OPE-L message, Re: [OPE-L] oligopolies and consumers: a response to Murray Ro

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Dear Jerry:

I completely share your appreciation of the bad consequences of Wal-Mart monopoly. My Marxists friends usually forget that my defence of market doesn’t mean the defence of capitalism. 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.

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.

Best regards,

Alejandro Agafonow

----- Mensaje original ----
De: Jerry Levy <Gerald_A_Levy@xxxxxxx>
Para: OPE-L@xxxxxxxxxxxxxxxx
Enviado: domingo, 29 de abril, 2007 1:51:55
Asunto: Re: [OPE-L] oligopolies and consumers: a response to Murray Rothbard's apologetics

Hi Alejandro:

Rothbard's argument is, quite frankly, a laughable defense of

monopoly power by oligopolies. The lack of a boycott does

not signal "consumer satisfaction with the existing state of

affairs" (!) and how they allegedly "benefit .. from voluntary

exchanges": it rather demonstrates the relative *lack of consumer

choices* in an oligopolistic market. Consumers know that if they

boycotted one huge corporation then it would only work to the

advantage of one or more other huge corporations. Thus to target

Wal-Mart (as some have tried, see the movie "Wal-Mart: the high cost

of low price") would benefit Target and K-Mart and other

mega-corporations.

As the above referenced movie shows, huge corporations (in this

case, Wal-Mart) have enormous resources with which they use to

influence state policy and abuse consumers (as well as workers,

domestically and internationally, the environment, etc.). For instance,

there have been hundreds of physical assaults (including homicides)

on consumers in Wal-Mart parking lots. An internal study found, if I

recall correctly, that 80% of these crimes were preventable but

Wal-Mart didn't want to spend the (relatively small) additional money

required for security. (Many stores have video cameras directed at

the parking lot but they were installed, as the movie shows, *to help

prevent unionization!*). To say that the lack of a boycott or a successful

boycott demonstrates consumer satisfaction with the "existing

state of affairs" is apologetics for transnational capital.

In solidarity, Jerry

I think the Austrian economist Murray Rothbard (Man, Economy and State, Ludwig von Mises Institute 2004) was right when facing your statement:

If the consumers were really angry at this “monopolistic action,” they could easily make their demand curves elastic by boycotting the producer and/or by increasing their demands at the “competitive” production level. The fact that they do not do so signifies their satisfaction with the existing state of affairs and demonstrates that they, as well as the producer, benefit from the resulting voluntary exchanges. (pp. 634)