Re: Free-Market Economics

Eric Watt Forste (
Thu, 10 Jul 1997 13:59:37 -0700

Bobby Whalen writes:
> But is a market free, if a company becomes so powerful that it
> establishes a near-monopoly on a given market and in turn prevents
> competition and progress form occurring?

Apparently so. IBM in the 1960s and 1970s was in a market-dominant
position very similar to the position that Microsoft is in now.
Its repressive influence on progress in computer technology was
also about the same as that being exercised by Microsoft now. But
Digital's VMS systems and the Unix system out of AT&T (popularized
on Digital's machines) did not go extinct, and eventually a smart
young feller named Bill Gates figured out how to steal IBM's fire
by stealing its new microcomputer platform out from underneath it.

Natural monopolies of this kind grow up from time to time. They
last, usually, for a few years or decades because they are pioneering
a new market niche that people are unfamiliar with, and because
they provide service, products, and prices that are "good enough"
for the vast majority of new consumers entering this market. Alcoa,
which dominated the aluminum industry in that industry's infancy
by keeping its prices very low, is another good example.

This sort of monopoly is not nearly as pernicious as monopolies
like the US Post Office, whose competition is prohibited by
legislative fiat, and the oppressive influence of which can last
for centuries and not mere decades.

Eventually, someone will trip up Microsoft the way Microsoft tripped
up IBM in the 1980s. It's a fairly straightforward measure of the
ambition of any young business executive in the software industry
whether they dream of unseating one day; I
suspect that most of them do, though few of them mouth off about
in public. I doubt that any human being or corporation can withstand
being the focus of that kind of competitive pressure for many
decades. Although I've badmouthed Microsoft on this list before,
really, I think the US federal government is a much greater threat.

Eric Watt Forste ++ ++ expectation foils perception -pcd