Comment by WalterBright
14 hours ago
This is why companies (in a free market) do not grow big enough to take over the world. "The Innovators Dilemma" is a good book on the topic.
14 hours ago
This is why companies (in a free market) do not grow big enough to take over the world. "The Innovators Dilemma" is a good book on the topic.
That's a good book, but I'd argue that in a pure free market without intervention, monopolies would be disappointingly common (and why some level of regulation should exist).
Absolute free market, like any other idea taken extreme, is cancerous.
History shows us that the more free market an economy is, the more prosperous it is.
For example, the software industry. It's pretty much completely unregulated. Prices for software have gone to zero. Software engineers routinely become millionaires, and some billionaires.
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How do you know that it would all evolve to a handful of companies? I hear your sentiment all the time, people just assume it is true.
We obviously cannot know.
However, what we do know is that a free market requires management people today aren't accustomed to. Suddenly you are fully responsible to negotiate protection, transit, etc. That is a burden many would find off-putting and, in many cases, something beyond their capabilities.
If we were magically dropped into a free market tomorrow it is likely we would quickly attach ourselves to whomever is willing to give us those things without needing extra thought, just like the monopoly does today, and – tada – we're right back to the way things are right now.
If we were born into a free market and didn't know anything else then monopolies might be harder to pull off. That said, while the initial conditions were a bit different, we've been in a similar situation before and the monopoly won in the end.
I believe the exact opposite: you need collusion with the state to establish a monopoly. And you don’t have a pure free market as long as there is a state that puts its heavy hand on the scale to favour one group over another.
The free market has its flaws, but many blame it for the ills caused by corruption and lobbying of politicians.
There has never been a truly free market anywhere in the world, let alone ‘pure’, so I don’t see why you use this adjective at all.
Every corporation requires collusion with the state to simply exist, so of course it’s a requirement for a monopoly.
> I'd argue that in a pure free market without intervention, monopolies would be disappointingly common
How? If a monopoly were to emerge in what was a pure free market, it would become the government, and its rules would become regulation on the market. And thus the pure free market could no longer exist. Monopolies and free markets cannot coexist.
That's not what we're seeing. Companies grow big enough to take over entire sectors of the economy, the economy of scale works against smaller competitors.
And once you're big enough, you can just offload your inefficiencies onto the consumer (the "enshittification" stage). As long as you're not _terribly_ bad, competitors won't be able to overcome your network effects.
What _really_ held companies from taking over the world was the inherent overheads of distributed corporate structures. Before computers, you couldn't really manage a horizontal company with offices in hundreds of different cities. Network effects were also less pronounced.
Internet-enabled companies like Google (or Yandex, Baidu, etc.) are a really great example. The early Internet was about as close to a perfect free market as possible. And in every case (Google in the US, Yandex in Russia, Baidu in China) the same thing happened: one large company ended up dominating and then gobbling up all the competitors.
So what happened to Sears, IBM, RCA, GE, Kodak, etc.?
Why are the biggest companies of recent origin?
> So what happened to Sears, IBM, RCA, GE, Kodak, etc.?
They never had a chance to expand in the post-computer era. GE was really close, but they switched to the "do everything" model a bit too early. Before computers, your only option was to have a financial stake in other companies, and this doesn't provide enough control.
As for IBM, I think it just lacks the ambition to do anything drastic. You don't get _automatic_ world takeover, you need to work for it. But others are giving a good run for it, just look at the recent acquisitions by Oracle.
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