Comments on: More of the Same

By: Jack Lecou

Jack Lecou — Fri, 26 Mar 2004 20:22:13 +0000

Umm. Government didn’t have anything to do with creating a monopoly OS provider. As I said above, the most the antitrust ruling could have affected is who got the monopoly, not whether there was one. By your own reasoning, even if we suppose that, absent intervention, IBM would have developed its own OS for the PC (and I’m not at all sure this would have been the case), then we would have IBM with one big monopoly. Terrific. With or without the government intervention we end up with a monopoly in software, so how could the government possibly be responsible for it? Saying copyright protection perpetuates Microsoft’s monopoly is like saying that laws against arson perpetuate its monopoly. Copyright protects everyone in the software marketplace equally, it doesn’t give any preference to Microsoft. I suppose removing such protection from Microsoft alone would make a novel antitrust remedy – it would make it very difficult for them to sell binaries – but even then they could keep the source secret.

By: james

james — Fri, 26 Mar 2004 16:01:47 +0000

Concerning a debate on Government intervention vs Market forces, the origin of Microsoft is important. By showing that government intervention against IBM created the entity Microsoft, it demonstrates that the government cure for a problem can be worse than the original problem. Thats why its important. The government handling of Copyright law is one of the tools Microsoft uses to maintain its position. If the source code to the OS became public domain, competitors or manufactures could offer windows compatible OS. This would immediatly remove Microsoft’s monopoly.

By: Jack Lecou

Jack Lecou — Fri, 26 Mar 2004 06:27:37 +0000

Right. And if IBM had awarded the OS contract for the PC to Disney we might be talking about a Mickey Mouse OS monopoly. So what? The point is that it was the unprecedented success of the PC platform which set the stage for a monopoly OS vendor. The most the antitrust ruling could have influenced is whose name was on the door of the dominant firm, not whether it existed. Copyright law has absolutely nothing to do with Microsoft’s monopoly. If I write a mystery novel, copyright grants me a monopoly on that novel, not the entire mystery novel market. (Microsoft would obviously be in trouble without copyright, but so would be every other software company. Even open source relies on copyright.)

By: james

james — Fri, 26 Mar 2004 04:47:47 +0000

Without the governments anti-trust rulings, we would be talking about the software giant IBM instead of the software giant Microsoft. The anti-trust rulings made it possible for Microsoft to exist as an OS provider. By the time IBM entired the OS market, Microsoft was already entrenched. Copyright laws might keep Micrsoft going, but the anti-trust rulings created it.

By: james

james — Fri, 26 Mar 2004 04:47:40 +0000

By: john c. halasz

john c. halasz — Fri, 26 Mar 2004 03:06:41 +0000

Mr. Holsclaw: I have no doubt the you and I would never agree on these matters, having read some portion of your vociferations before; the ideological gulf, that is, the difference in basic normative conceptions and commitments, is simply too great. But allow me to respond to some of your contentions. That ” the market is really just the aggregate of billions of free choices” adventitiously flitting about is a beautiful idealism. However, more realistically, it would be described as billions of interactions, deriving from productive activities with their own conditions, constraints and functional requirements. That money changes hands there is not in doubt; however, that fact alone is not sufficient to guarantee systematic equilibriation, nor the optimal equilibrium of human needs. Furthermore, that the economic realm is the primary domain of human freedom is an idea that shows a want of realistic imagination. To the contrary, the economic realm is primarily the realm of necessity, of onerous activity directed toward the fulfilling of the basic needs and necessities of life, so that some of the finer things in life may develop, flourish and be enjoyed, which goods would not be reducible to material goods, subject to private appropriation as property, but would include ends of life derivable from the basic capacities of our sociality, perhaps not the least of such goods being deliberative participation in the affairs of a political community. And “economic freedom” is in the first instance primarily a functional description, pertaining the the requirements of a systematic way of arranging economic affairs, which may, indeed, arguably have its considerable merits and on balance be desirable with respect to optimizing and augmenting the production of the net social surplus product, but which is not derived from an expression of individual volition. Finally, to argue that domination and coercion pertain only to the political realm and government action, whereas the economic realm is blissfully free from any such taint, beggars thought and experience. There is a peculiarly paradoxical flavor to your thinking, for at its core there is a claim that the raising of cognitive validity claims about these matters is futile and can only amount to a deleterious interference in its mute, spontaneous harmony, which itself amounts to a claim to some sort of transcendental “knowledge”. An argument from complexity can be a valid and insightful approach, but an argument from complexity in the name of ignorance is not. I’m sure I am not the first one to note the naivete’ of such supposed scepticism, as well as its defensiveness. It amounts to the evasion of any requirement that validity claims be tested. Now I am just as sceptical as the next fellow of some of the claims of professional economists, but to claim that they spend their time worrying about what can not be known and provide no understanding of complex states of affairs is tantamout to denying any possibility of remedying the course of blind fate. No one should underestimate the difficulty of establishing good government and of subjecting it to effective public oversight and rendering it responsive to the claims and needs of the public sphere in searching out the overall balance of the public interest. In this, us lefties are not naive idealists, but are just as capable of bitter cynicism as anyone else, though perhaps we are deficient in enjoying it with full relish. Not the least of the difficulties is the usual extent to which political leaders betray the public trust as guardians of the public interest and abuse the processes of public political legitimation, especially at the behest of concentrated private business interests that covertly and symbiotically support them financially. But to argue as David does, that political leaders and actors should regularly act in an “apolitical and socially-upright way” is a piece of laughable misunderstanding, similar to demanding of businessmen that they behave uneconomically, and is itself a piece of ideological fantasy. The recurrent trope on the right is that all human behavior is necessarily solely self-interested, but that in a market economy self-interested behavior must necessarily and miraculously be converted into the operations of the general interest, as if excesses of fraudulent and coercively exploitative behavior did not regularly occur there, whereas political actors are necessarily comsumed with and corrupted by self-interest, such that they can not possibly do anything right. The veracity of this platitude is especially amusing and instructive to observe when right-wing governments take charge. Still, for all its pitfalls and dissappointments, there is often enough sadly no other recourse than political action and government policy when dealing with the errancies and dysfunctions of our inevitably collective condition, lest we all succumb to the blindness of fate and lose any capacity to recognize any common belonging. Finally, Jack Lecaw brings up a crucial point about the asymmetry of information, though I don’t see why a “default setting” should necessarily be preferable to the avoidance of default: very often, government action, regulation or intervention is, in fact, required to bring about the effective functioning of markets. So I’m sorry, Mr Holsclaw, that I must defect from joining you in your indulgence in the “higher fatuity”.

By: Jack Lecou

Jack Lecou — Fri, 26 Mar 2004 01:52:09 +0000

It is difficult to see how the IBM antitrust situation could have much to do with Microsoft’s monopoly. It was the wild popularity of the PC platform (forming a network externality) and Microsoft’s subsequent actions (e.g., against DR-DOS) which created the monopoly. The same opportunity would have been there had someone else provided the PC’s OS, even IBM (assuming another OS would have been as popular).

By: james

james — Thu, 25 Mar 2004 23:52:54 +0000

The government source of Microsoft’s original monopoly is not copyright law. Its the government anti-trust rulings against IBM. IBM was forced to decouple IBM software from IBM mainframes. This created an environment where IBM created revenue from hardware, but was prevented from creating revenue from IBM hardware coupled with IBM software. Its not clear if the anti-trust rulings would have applied to the PC world. The ruling did effect IBM’s in place business model. Which brings us to the point of IBM bying operating system code from a new company called Microsoft.

By: Jack Lecou

Jack Lecou — Thu, 25 Mar 2004 23:02:03 +0000

The cases where we are better off with lots of government intervention are quite limited. I did not say “lots” of intervention. Merely that there are many, many markets (most, probably) which are the better for some small bit of regulation. This is because there are very few markets which truly fit the very strict conditions for achieving an optimal outcome on their own. I agree that the default position for government ought to be hands off as much as possible. For example, no one ever actually has all the relevant information. Thus, while it is a very bad idea for a government to be intimately involved with the supply and distribution of toothpaste (markets work much better for this), it may be an equally good idea to have a few regulations about the safety, purity, labelling, etc., of ingredients in the toothpaste. Such regulations are virtually costless and help to overcome the information problems. John: Copyright only gives Microsoft a monopoly on Windows, not on operating systems in general. This alone would not be a problem as others (Sun, IBM, Redhat, etc.) would all be free to market their own products. Mostly because of trademark protection, this is the type of market (monopolistic competition) in which the majority of products are sold. Except for the higher information gathering requirements (many differentiated products to choose from), this is generally almost as good as perfect competition.

By: John Lederer

John Lederer — Thu, 25 Mar 2004 20:58:26 +0000

Any discussion about Micorsoft and the functioning of markets ought take into account that Microsoft is a governemnet created and maintained monopoly. Doubt it? Copy Windows XP , sell it for $10, and watch the state interfere. We may be accustomed to monopolies created by the copyright law, but that doesn’t mean that they are not a large interference with a free market, and a very pertinent one when discussing a business that relies on them. Thus the application of anti-trust law to Microsoft is not a question of “ought we interfere with the market” but one of “ought we interfere more with the market that we have granted monopolies in?”

By: David

David — Thu, 25 Mar 2004 18:03:13 +0000

“A more reasonable prudential maxim may be that governments ought to consider the functional virtues as well as limits of markets and tailor their interventions to work in interaction with markets and in consideration of their functional requirements and carrying capacities, to the greatest extent possible.” The idea that “governments” can regularly operate is such a rational, apolitical, and socially-upright way is itself based on fantasy. This is simply not how policy is made.

By: Sebastian Holsclaw

Sebastian Holsclaw — Thu, 25 Mar 2004 17:45:12 +0000

“it is equally true with respect to market participants as with respect to government agencies, though, in fact, government agencies would probably have the where-with-all to gather together expertise and information to a greater extent than private agencies.” No it is most certainly not equally true. My point is that no entity can gather the information that you require. No company can, no government can. The ‘market’ is millions of individual and self-grouped actors making decisions based on their own interest, their own costs, their own needs, and their own desires. And in none of those catagories does the government know better for most of the people. These personal needs, desires, costs and interests are fulfilled by doing something that other people are willing to pay for. People are willing to pay for things based on their own needs, desires, costs and interests which they balance out for themselves. There is no agency, public or private, which could possibly gather the ‘expertise and information’ necessary to take even a small fraction of that into account. What we call the market is really just the aggregate of billions of free choices. You do however locate the key leftist contention: “So the claim that any governmental intervention in the operations of markets is detrimental to the inarticulate wisdom of their seamless functionning bears a considerable burden of proof.” You don’t believe in what you dismissively label ‘inarticulate wisdom’, and you certainly don’t believe that it could lead to better outcomes than those that could be dictated by government officials. But that is precisely where you are wrong.

By: Kikuchiyo

Kikuchiyo — Thu, 25 Mar 2004 11:21:08 +0000

For a related bit of empirical evidence, may I suggest this post at Truck and Barter? Short version: Microsoft may fall prey to Walmart’s aggressive policies viz suppliers.

By: john c. halasz

john c. halasz — Thu, 25 Mar 2004 10:24:37 +0000

Mr. Holsclaw: No one in there right mind would argue that governments should micro-manage economic affairs or that the operations of markets and private businesses do not have a large role to play in the management of economic affairs. The point of the “unsurveillable” remark is that, if it is true with respect to the economy as a whole, it is equally true with respect to market participants as with respect to government agencies, though, in fact, government agencies would probably have the where-with-all to gather together expertise and information to a greater extent than private agencies. But your account of markets amounts to no more than a blind faith in them. And your articulation of their operations as purely a matter of individuals rather than of organizations is likewise unrealistic. The argument for markets is not that they don’t make mistakes,- they do and often large ones-, nor that they are perfectly self-correcting and self-equilibriating, for history has proven that this is often far from the case, but that they tend to reduce the size, scope, and duration of errors and it is from their functionning as an error-reduction mechanism that they produce their relative efficiencies. (A functionally equivalent criterion could be applied to evaluating the efficacy of government operations.) But markets, as well as tending to periodically short-falls in demand through their own operations, also generate significant externalities, such as pollution or social dislocations, and underprovisions, since markets tend to produce for consumer demand in accordance with the inverse proportion to the marginal utility of additional income, and to generate concentrations of market power that impede and distort their effective operation. And there are any number of public goods, ranging from health care and education to infrastructure and utilities, where public provision is arguably to be preferred. So the claim that any governmental intervention in the operations of markets is detrimental to the inarticulate wisdom of their seamless functionning bears a considerable burden of proof. A more reasonable prudential maxim may be that governments ought to consider the functional virtues as well as limits of markets and tailor their interventions to work in interaction with markets and in consideration of their functional requirements and carrying capacities, to the greatest extent possible.

By: Sebastian Holsclaw

Sebastian Holsclaw — Thu, 25 Mar 2004 08:27:43 +0000

“if governments have limitations on their information-processing capacities, then so do markets, for, if markets are conceived as a dispersed information-processing mechanism, then this logically would mean that they are unsurveillable, as such, and the precise effects of the incentives can not be known.” What does unsurveillable have to do with anything? Just because you can’t articulate how something works does not mean that it fails to work. The fact that precise effects of governmental incentive deformations can’t be known is exactly why government needs to limit its involvement. The idea of the market is that indivduals typically understand individual things about their lives and jobs and needs that are not well understood by governments. They understand how to replace scarce goods with not so scarce goods better than any government worker could. All this is coded into prices quite neatly. “…that there are just as many situations where government looking the other way will get you into even more trouble.” I specifically do not believe that there are just as many such cases. The cases where we are better off with lots of government intervention are quite limited. But on the other hand I suspect that you would have trouble identifying a handful of cases where you will admit that government intervention is less than helpful. So I have to be skeptical about your rhetorical even-handedness.