This is interesting since Austrian economic holds that competition free of government interference results in a level playing field and that monopoly is only achievable through government intrusion. Monopoly is only achievable over time in the tech field through legal protection of intellectual property, which is a government intrusion in the free market.
If there is no government, then there are no intellectual property rights through patents, trademarks, copyrights, etc. So some government intrusion is good, like privileging intellectual property, and others are bad like undertaking social welfare? What is the justification of criteria for deciding which intrusion is good and which bad? Other than self-interest or class interest?
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My favorite from Thiel this week:
"Twitter is hard to evaluate,” Mr. Thiel said in an interview on CNBC on Wednesday. “They have a lot of potential. It’s a horribly mismanaged company — probably a lot of pot-smoking going on there.”
HA! He knows they are left-libertarian over there at twitter with the pharma material association....
libertarian civil war in full swing with the pharma-left warring with the metals-right....
Austrian economics is totally oblivious to the concept of 'barriers to entry'? How could anyone claim otherwise that monopoly barrier could only be achieved by government intrusion through legal protection?
Once you stablish a big quota of the market share for yourself (100% in case of monopolies) you can out-compete any new business (in an established market) through the sheer force of capital: from economies of scale to price fixing and making it a losing game for your competition (outlive them through loses) and then acquire their assets at a cheap price and other dubious business tactics.
Austrian economics, the ideology of the naive or the ideology of the evil business man, as you wish!
Their idea is that starting with free competition, no firm would be able to establish market power. This is exactly the idea that Theil is opposing.
Of course, vulgar Austrian economics doesn't say exactly how to get from the existing imperfect competition to perfect competition. It is assumed that ending government intrusion will simply lead to that state.
Theil is saying we don't want to go there, since there is no profit in a perfectly competitive economy in which each factor only earns its marginal product.
Establishing dominance is a function of power and perfect competition eliminates economic power and therefore economic rent. This is the point not only of Austrian econ but also neoclassical. In the stylized models there are no frictions and therefore no power or rents. Everyone received just deserts based on merit. The cause of friction in this view is government intrusion.
So what Theil is implying is that LIbertarians/Austrians need to rethink this government intrusion thing, since it is the source of intellectual property, market power that leads to dominance, and monopoly rent. Without enforceable intellectual property, technology would be quickly reverse engineered and the inventors' advantage would quickly evaporate, perhaps before startup costs could even be recovered. But even if property rights were terminated with recovery of costs, there would still be no profit in the system if it were subject to perfect competition. He doesn't go for that.
The whole anarcho-capitalist & 'austrian' economics is a chimera that only exists in the febrile minds of some man-childs that think the world is composed of 'robinson crusoes' and other stupid analogies.
Thiel is probably an other 1% (0,.%) crony whose ideology is just a mean to support his power lust and propiertarianism, that's why he would support a small government that secures his personal wealth and power through force (in this case using intellectual property) at the cost of the rest of the population: this is a much more optimal solution to the maintaining power and leverage against the plebs than a formal feudal society where he would have to fund private armies and enforce rules over other people that would not comply. That's costly and risky, while abusing the current institutional frame is much more optimal (people being abused are paying for the costs of their own enforcement and will not complain about it) and the serf-lord relationship is already well established.
Agree. But it is unusual for an anarch-capitalist to be so blunt about it.
And he has already said that he is anti-democratic.
Buffett takes a similar approach, he says he looks for monopolies or entrenched leading lowest cost producers...
All businesses hate competition and look to eliminate it. Which is why all markets tend towards oligopoly over time.
Some even put on a show of competition every now and again to try and demonstrate what good capitalists they are.
It's actually the job of the government to ensure that businesses always have their feet on the fire of competition - by breaking up large businesses that have become entropic but powerful and by making sure they always have to compete for labour, by forcing capitalists to invest in training and job elimination technologies.
The idea that it springs up naturally is historically naive.
What firms have a monopoly right now?
I cant think of any.... we have a lot of competition imo (here in the US anyway...)
What happens with the intellectual property rights is that when the govt passes the laws that are there to protect the holders of the rights, then libertarians, having a law to break, they bootleg the stuff and sell it on the black/grey market...
the non-libertarians end up the ones that actually buy the legitimate product from the rights holders...
rsp,
This is generally treated in a matrix of rivalous-non-rivalous and excludable/non-excludable goods, as well as private goods and public goods, and private property and the commons.
It is to the advantage of owners of private property and means of production to gain control over supply (monopsony) and distribution (monopoly) or to limit these to a few parties capable of colluding (oligopoly).
Think of everything as a commons and then how various barriers are erected to enclose it and how various interests are favored in the process. There is a lot of alternatives and there is no simple answer, although Econ 101 lays out the basics.
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