Re: [OPE-L] oligopolies and consumers: a response to Murray Rothbard's apologetics

From: glevy@PRATT.EDU
Date: Wed May 02 2007 - 09:57:49 EDT

>>>The question is whether the natural monopoly’ virtues might be isolated
from the prejudices it shows under capitalism. Its virtues concern the
technological progress due to the upper average profits attracting
rival capitals.<<<

Hi Alejandro:

What is the empirical evidence which shows that monopolies and
oligopolies have a great concern for technological progress? In an
oligopolistic market with product differentiation the emphasis is
generally on promotion (advertising, marketing) rather than on
developing technological breakthroughs and engaging in price
competition.   Furthermore, entry into such a market is generally made
possible not by technological progress but by promotion (and, of course,
large sums of money capital to open operations and/or merge with other
firms already in the market).

>>> Maybe Rothbard couldn’t sound convincingly for you. What do you think
about the following quotation from a market socialist? […] for it
remains to be seen whether buyers will accept the price for the given
supply and thus confirm the correctness of the suppliers’ decision or
will force a change of the market by putting to the seller the
alternative of either reducing the price or renouncing the sale of
part of the supply. The theory of monopoly, as elaborated through
decades of economic study, recognizes that even private monopoly need
not necessarily pursue an oppressive price policy. Eduard Heimann
(1934): “Planning and the Market System”, Social Research, vol. 6, pp.
486-504. <<<

I agree that "it remains to be seen".
As for the validity of the claims of  the  mainstream theory of monopoly,
that also "remains to be seen".

Since Heinmann wrote his article, there has been some relevant experience
in  "socialist" nations such as Hungary and the former Yugoslavia which
highlight how social problems can occur with at least a certain kind of
"market liberalization" and "market socialism".  For instance, in Hungary
there was the experience of  "departmentalism" which could be seen as
undermining the socialist principle of solidarity.  In Yugoslavia, you had
double-digit inflation (as well as high rates of unemployment) for extended
periods.    If one wants to consider  the actual possibilities for
"feasible socialism"  (Nove), it is more important, in my view, to examine
actual historical experiences than mainstream economic theories.

In solidarity, Jerry

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