From: Jim Choate <ravage@EINSTEIN.ssz.com>
Date: Mon, 5 Oct 1998 07:25:38 +0800
To: cypherpunks@EINSTEIN.ssz.com (Cypherpunks Distributed Remailer)
Subject: Capitalism and Monopolies (was RE: GPL & commercial software, the (fwd)
Message-ID: <199810051230.HAA02994@einstein.ssz.com>
MIME-Version: 1.0
Content-Type: text



Forwarded message:

> From: Matthew James Gering <mgering@ecosystems.net>
> To: "Cypherpunks (E-mail)" <cypherpunks@cyberpass.net>
> Subject: Capitalism and Monopolies (was RE: GPL & commercial software, the
> 	 critical distinction)
> Date: Sun, 4 Oct 1998 23:01:16 -0700 

> Jim Choate wrote:
> > Only after the early 1890's when the situation got so bad 
> > they had to do something. Prior to that there was no federal 
> > intervention in railroad operations per se 
> 
> Completely false.

Not totaly.

> Traffic to/from the West coast did not warrant the
> capital investment in transcontinental railway, so the government make
> *exclusive* lands grants to specific railroads to extend the railways to
> the West coast (100M acres between 1863-7) . Those subsidies created the
> monopolies, the source of coercive power over Western farmers. Protest
> against this arbitrary power was blamed on the market instead of the
> government subsidies, and resulted in the Interstate Commerce Act of
> 1887, and the Sherman Act of 1890. 

Only *after* it was clear that these companies could not do it themselves
because of a lack of sufficient traffic to support the business.

I must congratulate you. You're the first person in a long while who actualy
took the time to develop an argument based on *fact*. Well done.

> I should have stated government "distortions" instead of "regulation."
> That includes subsidies.

Even better, a distinction between 'law' and a 'grant'!....

> The placement (ownership) of these rights, their value, restrictions and
> enforcement are the result of a free market? No, government
> intervention.

Actualy no, try buying a piece of land and enforcing the title *without*
registering it at the country seat or its likes.

> Did anyone ever state monopolies result from federal regulations?
> Government distortion/intervention, that can come at any level. Acts of
> force or coercion can create a monopolistic situation, free trade
> cannot.

Absolutely it can because it actualy allows a freer hand in developing
strategies to decrease the market potential of ones competition. There is
*nothing* in free-market definitions or descriptions which will prevent
gross abuse of the consumer by the manufacturer. Remember in a free-market
there is the requirement for 'fair competition' which is contrary to the
very theory of business operation, which is to maximize profit and reduce
competition.

Now if we lived on Vulcan and we were all logical Vulcans it might work,
unfortunately we're not and human beings will specificaly go after their
competition, which without some sort of regulation being impossed leads to
obvious results; initialy a very fluid and dynamic market that settles down
with the survival of the fitest getting bigger and bigger. As these
companies get big enough they can no longer react as  quickly as they once
did (intertia of strategy among other things). At some point it becomes
easier to cooperate than to continue to fight. That cooperation leads to a
melding and promotes even more monopolization. 

> So what is the discriminating factor(s) distinguishing industries that
> can and cannot be monopolized?

Saturation of the consumer market, high start-up costs in either
infrastructure or intellectual resources, and others. I posted a list of
some characteristics to the list a while back. You can look for it. If I get
time I'll post it to the list again.

> Don't forget capital markets;

Are you speaking of capital markets in the sense of fluid and available
funding or of the existance of businesses that produce the capital assetts
needed by other businesses (eg creating rail-cars for rail-roads)?

 a free fluid capital market can and will
> support a smaller competitor if potential long term profits will support
> it.

You can't pay your employees today with tomorrow profit. This isn't a
Popeye's hamburger vendor...

There is another question I'd like to pose. In a free-market economy there
are only two participants, the consumer and the producer, what if anything
in the definition prevents one or the other from employing an agent in their
stead to 'negotiate' with the other. Does this by definition introduce a
third party or is it a permissible extension of the two-party system?


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