Anti-competitive behavior would be literally cheating at golf.
Right, and "cheating" in the real world is defined by fraud and physical violence and their myriad manifestations, not mututal trade to mutual benefit (as on a proprietary exchange, for example). Or offering the best product at the lowest price.
But, that's not at all the meaning of "anti-competitive" as people use it.
It is the position of the United States government, among others, that cheating includes the use of monopoly or oligopoly to unfairly restrict competition in any of several ways which are neither violent nor fraudulent.
You're welcome to argue that that position is misguided, but it is certainly not nonsensical.
You're welcome to argue that that position is misguided, but it is certainly not nonsensical.
I think it's a very commonly held position, and it's understandable that people hold that position.
I think monopolies are impossible or next to impossible except when granted by the government. BTW, I think (not sure) that that's actually the origin of the word "monopoly."
So, yes, monopolists are cheating, and the government is cheating. Of course, if the government permits cheating, it's "dog eat dog," so you have to cheat and/or might as well in some cases. (That, in fact, is what makes the Occupy Wall Street protests so inane, IMHO.)
I believe that in a truly capitalist system, oligarchies would be unable to weild undue influences for the same reasons I think monpolies would be unable to.
> I believe that in a truly capitalist system, oligarchies would be unable to weild undue influences for the same reasons I think monpolies would be unable to.
"Truly capitalist system" is not an economic term, it's a political term. As such it's not very useful in this discussion. It is important to distinguish "free markets" in the theoretical sense from "unregulated markets" in the political sense. Conflating the two just results in confusion.
Monopolies and oligarchies and all sorts of anti-competitive structures arise naturally in unregulated economies. For example, monopolies arise in any market where the marginal cost of providing a good or service continues to decrease without hitting a floor. Natural monopolies also arise in situations with significant network effects. Telecoms are the pedagogical natural monopoly.
Completely disagree with you here. I use "capitalism" to refer to an economic and political system, and I think people who use the terms the way you are are the ones introducing confusion. There are economists on both sides of this, as well as philosophers, so having clarified, we should stop this kind of discussion. What I mean is, if you are already so convinced of the rightness of this many things that I disagree with, I don't think HN is going to be a productive place for further discussion.
Monopolies and oligarchies and all sorts of anti-competitive structures arise naturally in unregulated economies.
I completely disgree, but I think we disagree on which usage of most of the words in that sentence is proper and which is invalid. (All the ones that aren't just glue words.)
I know you've read this stuff in economics textbooks. I'm already aware that I disagree with those particular textbooks.
You can have that opinion, of course -- although I'm very skeptical of any such absolute statement about such a complex system, and I feel it's willfully ignorant of the history of antitrust law -- but it's not really relevant.
Monopolies are not illegal; if I make the best widget, I can be the only person selling widgets. It's illegal when I use my monopoly to stop competitors from selling their own widgets.
If you believe that this situation is impossible, then the law is irrelevant, and it shouldn't bother you any more than laws against walking your elephant without a leash.
I feel it's willfully ignorant of the history of antitrust law
FWIW, I've spent a huge chunk of time studying ethics on my own. It's true that I can't claim to know a LOT of history about antitrust law. But the reason it's possible to make sense of "complex systems" is the use of (correct) principles about how they work, not examining every concrete example ad infinitum and saying, for example, "well, but maybe the ball will fall up next time". Anyway, putting aside the philosophisizing, I have more specific comments below.
It's illegal when I use my monopoly to stop competitors from selling their own widgets
My point is that your only means to do that is to use government force, i.e., laws. (Now there's a principle for you!)
Now, I might obfuscate the design of my widgets so that only I can make other widgets that interface with them. But that's not the same thing. For example, that doesn't stop others from making their own entirely separate system of interconnecting widgets. Similarly, Apple controlling what's in the App Store doesn't stop Google from creating it's own app store and controlling it's content. One might say that Apple "has a monopoly on content of the App Store," but that's using the term "monopoly" disingenuously.
This is not supposed to be a complete proof of anything, but it's supposed to suggest my line of thinking.
If you believe that this situation is impossible, then the law is irrelevant
Quite the opposite. The law is highly relevant because it's what makes the "cheating" possible. For example, if Apple got the government to bad the Google Store. Or if the EU bans Microsoft tightly bundling IE in Windows, for a real example.
Antitrust law came about because near-monopolies had formed in the late 19th century.
Microsoft was almost a monopoly and tried to use that monopoly to shut out competitors in adjacent markets.
This is just speculation, but I suspect Microsoft's life-saving investment in Apple could only have happened after they had been targeted by antitrust law. Otherwise Bill would've told Steve to get lost.
I addressed some of this in detail in a more philosophical manner in response to a "sibling" comment of your comment, so I'll just be more specific here.
I believe that if it were not for various antitrust action (in both the EU and the US), MS would have continued bundling IE with Windows in a way that made the two inseparable. This would have led to the collapse of the Windows, because IE was too bug-ridden and security-vulnerable at the time, just barely acceptable. There had to be a separation of the two for Windows to remain viable. The EU had a particularly harsh ruling on this, IIRC.
Were it not for the EU, Linux, Solaris, BeOS, Amiga, or something else would have suddenly become much more important and would have taken up the slack. In other words, antitrust action may have "accidentally" saved Microsoft from their own mistakes.
I actually think this theory is plausible. (I know I actually was driven away from Windows because it was too virus-prone, and yes, this is for technical reasons, not just being the most used.)
Maybe MS and Windows would have survived just fine anyway. But the true moral of the story is, MS fundamentally cannot achieve a true monopoly in the operating system market, unless they get the government to ban all other operating systems. Unless other operatings systems become illegal, somebody else can always make a new one.
I believe that if it were not for various antitrust action (in both the EU and the US), MS would have continued bundling IE with Windows in a way that made the two inseparable.
"Would have continued"? MS still bundles IE with Windows and uses its backend rendering tech in the system. The decision made by the court was that they had to provide access to "secret" APIs, not that they had to stop bundling IE.
This would have led to the collapse of the Windows, because IE was too bug-ridden and security-vulnerable at the time, just barely acceptable. There had to be a separation of the two for Windows to remain viable. The EU had a particularly harsh ruling on this, IIRC.
But there was never any separation! All copies of Windows with the sole exception of Windows 7 in the EU come with IE as the default and only browser. The HTML rendering technologies are still the same (Trident). And IE is still the most used browser.
The decision made by the court was that they had to provide access to "secret" APIs
What did those APIs do? If they were APIs that one would need access to to make a competitive alternative to IE for Windows, then my story would be surprisingly accurate given the little that I remember. To be clear, the case I'm remembering greatly predated Windows 7.
Anyway, maybe I just got the story from some shitty pop news article many years ago and it's all wrong. But it stands as a hypothetical rhetorical device in the discussion about monopolies.
US steel was a near monopoly (70% of the market) not though government regulation but simply by buying up the competition. It was also lost market share to more innovative rivals.
ALCOA was the opposite they become a monopoly by out competing everyone else.
In case it wasn't clear, the way I define monopoly is synonomous with coercive monopolies. So I would not consider 70% marketshare to be a monopoly, and in most cases I would not even consider 100% marketshare to be a monopoly. Likewise, in the vast majority of the types of cases you're raising, I don't consider it to be a problem.
With US Steel and ALCOA, if these companies were in any way not serving the needs of the market, it would be perfectly feasible for competition to successfully enter the market. (Maybe that's what you're saying too.) Assuming they were not using government regulatory capture to prohibit the operations of their competitors (which, actually, is practically universal these days, and is precisely what I do consider to be a monopoly).
Your redefining the term. In law, a monopoly is business entity that has significant market power, that is, the power, to charge high prices.http://en.wikipedia.org/wiki/Monopoly
While, I get where your coming from. If you want to redefine a term use a new word, I would suggest Monopower if you don't want to say coercive monopolies.
PS: The reason you don't need 100% market share to count as a Monopoly is once your competition can't meet the full needs of the market so you can increase prices which in theory causes a loss of market share, significant barriers to entry can dramatically slow this process down. If the barriers to entry are high enough you can fluctuate between high prices -> slightly below market prices -> high price to prevent the competition from affording to expand quickly or even drive them out of the market as they must conserve cash to survive your dumping product on the market.
I'm not redifining the term, economists are. Here is an etymology from dictionary.com
monopoly : "exclusive control of a commodity or trade," 1530s, from L. monopolium, from Gk. monopolion "right of exclusive sale"...
The people who have started using "monopoly" to mean "significant market power" and the like were doing a bait-and-switch to try to further an anti-business academic or political agenda. And most of the arguments you hear using the word "monopoly" imply the older definition that I'm using, but apply it to much looser definitions. For example, MS was never even remotely close to having a monopoly on operating systems. In fact, such a thing is not even really fathomable.
PS: The reason you don't need 100% market share to count as a Monopoly is once your competition can't meet the full needs of the market so you can increase prices which in theory causes a loss of market share, significant barriers to entry can dramatically slow this process down.
I didn't quote your entire paragraph, but I'm referring to all of it.
This kind of reasoning (which is reasonable and extremely common) is totally rationalistic (which is properly defined, by the way, as being an argument that seems deductively valid but is divorced from the way reality really is). I could talk about this at length, but I'd rather just give a short example for now. Imagine I'm a big business. If I'm consuming a particular kind of product as an input to my production, and one particular supplier charges a very high price, it wlll be greatly to my interest to either invest capital to produce it on my own, or (much more likely) seek out new producers to enter the market. If the existing supplier then tries to manipulate prices to drive the new competition out, only planning to raise them right after, I'll just see through it and continue purchasing from the new producer. A group of companies in my industry could even come to a mutual agreement of this sort to ensure that new competition enters.
The point is, in a capitalist (that is, politically and economically laissez-faire system), people don't just keel over when there are problems in the market, if those problems are actually big enough to be worth solving.
By the 1530 definitive it's the ability to control not the act of control. Historically, governments have granted monopoly's for various activity's, that did not mean someone needed increase prices just that they had the ability to do so should they chose. Obviously after being granted the power most chose to exercise it and become weathly, but not all.
More recently manufacturing has enabled company's to create capabilities though investments that are not easy to duplicate.
Intel is the only company on the planet capable of manufacturing 22nm chips at scale. Other companies can do 28nm and given time other companies will catch up. But, their Monopoly on 22nm chips has nothing to do with patents and is dependent on the incredible multi billion dollar investments required to manufacture at such scales. 14nm Fab's are expected cost more than 5 billion dollars per facility, and vary few institutions can afford such investments. http://www.kitguru.net/components/cpu/carl/intel-plan-fab-42...
PS: In 5 years 22nm manufacturing will be yet another commodity process, but by then Intel will have moved on. Intel has no interest in becoming a true monopoly, in large part due to the legal limitations that monopoly's face. However, that does not mean if the law was revised they could not rapidly do what Standard Oil or Alcoa did.
Right, and "cheating" in the real world is defined by fraud and physical violence and their myriad manifestations, not mututal trade to mutual benefit (as on a proprietary exchange, for example). Or offering the best product at the lowest price.
But, that's not at all the meaning of "anti-competitive" as people use it.