Not only are sellers and buyers natural adversaries, but so are employers and employees, and as recent events have made clear, investors and borrowers, in fact, all borrowers and all lenders are in a state of tension and conflict all the time. It should also be fairly obvious that so-called business competitors have many incentives to cooperate against their customers, investors, suppliers and employees. In other words, the entire guiding paradigm of capitalism, that ferocious competition keeps everyone honest and weeds out inefficiency, is a puerile fiction maintained primarily to keep the rubes ignorant of how the shell game really is played.

Corner lemonade stands and neighborhood carpet salesmen may be counted on to compete to the consumer's benefit, but it is not a law of nature, and the natural checks and balances can, and are, easily circumvented by those with economic power, influence and knowledge. In short, it is more profitable, that is, there are actual financial incentives, to cooperate with your competitors than to lower prices, improve quality, etc. Poorly planned government regulation, or worse, regulation designed and lobbied for by those supposedly being regulated, only aggravates the problem.

The really insidious consequence of this is that these monopolistic activities are not necessarily illegal, in fact, the participants may not even be aware they are engaging in them. Business competitors may divide market niches (geographical, price, customer, or some other defining criterion) by simply refusing to compete because they would find it a losing proposition. In other words, you don't need to collude and violate anti-trust laws, by choosing not to compete with another firm you do the same thing. You may simply determine it is not profitable, or it is too risky. It is a perfectly legitimate business decision, but it still limits the consumer's choices, just like a real monopoly would.

Without some inefficiency, the market can't function at all. If every firm was making just enough to pay its bills, and every employee earning just enough to survive, and every customer buying just enough merchandise to keep himself alive, it would be a pretty drab world, and a very poor one. It's a zero-sum game. Someone has to lose for someone else to win, it's that simple. Traditionally, capitalist societies have solved this problem in three ways: exploiting their workers, foreign imperialism, or easy availability of credit. To put it another way, you simply can't pay enough salary to your workers so they can buy all the products they make. There is unavoidable overhead in the system, what you earn in sales must exceed what you pay in wages, so who makes up the difference?

This is especially the case in the competition between employee and employer. Without some constant, non-trivial background level of unemployment, no one would be too conscientious about showing up for work; after all, replacement jobs would be easy to get. You can't keep a work force if they are free to leave whenever they like, and you can't get people to bust their ass when they can go somewhere else and get a better job.

So how does a capitalist economy (or any economy, for that matter), work at all? The exact same problems would exist in a fully socialized economy, and they would probably be even worse because centrally planned socialistic economies lack built-in regulatory mechanisms, are bureaucratically turgid, and do not harness the desire of people to take chances, or reward those who innovate and take risks. Well there is no way (unless you employ the ugly trio of exploitation, imperialism or credit). Deficit government spending is just another form of credit. It simply postpones the day of reckoning.

There is another way, it is economic growth. As long as an economy is growing, it can assure itself there will always be enough wealth tomorrow to pay the debts incurred today to keep growing. This is why economic growth is so important. Economies cannot long exist without it. But it should be fairly obvious this is just another variant of the credit dodge. It works well when there is plenty of room available for expansion, but when the raw materials get scarce, the competition gets stiff, when the overhead costs of cleaning up pollution and maintaining infrastructure get out of hand, when the cost of energy starts to climb, or when resources get scarce, and when workers start demanding too high a standard of living, or enterprises too high a level of profit, the system starts to choke in its own waste.

Maybe its not a question of socialism vs capitalism at all. Maybe we are starting to come up against natural limits to energy, resources, markets, human expectations and complexity. Maybe there is no solution, only a managed strategy to postpone disaster as long as possible. No closed system in nature can continue to grow indefinitely. Even highly complex yet stable ecosystems, like coral reefs or rain forests, only maintain diversity and productivity because they have an essentially limitless input of resources, and they are constrained in size by geographical conditions. These constraints do not exist in administrative systems. In the case of the rain forest, there is an essentially infinite supply of rain and sunlight. And how many millions of square miles of open ocean are required to provide enough plankton to keep a coral reef in business?

We really do need to get our ass into space before its too late.