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where to start...
disclaimer: i have not read adam smith's "wealth of nations" however i have read quotes from it as well as pages here and there.
problem: capitalism is a philosophy. as such it is subject to variations and distortion. the term is actually political economy which is a step in the right direction since it assumes, correctly, that the political system and the economy are linked.
false assumption: von hayek, friedman and others have made false conflation that free markets equals freedom and anything else leads, to borrow from von hayek, to the "road to serfdom." why is this a false assumption? because distortion and thereby the road to serfdom also lies on the road to so-called free markets.
things to note: smith correctly noted that capitalism with out regulation leads to monopoly power concentration. capitalists do not want competition. the myth that competition and capitalism go together is false. this can be seen quite well in the fevered merger and acquisition mania of the '80's into today. the sole purpose of the capitalist is not freedom nor is it competition nor is it engaging in activities which are for the betterment of anyone including society. the sole purpose of a capitalist is to maximize his return upon investment. that is key to understanding capitalism. the rest of the philosophy is secondary to this important basic foundation. that the capitalist may in fact create conditions via his investment resulting in benefit to society is not the invisible hand, a term which has been completely altered from smith's original intent, but rather a coincidence. we can see in the example of the financial mess that the invisible hand didn't just remain invisible and thereby unable to move anything to benefit society it in fact did the opposite and gave society a prostrate exam using its whole fist.
market - does not exist in the sense that it decides anything. only humans can make decisions. even the hft, high frequency traders, utilize computer programs developed by humans to make trade decisions. thus the market cannot decide anything.
the free market - an invitation to chaos and outright fraud. we need only look at the gilded age for a sneak peek at the failures of lack of regulation.
freedom - undefinable. what this term means depends upon the viewer's upbringing, personal history, belief structure, religious belief/non-belief etc. it is an excellent dog whistle but beyond that virtually worthless.
ownership of the means of production - here we run head on into the manic, maniacal screams of "socialism! communism!" which emanate generally from the right. that concentrated monopoly power in the political economy and distortion of said political economy bending the will of the state to the will of the corporation and non-elected elites is fascism is lost in the uproar. such is the power of the distortion of history that the myth of "we defeated communism" supersedes the fact that fascism is the combining of corporate and state power. yet fascism in the minds of 'we the people" is associated with nazis and the holocaust and little else. after all 'the business of america is business." sorry for that little steaming puddle of sarcasm.
l.a. brought up some excellent examples re: the grocery store and the myth of choice. in the case of food the giant agribusiness decides what you will buy. of course, yes, they do all kinds of market research and watch what brands move and which do not but that isn't truly choice. that cereals for instance are loaded with high fructose corn syrup and little nutritional value stems from agribusiness and marketers both tailoring the product and tailoring the taste of the consumer. this is a host/parasite relationship where the consumer is the host and agribusiness a parasite. there are various books written that describe the nature of how massive retailers such as mao-mart and target utilize collusion to impact the consumer and the same applies to agribusiness. the only choice that a consumer has when it comes to food is to buy local from local growers. even then the machine is in play in various ways but it is much closer true choice.