From: Jim Choate <ravage@EINSTEIN.ssz.com>
Date: Fri, 9 Oct 1998 08:11:50 +0800
To: cypherpunks@EINSTEIN.ssz.com (Cypherpunks Distributed Remailer)
Subject: RE: GPL & commercial software, the critical distinction (fwd)
Message-ID: <199810082352.SAA21802@einstein.ssz.com>
MIME-Version: 1.0
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Forwarded message:

> Date: Thu, 8 Oct 1998 17:21:26 -0500
> From: Petro <petro@playboy.com>
> Subject: RE: GPL & commercial software, the critical distinction (fwd)

> 	He is right--to an extent. Monopolies _can_ exist in a free market
> under 2 conditions: 
> 	1) Early stages of a market, when the creator/initial entrant has a
> lead on the competition. This will (without "government" intervention) end
> at some point unless:

Actualy, without a copyright or some similar 3rd party regulatory
intervention this is one of the points in a market development when a
monopoly *can't* develop. At this stage of the game the entry cost is
minimal and many potential groups have access to the necessary commodities
(real and intellectual) to get into the business. This also happens to be
when violence has the highest pay-off in staying in the market.

It's the strategy of the business that determines if it can *stay* in the
market.

To put it in terms capable of modelling, consider a petri dish with various
bacteria arranged around it. To start, no colony of any particular type
(comparable to business strategy) controls the entire surface of the ager.
Only after the market matures and competition begins to reduce the number of
colonies and the area of the colonies increases do we begin to see a
monopolization effect. This is modelled quite simply with cellular
automatons.

At this point in time what happens in a real-world business is that somebody
gets a bright idea. He acts on that idea and starts a business. In order for
that business to grow and prosper at some point employees must be hired.
Those employees learn the business and some point one or more decide that
since there are more people wanting widgets than there are widgets being
made it looks like a good time to quit. That ex-employee starts up a
company. The original employer has no way to prevent this short of overt
violence, no laws or protective agents have been violated because there is
no 3rd party to act as guarantor to the employment contract or the
intellectual property rights. Now we have two companies making widgets.
These products are consumed and resupplied at a profit and both companies
(it is easy to extend this to n-parties so I'll stay with two for brevity)
continue to grow until market saturation. Now some folks will claim the
employer can impliment a limited access policy to the technology and product.
This strategy will not work. As another potential supplier I put out an add
asking for anybody who *used* to work in that industry to come by for a job.
I hire them, drain their brain, and impliment my competitors system. Once the
market saturates there isn't enough 'spare' money floating around to stay in
business, hence new businesses in that field don't start up unless another
fails unexpectedly; if its expected other competitors will begin bidding
economicaly for those potential new customers. The existing employers are
always trying to hire their competitors so there is a constant motivation to
defect from the employees perspective (ala computer industry).

Imagine the impact of these sorts of dynamics on banks and the issuance of
effective currencies and how that impacts travel and at-a-distance business
(such as across the big pond). Even such technologies as e$ won't solve this
problem because for one variety to have a chance at the market it must be
widely respected, implying a very large share of the market approaching
mono-e$ token saturation. So we create a monopoly in our rush to eliminate
monopolies via technology.

Monopolies are a function of doing business and not any political or
mathematics aspect. It's axiomatic in nature. Monopolies themselves,
something we haven't even touched on,  have both positive and negative
characteristics. These characteristics can in fact be described to a very
good degree of precision. Now if there were a mechanism to move a more
rational and experience based set of laws and regulations into business then
we might make some progress toward creating a society (due to moderated
market activity - by a *impartial* 3rd party) where investment in technology
and its application toward automation creates a situation where everyone
invests a sufficient amount of income to retire in a very small number of
years.

Another point to be made is at no time have I required these various
inter-active producers and consumers to be in lock step or have been created
at the same time. Nor do they, in principle or practice, have a requirement
for such things as instant market change propogation and rational
participants, etc. Those issues are irrelevant except early in human
history when these sorts of issues are intitialy introduced into a culture.
If people can't fulfill one desire, they'll fulfill another. The result is
that the same base set of human emotions and desires, expressed through a
cultures bias, that varies widely in content, context, and expression, will
in fact find a way to express the same basic sets. What most economists do
is vastly underestimate the range of that those individual members.

The major short-fall with anarchistic or free-market models is that they
have faulty comprehension of a workable concept of a contract. This contract
represents a major constituent of what holds any society (which I believe
we'll all agree is a requirement for an economy) which is trust in the other
members, that they will do what is expected at the right time. In these
sorts of 2-party systems there can't be an expectable set of reactions. The
contract exists from the time the consumer approaches the producer asking
for a price, till the time the consumer has taken possession of the object
of desire and the producer has their money. At that point, there is no
warranty, no 3rd party to enforce any sort of liability, etc. Because of
this the business world is best described by caviat emptor. You bought what
you got. Now consider the Prisoners Delima, under what conditions does a
prisoner go along with the jailer, or tries to escape (not play by the
rules, whatever they may be - in this case the contract between the
parties). The maximal payback for the prisoner is to go along until the
jailer is lulled into a false sense of security. And then defect. This is
wired into human genes, everybody does it because that is how we survive as
a group in the wild. People as a whole and as individuals don't mind
stretching the rules, it's just a question of what rules and how far.

> 	B) a competitor emerges that manages to meet the entire markets
> desires for goods and services in such a way that profits are so thin as to
> not attract competion.

Not *a competitor*, only that the total number of competitors in a given
market can and do meet the market needs. At this point the growth rates of
the individual business strategies begin to emerge and high efficiency and
long-lived strategies begin to gain the upper-hand. As time goes by
businesses either die and are replaced by consumption or else they merge to
create a new structure. The major featues of that structure are that it has
potential for long-lived behaviour and it reduces the management overhead,
and potentialy the work force requirements (but that's icing on the cake).
At that point there will be a merge because both sets of competitors want to
make more money, that is their sole reason for existance.

> 	(1) can be effectively ignored, it is a localized (in time)
> condition that the market will usually remedy.

Is a totaly false conjecture not born out by history or theory.

> 	I have maintained that Monopolies in ANY market large enough to
> accept competition (i.e. larger than one or two purchasers) cannot continue
> to exist (in fact would have a hard time coming into existence) without
> some sort of government influence.

And I have yet to see an explanation expressed in market dynamics that
describes how this supposed process works. Phloegestron and ether were great
ideas until somebody tried to measure them...

Whew. I've about had my fill of this topic for the time being....

Adios mi amigos!


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