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Monopoly impossible under Capitalism. Really?Submitted by Kasper on Thu, 2008-06-19 10:26.
I was given an interesting scenario which has been chewing on my brain ever since and I wonder if someone can shed light on the issue. Here is the scenario: I have developed a computer software product which specializes in music and happens to be better than Microsoft's music products. This product is called the K music program. 1 big business which dominates the market and has its operating software in 99% of the homes in my market and does not wish to disclose its intellectual property, rightly so. Now the theory is that within Capatilism you have the right to compete, provided you have the means to do so and if you can provide a better product at a cheaper price then you should succeed in the market. The scenario is that Microsoft is a whole operating system and has practically got complete market dominance. K music is just a music system but is a better product for music than Microsoft can offer. Also K music is cheaper. Microsoft won't disclose their program running codes so due to this lack of information my product is incomputable with theirs. Rendering me helpless to enter the market.
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Yes Eli
I use this one for free and it has some good features. (Instantly exports files as PDFs is one) http://www.openoffice.org/
I see Mr Gates from
I see Mr Gates from Microsoft has decided to put the cue back in the rack and let someone else have a turn.
I must say the photograph of his 'mug shot' is most amusing..ha ha
http://nzcapitalist.blogspot.com/
To be fair
Kaspar's initial problem threw up the moral/practical dichotomy.
When I (laconically) wrote "Capitalism boils down to private ownership" I thought people might read that as implying the normal rights of ownership. Of course, teachers were always asking me to “expand my answer”, but I just thought that was some vague form of innuendo.
"..more getaway routes.."
"..more getaway routes.."
Ha ha...that sounded so amusing
..well done!
http://nzcapitalist.blogspot.com/
This thread ...
... reminds me of Peikoff's story about a group of guys who sit down to discuss the ethics of bank robbery. Before you know it someone has said, "Which bank?" and they're all exercised over which bank has easier access, laxer security, more getaway routes, etc..
A number of phony dichotomies have been thrown up in the answers here, including even the moral/practical one. We've had efficient/"messy" too I think. What's been largely ignored is the right of the producer to use/dispose of his product as he sees fit and the fact that no one else has a claim on it (save for what the producer freely negotiates with his wannabe consumers).
This is a good time to remind folk that the Ayn Rand Lexicon is online: good place to check the Objectivist position on monopolies or anything else!
Oh. Ok I see what your
Oh. Ok I see what your getting at
Thanks, William...
iTunes on Linux
iTunes does work on linux, through wine.
Wm
iTunes on Linux
Jameson: "Essentially, the inventor of iTunes has developed software that works on any operating system..."
What a foolish thing to say. iTunes doesn't work under Linux.
I haven't read the rest of
I haven't read the rest of the thread, so chances are this point has been addressed already, but here goes anyway....
Mark said: Hell, they've already paved the way for you, now knowing such an operating system is possible, so it is simply up to K Music to make an operating system of it's own
Kasper, you wouldn't have created your program independent from any operating system. You need an operating system first in order to create your program.
re: fanboy fight!!
I enjoy feeding tasty young macs to my self-built power PC. I stuff them in the A drive and watch my comp crap them out the PSU fan thirty minutes later. *nom nom nom nom* In a related story, I've customized again and now have 1 TERABYTE of hard drive space in my big black box. woo hoo! now im broke...
No contradiction, Kas
iTunes for Windows works on a PC irrespective of the operating system its parent uses. Essentially, the inventor of iTunes has developed software that works on any operating system... a dessert that customers can order no matter what restaurant they're in.
Some great responses thank
Some great responses thank you.
I don’t mind, I think its comical.
Trust Glen to hijack this into a Mac vs PC argument
You got me there Peter! Ok not cheaper but more sophisticated and better.
Mark this is not an issue of whether Capitalism is necessary. The split
economists that I’ve met are definite that Capitalism, trade and competition
are necessary for a nation’s growth. What they believe is that governments play
a pivotal role in the essential services and creating artificial privileges for
competition to maintain optimal growth and expansion, also to make things
accessible and cheaper for the consumer. The debate is not whether capitalism is necessary but whether in its pure form it is the most successful system of creating the above criteria.
Kevin my post does not assume the right to use another company’s protected program running codes but it does query whether it is necessary. If Microsoft has total market dominance then anybody wanting to come up with a particular program would only gain entry if they managed get into the market by building a whole computer software system.
Jason – was hoping to not address that argument by sticking to the variables in my hypothetical post. Reed showed a similar scenario with an isolated piece of land used for roads.
Mark: “Then at that stage, the world truly was K Music's oyster Kasper” was it? Remember Apple has built a whole operating system well before it invested into music. I don’t see your point there
???
Glen: You contradict yourself.
I said: "So in reality I would have to build a whole operating system, compete with Microsoft to get a part of the market just to sell a small facet of computer operating technology. The mere virtue of complete market dominance has stopped good products infiltrating the market. So a monopoly has essentially stopped a superior product."
You said: Rubbish...and then in another line: “Heard of iTunes? Invented by Apple; adopted by the most of the PC world”
Exactly my point, they had to build a whole operating system. I rest my case in as far as that goes.
“Swap the software idea for a restaurant metaphor: I have a popular restaurant and you have created a great dessert that customers would prefer. Should you be able to demand the right to sell into the restaurant?”
Excellent analogy Tim – you helped the faulty premise sink in for me there. The practical is not always the moral. My faulty “fair competition” premise really meant that the de-bundling of a company’s market dominance in order to help little people come to the market would necessarily put a cap on their success. This is the faulty premise of split economists. The one I didn’t see clearly.
run by some chap called
run by some chap called Jobs.
*The sound of millions of Apple fanboys crying out tears across the world in a wave of indignation*
Sometimes I'd swear he does this just for effect...
Kasper et al ...sorry for
Kasper et al ...sorry for sounding thick, but you have lost me
...what is to stop them organising something with Apple? ..and a few years ago Apple was around, indeed, I checked their website and the company was formed some three decades ago (longer than I had realised) and is run by some chap called Jobs.
Could this be a situation whereby Microsoft or Apple or whomever simply decided they would create their own music thingy rather than contracting it out to someone else?
The other thing, on the monoply front...as someone who even after 10 years is still not particularly comfortable or expert at using a computer, I am rather pleased it is all standardised and you do not need a training course on how to use one type of computer and then another for the next type and so on due to the different operating systems.
Imagine the chaos if there were a dozen different operating systems, all quite different to each other because a dozen companies all had a 7 or 8% market share
http://nzcapitalist.blogspot.com/
who wants a stinky PC when
who wants a stinky PC when you can have a sexy Mac?
Anyone who is capable of customisation? Seriously whoever heard of a Mac with a RAID array or upgradable graphics?
FANBOY FIGHT!!!*
*For the record: I may or may not have once indulged in some very, very, very, naughty violations of intellectual property laws and built a FrankenMac, just because the concept is AWESOME!
Yeah, but...
who wants a stinky PC when you can have a sexy Mac?
a great piece of media
a great piece of media software would be thwarted by the Microsoft 'monopoly"?
No, I'm saying that if any piece of software needs proprietary information to run on Windows, they had best give Microsoft a damn good reason to help them out. Hell I don't even know if the Windows port of iTunes even needed anything that Microsoft hadn't already made freely available in the interests of having popular third party applications available on their OS. They do that doncherknow.
So, Lance...
... are saying that a great piece of media software would be thwarted by the Microsoft 'monopoly"?
Heh, I like the "TrueNuff"
Heh, I like the "TrueNuff" spoofs, no one is spared not Windows, OSX or generic Linux
I realise your point, I was merely pointing out that iTunes did NOT get on Windows by virtue of being a particularly great piece of media software.
And just for the fun of it...
Hilarious Mac vs PC piss-take...
Mac vs PC
For those who haven't seen the ad campaign...
and here's a new one attacking that dog called Vista...
iTunes works wonderfully for me
... but then I'm a Mac guy.
The point I'm making here, Lance, is that Kasper's argument doesn't hold water. iTunes proves that a product can invade Bill's 'Monopoly'.
Heard of iTunes? Invented by
Heard of iTunes? Invented by Apple; adopted by the most of the PC world.
Heh not me, I installed that pig of a program on my PC once and promptly removed it.
iTunes wasn't adopted by the PC world on any virtue of its own other than it was at the time necessary(?) when you wanted to use your brilliantly marketed iPod (along with firewire).
Reminds me of this though
"Raise your hand if you have iTunes ...
Raise your hand if you have a FireWire port ...
Raise your hand if you have both ...
Raise your hand if you have $400 to spend on a cute Apple device ...
There is Apple's market. Pretty slim, eh? I don't see many sales in the future of iPod."
*snort*
Someone else was a tad more "insightful" however:
PCs have access to FireWire, as does Linux. The direct connection to iTunes is the only Mac-only feature that I can see; I should hope Apple will be smart enough to enable compatability with PCs, or if not, develop a Windows version of iTunes to do the same job.
Comparing Apples
"Apple does not exist in this scenario or its existence is not worth mentioning."
Oh yeah...?
Big Mac Attack
"In early 2008, NPD Research pegged Apple's share of the U.S. retail computer market at 14 per cent. Research firm IDC says Macs now represent 6 per cent of the overall U.S. computer and notebook market, with Apple's shipments experiencing a growth rate of 25 per cent in recent months. In comparison, the global PC market grew 14.6 per cent during the same period, and the overall U.S. computer market just 3.5 per cent.
Meanwhile, bad press continues to dog Microsoft's Windows Vista, Apple's chief competitor in the operating system market.
The result is that some businesses are looking at what's available besides Windows when it's time to upgrade, and they're kicking the Mac's tires.
The software argument, commonly seen as a disadvantage, does offer one benefit, too. Due largely to Apple's still-small market share, security experts generally concur that Macs do not need the resource-intensive virus protection that every Windows computer must run.
Analysts have also compared the Mac's vaunted usability to that of its competitors. While stating that Apple remains a minor player in the business market (with a 4.2 per cent market share, according to Gartner), ChangeWave Research says that business users of Mac OS 10.5 ("Leopard") are five times more likely to say that they are "very satisfied" with the Mac than colleagues who use Vista.
These results dovetail with a summer 2007 PC Magazine survey that rated Apple computers above all their Windows-based competitors in terms of reliability, technical support and the likelihood that owners would recommend their computers to others. And some are saying it's this kind of sentiment that could be Apple's ticket to bigger business sales.
"One of my partners doesn't like to use computers, and he loves the Mac," McDonald laughs."
No Monopoly
"So in reality I would have to build a whole operating system, compete with Microsoft to get a part of the market just to sell a small facet of computer operating technology. The mere virtue of complete market dominance has stopped good products infiltrating the market. So a monopoly has essentially stopped a superior product."
Rubbish...
"K music is just a music system but is a better product for music than Microsoft can offer. Also K music is cheaper. Microsoft won't disclose their program running codes so due to this lack of information my product is incomputable with theirs. Rendering me helpless to enter the market."
Heard of iTunes? Invented by Apple; adopted by the most of the PC world.
Think 16 years ago when
Think 16 years ago when apple had not quite proliferated the market well enough to be taken seriously when compared to microsoft.
Then at that stage, the world truly was K Music's oyster Kasper :)
Eli
Apple does not exist in this scenario or its existence is not worth mentioning. Think 16 years ago when apple had not quite proliferated the market well enough to be taken seriously when compared to microsoft.
Kasper, I am not sure if I
Kasper, I am not sure if I am on the right track here... (as someone who is fortunate enough to locate the 'ON' button, let alone being any sort of computer expert) ...but what about those Apple computer chaps? ...would your music thingy work there?
http://nzcapitalist.blogspot.com/
Microsoft...
...wouldn't be so stupid as to completely close off its operating systems to third party programs. It seems to have an understanding of Capitalism 101: consumers must be given the option of making their own choices. There are probably upwards of 10 million people around the world every month attempting to improve upon whatever ancillary products that come with Windows, for instance. Tools and layouts that can do more, are flexible and usable by more than the typical grandmother or 8 year old. Microsoft would, in effect, be closing off every one of its consumers to an entire third-party marketplace, which it could easliy do by "locking-down" windows. And it hasn't done so. I have at least a dozen programs on my comp that are definitely not microsft-approved, and I update my computer with the latest official Microsoft hotfixes that clearly aren't attempting to stop me from having them. I don't think I'm breaking any rules of capitalism by having them, and they point to a willingness on Microsoft's part to accept third-parties "freeloading" on their code, as one poster said. (btw almost any software code can be 'broken' and read, microsoft knows this) and when Microsoft does attempt to be draconian, or can't seem to get the point where its consumers desires are counted, Jason hits the nail on the head. Linux.
Capitalism
Kasper: "Capitalism claims that it is the only system that provides for consumer choice, product/service diversity and that only with in its pure form will you have best progress."
Capitalism doesn't claim anything. Some advocates of capitalism defend it on this basis: the utility argument. This basis of defense surrenders the moral to pragmatism.
Capitalism boils down to private ownership and the ability to vote with your wealth. In the long run the best choices are made but at any point in time it can look quite messy and inefficient.
Swap the software idea for a restaurant metaphor: I have a popular restaurant and you have created a great dessert that customers would prefer. Should you be able to demand the right to sell into the restaurant?
Monopoly
You are assuming a set of "fair competition" premises that don't hold up as others have argued.
But it is even easier to see why Microsoft isn't a monopoly. Mac OSX and Linux are thriving alternatives and you could be making this "K Music" thing for these platforms. Of course, there you would also be faced with some very impressive free alternatives.
- Jason
Assumes too much
The primary problem is that it assumes you somehow have a right to write software to run under the Microsoft operating system. Now of course it is in Microsofts interest to have applications written by third parties for their platform. But dropping all the specific details of the software business and making your argument more general, it states:
1. A company created a product that adds value to a generic device.
2. The product they have could theoretically be improved by you, but first the company would need to reveal their trade secrets for you to be able to do this.
Boiling it down as such makes it clear that without the existence of that company, Microsoft in your example. The potential improvement wouldnt' exist at all.
As it turns out the Microsoft and all the other companies who created and create operating systems have created a vast market that hadn't existed. They also actively encourage independent software vendors to create applications that run under their operating systems.
As far as the destructive monopoly in this scenario it doesn't exist. You are free to offer a better solution to the problem they are solving.
Is it hard for you to enter the market? Of course, there is an established competitor that is dominant.
Should they be morally bound to make room for you? No. They actually should continue to try and make it harder for you to compete with them by using their lead to create superior solution.
If the problem actually is that they have almost the entire market share, is the alternative some central planning that penalizes their success? Perhaps directive 10-289?
"Also K music is
"Also K music is cheaper."
How's that? Isn't Windows Media Player free?
"Microsoft won't disclose their program running codes so due to this lack of information my product is incompatible with theirs."
How's that again? Then how come there's an after-market for plugins to Windows Media Player?
Either more details or more thought needed here, I'd suggest.
Mr K
"and if you can provide a better product at a cheaper price then you should succeed in the market" Many exceptions in reality. Also the definition of "better" varies considerably depending on who you ask.
People use Microsoft despite knowing it's many inferiorities.
Stick K onto an open source operating system. That's where the real free market is.
The "mere virtue of complete market dominance." Not sure when this became virtuous.
"Whats the problem with the above scenario?" Alright, you tell me. I'd say, nothing should be taken for granted. You compete by risk analysis. This would necessitate using a non-MS platform.
The problem with the above
The problem with the above scenario is that there is government protection of what you described as "program running codes". Protection of something that is simply a barrier to competition.
MS should not be forced to release information but if the interface information is not legally protected then the information will become available and then there will be normal competition.
On the topic of monopolies... IMO privatising roads would create monopolies. For example, it would be simple for someone to purchase a strip of land to isolate a peninsula from the mainland - the purchaser would then have a road access monopoly. In fact, any piece of land could be isolated by buying the surrounding land.
[Edit: I think it is still illegal for me to enable dvd playing on linux because of a law like the above]
Kasper I couldn't disagree
Kasper I couldn't disagree with the split economists more.
... government intervention in economics is necessary and that our success so far has been due to government playing a role.
Success? Outside of the dairy sector, whose success is due to innovation that has only been stifled by Government/Green intervention - and stifled to the sake of being crippled when the emission trading scheme begins - plus international dairy prices which have nothing to do with government intervention, what part of the economy are you citing currently as being part of 'our success' (due to government intervention)?
Turn that phrase around and imagine what could be if we had capitalism unfettered by state intervention, other than for the necessary underpinning of a contract law system? The country that gets to that first, will gain for itself the highest living standards of any country in the world. And perhaps, given the distortions that governments have in free market economies, you might even had had ten operating systems to have chosen from for K Music, not three or four.
Memoirs of a split economist
Thanks Mark. I have two sides of an arguement. Split economies are the best. Pure Capitalist economies are the best.
Split economists assert that for a successful economy to occur (progress being the bench mark) government intervention in economics is necessary and that our success so far has been due to government playing a role.
Capitalism says no way hosay, we need the divorce of state and economy.
1) On one hand Capitalist apologists claim that coercive monopoly is impossible under Capitalism. That a monopoly from being the best is not a problem. I agree here. But there is a different type of monopoly which I have tried to portray above. Problem? On its own its fine.
BUT
2) Capitalism claims that it is the only system that provides for consumer choice, product/service diversity and that only with in its pure form will you have best progress.
Now my scenario becomes a problem for me. I can't quite compute the two.
Whats the problem with the
Whats the problem with the above scenario?
That the operating system was made by Microsoft at a cost of many of millions of dollars, and continues to be tweeked and updated by them at great expense.
So why should K Music be able to freeload on their intellectual property? Hell, they've already paved the way for you, now knowing such an operating system is possible, so it is simply up to K Music to make an operating system of it's own, and try and get it into the market. It's not impossible - Apple is out there. Do a good enough job, and Microsoft might just decide they don't want the competition of your operating system, so will make room for K Music within their software.
Moral: the answer is not always what we want to hear
[I learned this hard lesson while eating fish.]