Disagree. Absent large barriers to entry like economies of scale, network effects, or legal/regulatory hurdles, monopolies are fairly unstable in a capitalist system. The excessive profits that they bring in (monopoly rents) are a ripe target for new firms, who are easily able to enter the market and compete on price. Or technological change renders monopolies irrelevant from the outside.
One of the best strategies for creating long-term competitive advantage is to use the profits from your early lead to do something that is expensive to replicate.
Here's an example close to my heart (and please note that I'm just a cog and this is not a statement on official strategy -- just my personal observation): In Google Chrome, we decided to do native beautiful polished UI on every platform - Windows, OS X, iOS, Android -- even Linux!! This is a very expensive way to build a piece of client-side software, and some might say the result is only a few percent better than what could be achieved using a cross-platform UI toolkit. But it's a very expensive couple percent to duplicate.
Same thing with multiprocess. Only makes the software a little bit better, but again, extremely difficult to replicate.
If you look closely, I believe you will see this strategy being used by the leaders of many industries that would at first glance appear to have low barriers to entry.
It's interesting you mention this. The polished UI and tab isolation are the only reasons I haven't switched back to firefox at this point. Firefox has mostly fixed their bloat and stability issues (not to mention chrome is far more 'bloated' on purely a ram utilization scale), but its just so damned ugly and lacks the security benefits of process isolation.
Btw, the reasons I want to move away from chrome are the "sign in to chrome" movement, I'm assuming this is an end-run around the movement to block internet tracking, and the lack of a strong extension model.
As an excercise - pick a random company out of fortune500, assume you have solid industry expertise (say - you've got a team of a couple of top guys who worked in that industry) in their area and also a couple million dollars, and think how likely you are to create a company that can compete with them. I'd say, that for a big fraction of fortune 500 (which is itself a large fraction of global economy), you need even more than the experise and a couple millions, which makes them fairly safe in their current positions.
I think there are few areas where the barriers you mention do not exist. I also mention the scenario where technological change renders monopolies irrelevant and address it by stating that smart winners spend a lot of time dealing with these threats.
"Absent large barriers to entry like economies of scale, network effects, or legal/regulatory hurdles"
Key supposition there. Because of the economic profits enabled by monopoly, corporations and individuals will disproportionately attempt to lodge themselves into niches where there are economies of scale, network effects, and legal/regulatory hurdles. Or lobby to legislate them, or create products that generate network effects and economies of scale.
Of course, not all markets are susceptible to any of those threats. But as a result they're open to competition, which quickly eliminates economic profit and makes companies occupying those niches much poorer and much less powerful.
Well, for one nothing lasts forever and there's no such thing as "the long run", so it's true that monopolies can't be sustainable. But the idea that they need a government to prop them up seems to lack a factual basis. De Beers seems to have lasted a pretty long time -- did they need the government in order to last as long as they have? Does the fact that they will collapse "eventually" (which, of course, all things must) make acceptable the massive rent that they've taken?
Power is power. As soon as one actor gets it in one domain, it spreads to another domain. Even if we had some completely laissez-faire economy in which there were no monopolies, as soon as one arose it would begin to get the laws changed to favor its persistence. It would then look as though it was government regulation that was propping it up, but the causal force was the monopolist, not the government.
The way to prevent this is to maximize the control of the people over the government, and make sure that no unaccountable-to-the-people entity gets too much power. I.e., the people must take an aggressive stance against rent-seeking monopolists in order to maximize competition, progress, and the overall growth of wealth.
"How could DeBeers maintain such a flourishing, century-long cartel on the free market?
The answer is simple: the market has not been really free. In particular, in South Africa, the major center of world diamond production, there has been no free enterprise in diamond mining. The government long ago nationalized all diamond mines, and anyone who finds a diamond mine on his property discovers that the mine immediately becomes government property. The South African government then licenses mine operators who lease the mines from the government and, it so happened, that lo and behold!, the only licensees turned out to be either DeBeers itself or other firms who were willing to play ball with the DeBeers cartel. In short: the international diamond cartel was only maintained and has only prospered because it was enforced by the South African government."
>> The way to prevent this is to maximize the control of the people over the government
Oh? How do we do that? We all know a civilized discussion is much more persuasive than cursing and raging, right? -I guess we need to write respectful, eloquent letters to our "representatives", and ask them to pretty-please be less corrupt and keep their campaign promises?
>> make sure that no unaccountable-to-the-people entity gets too much power
An entity that's not accountable to the people, huh? -Such as, the government itself? Or how much sway do you hold over the secret FISA "courts"? What about how your tax money is spent?
>> the people must take an aggressive stance against rent-seeking monopolists
Oh? What about the ultimate monopoly, the government? Or is there some other entity that decides what happens in a country, what's allowed and what's forbidden?
Let's see: what do we have in the world, in actual reality, when considering your comments? What do we know (from actual examples of things that really happen) when it comes to the potential for a government to be accountable to its citizens?
In the actual world that we live in, do we have democracies that function pretty darn well? Yes (all of Scandinavia, Iceland, Switzerland).
In other parts of the world, do we have corporate monopolies (or near-monopolies) with noxious outsized influence? Most definitely yes (e.g., retroactive copyright extensions in the U.S.).
If you were to pick a country to be born into, where your household was picked completely at random, would you rather be born in the U.S. or in a country in Scandinavia? In which country do you believe you would find yourself most empowered viz. society and its governance?
>> What do we know (from actual examples of things that really happen) when it comes to the potential for a government to be accountable to its citizens?
Well, we know from the history of the human race that people have pretty much always been ruled by some evil scumbags. Today is no exception. The scumbags come and go, but rule remains.
As for accountability.. I'm not sure even revolutions really count. How many times has been some insane, evil dictator been forcefully de-throned, only to get replaced by someone just as shitty, or even worse?
How accountable was Stalin to "his" citizens? -Hitler? Mao? Pol Pot? .. and so on. History is full of monsters and genocides, and even if some dictator gets killed in a revolution after he's tortured people for, say, 20 - 70 years, so fucking what? Is that "accountability"?
>> In the actual world that we live in, do we have democracies that function pretty darn well? Yes (all of Scandinavia, Iceland, Switzerland).
You have to realize that there's corruption and secret dealings behind the scenes everywhere. In every country. I'm Finnish myself, and Finland is no exception. The corruption here is not as blatant as in Mexico or whatever, but it's there.
>> would you rather be born in the U.S. or in a country in Scandinavia? In which country do you believe you would find yourself most empowered viz. society and its governance?
I'm not empowered by "governance" - I'm enslaved by it, just like everyone else on earth.
how naive. were it not for government, in the end monopolies would just resort to threats of violence to achieve the same result. as distasteful (and perhaps inevitable) regulatory capture is, at least it provides a non-violent outlet to squash the competition... until the revolution that is.
