I mentioned recently that capitalism fails when consumers don't have the chance to make informed choices between desirable options. Monopolies are one example of capitalism failing. Monopolies have virtually no competition and can dictate prices to their customers unless they are restricted by regulators. The customer either has to pay the price demanded by the monopoly or not receive that good/service.
Monopolies can lose their control through a number of mechanisms including government intervention (AT&T break-up, Teddy Roosevelt's Trustbusting days), competition from a new product in a related market, new competitor with an innovative product in same market or shifting customer needs. For example, while owning more than 90% of the market for black and white TV's would have been a tremendous asset when my dad was growing up, the market shifted.
One company that many would call a monopoly is Facebook. Facebook dominates the online social media world with only a few small competitors creeping up around the edges. So far Facebook has wielded its power mostly through its ever-changing privacy settings designed to open up consumer information to companies so Facebook can increase its advertising revenue. Customers who don't want this personal information broadcasted widely either need to stay offline, become an expert on the ever-changing privacy policies or avoid Facebook, since this monopoly in social media gets to set its own rules until a viable competitor enters the marketplace, and no, I am not betting that MySpace will have a comeback. For those surprised about Facebook's desire to loosen privacy settings to improve their profitability, they should recall that (1) this a for-profit company that needs to make money to survive, not a public service designed for reconnecting with long-lost friends and (2) whenever you post something online, you are inviting the world to view it with all the benefits and problems associated with information sharing.
Another company that many have labeled a monopoly is Microsoft, who dominates the PC operating system with 90% of the market. This market dominance has allowed Microsoft to gather major profits while also enabling them to expand into other areas of the computer market including browsers (recall their famous antitrust case with Netscape) and software such as the Microsoft Office products. Many people report that Microsoft's dominance and market capitalization are waning. Innovations and changing customer needs are shifting people away from traditional PC's and laptops as computer users gravitate to advanced mobile phones, cloud computing, iPads and other new technology.
Lastly, let's chat about my local situation. Where I live, there is only one provider for cable television. For years, you could either chose to purchase one of their packages or not have cable. The consumer had virtually no choice, as best paraphrased by, "you can have any color car you want, as long as that color is black". Much like Microsoft, my local cable company's strength is waning. I can now access the internet easily via my cell phone and can watch many cable TV shows with a short delay either online or through Netflix.
Monopolies reduce customer choice, but in some areas such as technology, they eventually can be overcome by the market forces themselves. But, during the time it takes for capitalist forces to catch up to the monopolies' power, the customer usually suffers.
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The goal of a corporation is not to keep a market free, but to close it in their favor. The more money and power the corporation gains, the more it is able to buy up or destroy the competitors in its marketplace.
The American market of today is made up of some monopolies, but mostly oligopolies who are friendly competitors and don't really compete.
"Basic principles of oligopolies:
-All industries tend toward oligopoly.
-Being #1 is great, being #2 is good, being #3 is difficult, being #4 or higher is a losing game.
-Oligopolies are safer from regulation than monopolies.
-Oligopolies are tempted to go vertical.
-Oligopolies are tempted to go horizontal.
-Oligopolies are tempted to go multinational.
-Members of oligopolies tend to converge.
-Oligopolies offer pseudo-variety.
-Members of oligoplies are friendly enemies.
-Oligopolies watch their flanks, fearing disruption.
- A key source of disruption is a shift in the competition matrix.
-Acqusitions cause other acqusitions as a buying panic results.
-Oligopolies buy up innovators or steal their ideas and put them out of business.
-Oligopolies lead to oligopsonies.
-Oligopolies collect and discard brands like a gin rummy player.
-Only the big can serve the big.
-Oligopolies try to master three basic forces: shelf life, shelf space, and mind space.
-Oligopolies tend toward oligonomy"
http://www.oligopolywatch.com/stories/2003/04/21/basicPrinciplesOfOligopolies.html
http://www.huffingtonpost.com/howard-steven-friedman/gentlemens-agreements---w_b_635198.html
In any event the USA is the world's shining example of a Capitalist's Paradise. Millions out of work, because businesses wanted to improve the bottom line by looking around the world for the losest wages possible and shipped the American economy overseas. Millions of families losing their homes because business decided that instead of a middle class it was better to kill trade unions and employ people in slave wage countries to further enrich themselves. Tent cities springing up like mushrooms all over the USA. Prisons full to overflowing. Totally corrupted governments, federal, state and local.
In short a Capitalist Paradise is great for the 1% of people in the country who are capitalists, for the other 99% it is little better than Bangladesh. Americans ask where their country went? The answer? Greed took it all away. The greedy capitalists stole it from you while you were sleeping in front of your TV sets watching those wonderful TV adds that told you how great you had it. Well now you really know what they were talking about, and it had nothing to do with prosperity for the average American family.
In short, there will not be a full recovery until main street gets a big enough piece of the pie to fuel it. Only then will we have the economic strength to stimulate other economies without committing fiscal suicide.
If the same thing happened with today's anti-trust enforcement, IBM would have created and kept both the manufacturing of the PC and the operating system and you would still have IBM dominating the computer industry. And Bill Gates would just be some nerd computer repairman working for IBM. Actually Microsoft didn't even write the operating system for the IBM PC.
"The "Microsoft Disk Operating System" or MS-DOS was based on QDOS, the "Quick and Dirty Operating System" written by Tim Paterson of Seattle Computer Products, for their prototype Intel 8086 based computer.
Microsoft bought the rights to QDOS for $50,000, keeping the IBM deal a secret from Seattle Computer Products.
Gates then talked IBM into letting Microsoft retain the rights, to market MS DOS separate from the IBM PC project, Gates proceeded to make a fortune from the licensing of MS-DOS."
http://inventors.about.com/library/weekly/aa033099.htm