
American professional sports leagues are shining examples of the efficacy of regulated markets. The fact that amateur drafts are always ordered to place the worst teams first (except for the NBA, which has a [somewhat flawed] formula that theoretically orders the worst teams first without allowing teams to manipulate the system) shows how sports leagues value the outcomes of their systems over the mechanisms.
It can be argued that the competitive limitations leagues put on their teams actually hurts the quality of the product: what if the richest team, the "monopoly" team, were able to bid openly for talent instead of waiting in line for the draft, or dealing with some variation of a salary cap that allows less rich teams to bid for the best players? Theoretically they could buy the very best players at each position, and then stock their benches with the second and third tier players simply to keep them away from other teams. This team would, by any definition, be the best team available, and it most likely would dominate its league. In this case, the "monopoly" team would be the best not just in a quantitative sense, but in a qualitative sense.
This is an important point. Monopolies are not necessarily bad . . . they are as good as their goals. If your goal is to build a space program that will get you to the moon in a few short years, then a monopoly is not a bad idea. If your goal is to pool risk to lower the costs of medical coverage for an entire population, then a monopoly is not a bad idea. If your goal is to put together the most insanely talented football team ever, then a monopoly (no draft, no salary cap, just a wide open market) would be good . . . and not just good in a quantitative sense, but in a qualitative sense as well.
But what is the ultimate goal of "quality" in professional sports? It's not to have the best team, it is to have the best contest . . . and, to that end, the sports leagues have decided to heavily regulate their markets. It ranges from baseball, who will theoretically let you pay as much for your roster as you wish (but try to make the balance more competitive by taxing the living hell out of you if you spend too much, thereby making it prohibitive to spend above a certain amount), to NASCAR, who essentially makes everyone drive identical cars, who will change rules as soon as one team displays even the most minute of technical advantages, and even aren't afraid of changing rules on a race to race basis*. In this sense, the market regulations that the leagues have imposed have been successful, since they make the leagues competitive and interesting . . . and, importantly, despite the ebbs and flows of their incomes, wildly successful in the quantitative as well as the qualitative sense.
The simple fact that discussions occur on the qualitative level, whatever the final outcome may be, makes sports markets superior to financial and commercial markets. It also puts in sharp relief the question: what is a free market - the market which is most free in its mechanics, or the market which is most free in its access?
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And, free or not, who went and made the market the final arbiter of all that is great? Oh, right. Ayn Rand did.
Please, next time you want to include Ayn Rand and Friedrich Nietzsche in the same sentence, remember the following quote:
Far from the market place and from fame happens all that is great: far from the market place and from fame the inventors of new values have always dwelt. -- Friedrich Nietzsche, Thus Spake Zarathustra: First Part, "On the Flies of the Marketplace"
So you can just go to hell, John Galt.
* Does anyone else find it ironic that the sport most closely tied to the Tea Party is the most socialist of sports?