Private Monopoly in the Industrial Era

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This topic contains 1 reply, has 2 voices, and was last updated by  Jacob 4 months, 1 week ago.

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  • #628

    Spooner Bookman

    @jacob is having a convo over on reddit and asked for thoughts, so here goes: if your thesis is incorrect, it should be turbo easy to demolish it — one example of a monopoly gained without government aid (during the time period in question) and the debate is over. Should be easy work for your opponent!

    The first argument/evidence is Microsoft, which you handle easily by demonstrating it never achieved anything like a real monopoly. The rebuttal was that Microsoft achieved a near-monopoly for maybe 10-15 years, and that’s close enough. You rightly counter that temporarily reaching a more prominent position in an industry due to successfully serving people better than anyone else is compatible with your thesis and not evidence against it. I’d say Jacob 1 – AnCom 0, no assistance needed.

    The next argument is that Facebook makes it difficult for any competitor to attract users, since all their friends are already on Facebook. You correctly point out that network effects are only a problem in a minority of industries, and further, Facebook doesn’t charge its users money for using their service, which is different from most industries. The reply was to conveniently sidestep your argument and argue instead that Facebook stifles new entrants via the exploitation of network effects. (At least, I think that is the argument — just between us girls: your opponent is fairly incoherent at times and I had a hard time making out their point here.)

    I think your weakest response was on this Facebook point, so here’s where I’ll offer the most comments:

    A point you hinted at but might be getting overlooked is that Facebook’s users are not its customers. From this angle, the argument that Facebook is representative of a monopoly can be roundly defeated: Facebook is a media company and must compete with other media companies ranging from TV and film to newspaper and magazines, and so many thousands more besides. Furthermore, Facebook is nowhere near the largest or most financially powerful in their industry — just consider Disney, Viacom, Fox, etc. Further still, from the rather narrow perspective of ‘social media’ alone, Facebook still competes with Reddit, SnapChat, Twitter, LinkedIn, Pinterest, etc. To consider Facebook a ‘monopoly’ or even a ‘near-monopoly’, even in JUST the world of social media is to relax the standards of ‘monopoly’ to the extent that is no longer useful for meaningful analysis, and again, roundly defeated from all sides.

    Regarding this notion that Facebook somehow uses ‘ecosystem/network effects’ to stifle communication, it’s not like Facebook (or anyone) created network effects, and it’s not something Facebook (or anyone) can use to stifle competition as it is not something that can be ‘used’ at all. Claiming the opposite is akin to saying United Airlines uses gravity to prevent people from starting a competing airline. (It’s just so hard to FLY, it’s not fair!) Furthermore, regardless of the origins of network effects, how would Facebook solve the network effect problem for the social media industry? Should they purge a portion of their users?

    I think it’s safe to say it’s 2 – 0 in favor of your thesis.

    For all the talk on this point, the simple fact is that an example of a potential maybe-someday-in-the-future monopoly — e.g., Amazon — does not disprove your thesis. Only an example of an actual monopoly would disprove the thesis, and to really prove your specific thesis wrong, we need to see an example from the time period in question. Amazon, Facebook, and Microsoft clearly fail this last criteria, but I think you’ve argued correctly that they don’t even represent monopolies in their respective time periods. 3 – 0.

    You’re spot on in point out that railroad monopolies were in fact State monopolies. At least your opponent got the time period right for a change! 😉

    That’s 4 – 0, Jacob’s thesis for the win.

  • #632


    Thank you for your feedback, Spooner! I was a bit discouraged by the downvotes on Reddit, so I am glad that someone at least thought I was doing a decent job of conveying what I wanted to say.

    The conversation on Reddit has gone off the track of the thesis I had made the thread to discuss, though, and on towards topics that I want to write about more in depth in blog posts. Perhaps I will receive interesting feedback on any such posts that I write, both from my friends here and from those I’m talking with on Reddit.

    • This reply was modified 4 months, 1 week ago by  Jacob.

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