Re: Coercive Monopolies in Technical Markets (Intro)

From: Gordon Mohr (
Date: Sat Apr 14 2001 - 00:27:53 PDT

Jeff Bone writes:
> Gordon Mohr wrote:
> > But these are physical plant monopolies, granted by government
> > franchise, and/or powered by traditional increasing-returns-
> > to-scale.
> As I already stipulated. Down boy. ;-) I don't have an answer to your
> question off the top of my head. This is musing out loud, not a
> well-formed argument just yet.

OK, got it. :)

> > We free marketeers should be very careful about
> > calling anything short of violence or fraud "coercion".
> I'm using a very specific term of art, straight from the objectivist's /
> capitalist's playbook. Coercive monopoly:
> ...Such a monopoly, it is important to note, entails more than
> the absence of competition; it entails the impossibility of
> competition. That is a coercive monopoly's [my emphasis]
> characteristic attribute, which is essential to any condemnation
> of such a monopoly.
> "Common Fallacies About Capitalism," by Nathaniel
> Branden

Whoa! First, let's not equate objectivists and capitalists. Second,
I don't have a copy of that source, and it looks like you've removed
preceding context. "Such a monopoly..." would seem to refer directly
back to some unquoted antecedent, which is probably a monopoly backed
by violence or state force.

Branden seems to be talking about "monopolies which are coercive",
and then pointing out they can be impossible to compete against.
You're saying Microsoft is *so* hard to compete against that it
rises to the level of being "coercive". That's backwards.

> I would say that Microsoft's current dominance of (e.g.) the enterprise
> desktop operating system market exhibits not only absence of competition,
> it in fact makes such competition impossible. (At least for now.)

In everyplace else except the narrowly defined "enterprise desktop OS
market", Microsoft has namable and often even profitable competition.

Even in "enterprise desktops" there are islands of alternatives,
especially for engineers and creative types.

So it's only a mundane business area where Microsoft has total
dominance... a place where it might make sense for everyone to
just go with a single vendor, voluntarily, and for fortune-seekers
to look elsewhere.

And yet even in "enterprise desktops", people keep making alternative
OSes and basic-productivity-suite apps. Don't you think venture-backed
Eazel and Ximian have hopes of, deep in their future, cracking into
enterprise desktops, with the help of all the other big companies
resentful of Microsoft?

Check your premises!

There's competition being undertaken everywhere, bootstrapped and
entering from adjacent markets and even venture-backed. To dismiss
it, you would have to grant this competition not just the right to
try, but the right to succeed.

> The
> savior / regulator of the free market --- the capital market --- cannot
> come to the rescue; no right-minded VC would ever fund a play to take on
> MS on the enterprise desktop. Microsoft's total domination of the value
> network surrounding the enterprise desktop precludes any possibility that
> an investment in a competitive interest would yield ROI; if you buy that
> argument --- and I certainly see no existance proofs to the contrary ---
> then you'll agree that Microsoft meets the above textbook definition of
> coercive monopoly.

Look at what you're saying: that a coercive monopoly must exist everywhere
VCs choose not to invest. That's a nonsensical progression: VCs are only
a tiny part of the competitive matrix, and their investments indicate fads
as much or more than they indicate any underlying ability to make a living.

And still, what of Eazel and Ximian? (And before them, Corel and Netscape?
And before them, OS/2 and Apple?) Your zone of "no competition" actually
seems pretty full of motivated contenders, testing alternatives, at any
one point in time.

That Microsoft has a decade-long track record of fending them off isn't
alone enough of a reason to call them "coercive". "Savvy, ruthless,
intimidating, possessing great market power", sure. But "coercion" means
more than that, especially to the free-marketers and objectivists you're
claiming as inspiration. You should use the word more carefully.

- Gordon

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