The problem with sustainable monopolies in a free market is that there are a hundred thousand ways to skin a cat. Even if a particular business has a lock down on a particular resource it can't control alternatives. The only way a monopoly can be sustained is that businesses price things so low that there isn't any profit in competing against them with alternatives. And that is not really terrible and is not likely sustainable anyways.
Most people seem to operate under the misconception that somehow large corporate interests and large governments are opposing and balancing powers.
This is untrue.
Large businesses and large government are interdependent and complimentary. They feed into each other. They need each other. If you want bigger business you need to have bigger government.
The sort of ultra concentration of capital in the hands of a tiny minority of businesses and individuals wouldn't be possible without the government creating a regulatory environment to ensure that it happens first.
And it should be noted that even when the monopoly does not exist, regulation and government intervention almost always favors the larger players in the market. In many cases, they are the ones writing the regulations. Those regulations make the barrier of entry more difficult and discourage new competitors from entering a marketplace.
Big business and big government are symbiotic.
>Even if a particular business has a lock down on a particular resource it can't control alternatives. The only way a monopoly can be sustained is that businesses price things so low that there isn't any profit in competing against them with alternatives.
This is empirically false, there are many ways a large business can lock down a market/resource, or very nearly so, and prevent competition from smaller upstarts. Look no further than two-billion-dollar-a-day-revenue Walmart, whose signature practice is running competitors out of town by undercutting them and sustaining the losses until they close.
I, and millions of other Americans, shop at alternative grocery stores and department stores every day.
In fact with online retailing and hyper competition things are cheaper and easier and choices are more plentiful then at any other time in the past.
The problem faced by smaller retailers is that people really don't like going to them. It's charming and romantic to think about small hardware stores and local grocers, but the reality is that before Walmart came along and before internet retailer a lot of retail shopping was extremely expensive and downright miserable. Stores took advantage of people's lack of information about goods/services and lack of alternatives all the time.
The growth of internet retail and big box stores and big grocer chains like Costco/Walmart/Kroger/etc have actually done a lot to keep prices low and keep the economy healthy.
So, no. Picking on Walmart in this situation is pretty much proves the exact opposite of what you are intending.
not if you're definition is that there must be one, and only one, market participant to be a monopolist.
but monopolies, in practice, are defined by market power (and monopsonies, by supplier power). you can control a market without 100% market share. that's the defining feature of a monopoly (market power), not market share.
walmart has both monopolistic and monopsonistic power in the US, despite thousands of small alternatives and a few big ones (like costco, target and amazon, which together form an oligopoly, that individually and collectively have market power).
Undoubtedly, and the examples are numerous, Wal-Mart has used its market position to exploit its suppliers and to use their suppliers to creatively sell their own products.
But these scenarios aren’t the product of Wal-Mart exercising monopoly power, but rather exploiting those suppliers who violate rule #1 of manufacturing: don’t be dependent upon a single customer or that customer effectively owns you.
no. and besides, that's a false dichotomy. i literally described the foundational understanding of monopolistic behavior by economists and regulators (that it's predicated on market power, not market share). this is a basic tenet taught early on in business schools and economics programs.
such clarifications are needed because many commenters fail to avail themselves of even a baseline understanding of the topic, which can be gleaned from just reading a wikipedia page let alone by having experience or even cursory training in the field.
it's tiresome to read the same shallow misperceptions over and over again. let's establish the basics quickly and move on to the more meaningful discussion that can be had.
the exclusive possession or control of the supply of or trade in a commodity or service
Dress it in as much nuance and confident language as suits you, it doesn’t change the reality that there is ample evidence Wal-Mart is not a monopoly.
The Rise of Amazon as a serious threat to Wal-mart is a great example of the aforementioned principle in action.
Granted, Queen Anne's lace is a good source of nutrition for bees and wasps - a trait which dollar stores sadly do not emulate, cf. https://www.cbsnews.com/news/dollar-stores-and-food-deserts-...
So I have to say that, in my estimation at least, the plant comes out ahead. But even so, it's a mistake to confuse a thriving mass of Queen Anne's lace with a thriving ecology.
A better way to word this is this: consumers chose Walmart over its competitors because they believe they get better deals there than the alternatives.
[EDIT] OK that was a bit glib. My point is things are a lot more complicated than "capitalism does this, government does that" and the two are essentially inseparable. Further this entire thread is full of "markets = capitalism" which is missing the mark—tendencies toward free market policies are a defining feature of capitalism, but free markets per se aren't identical to capitalism.
Governments aren't fundamentally needed per se to create a free market. But rules are needed. And whatever system we have to enforce those rules would resemble a defacto government. How that governments power is distributed, who's interests it represents, and how far it goes in regulating the market may vary.
Without someone enforcing rules to keep monopolies in check, I think those monopolies would become defacto governments. And they wouldn't be democratic. This is what I mean (but did not carefully express) when I said that some government intervention in the markets are needed to prevent the powerful from take advantage of the weak. (And it can go the other way too... governments tilting the scale in favor of existing powerful interests.)
People who usually ask "give me an example of a monopoly not maintained by the government" are usually not asking in good faith. Many laissez faire capitalists explain away natural monopolies, or pretend they don't exist. So perhaps you expected this answer, and are already prepared to dismiss it.
Would that be different from the way that governments normally maintain a regulatory environment for businesses to expand?
Can free market capitalism even exist without the property enforcement that what we'd consider as organized crime or governments provide?
My second point would be: monopoly or not, it's not clear that they would have maintained the advantage they had. Of course we know that the government intervened, and some people will say that's what broke MS's alleged monopoly, whlile others will say it made no difference, and still others will say that they couldn't have maintained it for long in a free market anyway. We'll never know, since it happened the way it happened, but personally I don't see how the government's actions made the success of Linux, Apple and Google products possible where they weren't before; therefore I find the last argument more convincing - that is, that Microsoft had the jump on everyone, but it was never going to last. A free market doesn't guarantee that there won't be a clear front runner in any given competition.
If there's a state, it's natural to try to corrupt it to use its political power. If there is no state or that option looks unappealing, the alternative is to get some political power of the sort that grows out of the barrel of a gun, i.e. to be organized crime.
The implication of the question, that the state is necessary to produce a monopoly, fails to give the full picture. It's not as much that the state is necessary, that economic power can eventually be translated into enough force to subvert the rules. In the absence of a state, that force just takes the shape of an authoritarian proto-state, itself.
https://mattstoller.substack.com/p/this-is-not-a-democracy-i...
capitalism isn't uniquely prone to monopolies or cartels. all economic systems face problems of gaming, because humans relentlessly probe weaknesses in systems to gain advantage.
and capitalism doesn't attempt to address monopolization head-on and instead relies on competitive dynamics and invisible hands to control the problem. and to be sure, in many cases, it's been enough, but runaway market dynamics like network effects do occasionally overwhelm those mechanisms.
we now have enough practical experience to realize that those occasional runaway trains accumulate and we no longer have very free markets across the economy.
that's why governments step in with regulation (yes, regulatory capture is a problem too) and laissez faire capitalism simply isn't viable long-term.
we should iterate on market-based economies beyond capitalism to reach a more resistant economic system (capitalism =/= market economy, which is a commonly misunderstood).
edit: note that you can have a market-based economy featuring choice and competition without it being capitalism, who's defining feature is putting the means of production into the hands of the (moneyed) citizenry.
Go to github.com. Look at all the different software languages, operating systems, shells, web servers, and so on and so forth.
Tool manufacturers. Housing choices.
All that stuff only can possibly exist in a capitalistic system. There is no other way. People have tried. We have massive amount of historical precedent on this sort of thing. At this point it should be self-evident.
Great.
Whenever I analyze arguments against the free market, it almost always seems that the person speaking thinks the market should give people what the person speaking thinks they ought to want.
Most notably, people are not "misled" into valuing the "wrong" things. You just have a different opinion of what people should value based on your own culture, values, etc. It doesn't mean they're wrong, brainwashed, or anything of the kind.
Even if they make all the different kinds of, say, cheese (and they don't), the quality is terrible, because they don't have those 99 competitors.
Housing choices? Is that the choice to buy / rent vs live on the street? Capitalism has given us the homeless crisis which was non-existing just 70 years ago.
So don't buy the big brands. Buy local.
Are you telling me that there is no possible way that you can go to a farmers market and buy food? That the only choice you have is one of Conagra's food brands?
That you can't go one the one of probably hundreds of grocery stores and restaurants that are probably within driving distance of your house?
This is what I mean by 'Open Your Eyes'. Like just go outside and look around! If you live is in a developed western country and you are complaining about lack of choices it's very likely that the problem is you and your own choices.
> Housing choices? Is that the choice to buy / rent vs live on the street?
Since when in human history has people never had to work for housing?
There is only a thin band of habitat in the earth that humans can survive and thrive without housing and technology and work. Too hot and we die. Too cold and we die. Not wet enough and we starve. Not dry enough and we starve.
To spread across the rest of the planet we had to work our asses off.
If you think life is harder for a 20-something having to deal with the indignity of living in a un-hip part of town because they can't afford a nicer place... then it is for a frontier family that has to grow their own food and build their own house from supplies they had to drag behind mules from hundreds of miles away? If so, I have some bad news for you.
"Having to work" is not evidence that capitalism is terrible. You are going to work no matter what. Whether it's socialism or capitalism or if you live in some monastery somewhere. It's not optional. It's never going to be optional.
It's easy to see this from the perspective of the customer only, but think of how many lives and brilliant minds are being wasted away in the system.
Go to Home Depot. Lots of tool brands to choose from, right? Ridgid, Milwaukee, Ryobi, Makita, maybe a couple of Hiltis over in the contractor section. Amazing variety thanks to capitalism, right?
Wrong. The first three brands I listed all belong to the same company, TTI. The only significant difference among them is in build quality, and it's minor; other than that, all that changes is the injection molds for the shell, and the price - which varies out of all proportion to the quality of the product.
That's not a true choice. That's an illusion of choice, deliberately promulgated by a near monopoly in order to gain access to as many market segments as possible, and exploit each to the maximal possible extent - by pretending to compete with itself, TTI makes a lot more money than if it didn't, because that means it can sell three kinds of differently shaped boxes of 18650 cells, and in the modern consumer/prosumer power tool business, that's where all the margin is.
That's great for TTI! For everyone else, not so much, because only the Milwaukee line doesn't actively suck, and even then you're better off spending more for Makita, precisely because that's not a zombie brand, and is still competing.
So, TTI's a great example of capitalism, sure. Is it a good thing? One of the major complaints about Soviet communism, after all, was precisely the lack of consumer choice that it imposed. If that's really the crux of the problem, then why isn't it a problem when capitalism produces the same outcome? Is it only a failure when the Reds do it, but an example of freedom and apple pie when the same exact thing happens under capitalism? Why?
What does China tell us about Republics, given that it is the Peoples Republic of China? What does North Korea tell us about democracy and repulbics, given that it is "The Democratic Peoples Republic of Korea"?
No? But we are willing to take at face value oppressive regimes using "socialist" language?
As for cartels and monopolies, if you take a look at late 19th to early 20th century USA, where business could in fact form cartels and monopolies -- they were formed, but didn't last. They were ruined by both new competition and by "price busters", the cartel equivalent of a "scab".
That is one of the origins of "progressive" legislation. It seemed that the most efficient way to preserve monopolies and cartels was to use government. Indeed, the original meaning of the word wasn't a "large share of the market", but "exclusivity given by government".
EDIT: Show yourselves, downvoters. Give a rebuttal.
For example, the minimum wage is clearly helping out skilled workers. Imagine an experienced railroad worked earning $5 an hour laying tracks. To match his productivity, you'd need at least 3 unskilled workers, which are worth it at $1 each. The railroad union, to guarantee long-term work for its members, lobbies for a minimum wage, and now when it's, say, $2 an hour, those 3 unskilled workers are too expensive and no one hires them.