Home / David W. Cooney / Capitalist Monopolies vs Distributist Guilds

 

When distributists advocate the institution of local guilds to eliminate monopoly, some supporters of maintaining the monopolistic status quo claim that doing this would result in lower quality, fewer options for the consumer and higher prices. One reader claimed that the real reason distributists want to re-establish the guilds is to eliminate competition, thereby allowing less qualified people to stay in business even though the above would be the result. These detractors point to real historical examples to support their claims about the results of implementing guilds, examples like regulatory capture and state enforced labeling requirements that blocked the importation of goods.

These can sound like solid arguments against our position, but they all suffer from one fatal flaw; they are actually examples of how Capitalism creates a situation where big-business powers can manipulate state authority. For example, one reader linked to an article on regulatory capture and asserted that this would happen even more under Distributism. The article provides examples from several countries, and every one is an example of how big business (a capitalist phenomenon) uses economic and political power to get government regulatory agencies to implement state-wide policies for their own benefit. The problem with associating this with Distributism is that, because Distributism would replace big businesses with smaller businesses and decentralize regulatory authority as explained below, distributist guilds would not be able to effectively implement such schemes.

The challenge which this reader and others have presented is for distributists to explain why we believe the economic situation would be different if Distributism were to be implemented. Can we muster arguments to show why Distributism would not result in lower quality, regulatory capture, high prices and fewer options as claimed by these detractors? Let’s examine each claim in turn.

Would the Guild System Result in Less Qualified People Producing Lower Quality Products?

The main argument about quality is that the guilds will be able to establish protectionist regulations that will allow less qualified people to stay in business even through the quality of their work is lower. However, the guild system advocated by distributists is modeled after the medieval guilds. Historically, medieval guilds were known for the high quality of their work and I see no reason why it would not be the same today. The medieval guilds ensured quality with the apprentice–journeyman–master structure wherein the craft guilds maintained their high standards and trained those who wished to enter the craft. Merchant guilds imposed strict business standards to try and protect the consumer (and therefore their businesses) from unethical practices. The only real difference between these systems and what we have today is the authoritative agency granting the license to do business; the guild effectively replaces most functions of the city/county/state regulatory agencies with a single local authority directly answerable to the local community.

Would this guild system force the local customer to accept low-quality goods? While the distributist guild system would prevent remote producers from opening local shops and selling directly to the local community, local merchants would be free to import and sell remotely produced products. What if a guild attempts to thwart this by establishing restrictive regulations to block local merchants from selling those products? There are two problems with this idea. The first problem is that one guild cannot regulate another. The second is that, even if they could impose such a regulation, it would only be enforceable within the local community.

Distributism prefers the locally produced product, but it does not require it even in the face of poor quality or unjust behavior on the part of the local producer. If the locally produced products are of low quality, the local merchants would seize the opportunity to increase their own sales by importing better quality products from other areas.

Regulatory capture only works when the regulations can be imposed on a large enough area to make obtaining alternatives so difficult that it’s not worth the effort. Because the scope and range of authority of the guilds would be limited to the local community, citizens will likely consider it worth the trip to the next town to buy a better product. Remember that distributist guilds would be comprised of local small businesses. Protectionist regulations would end up hurting members of other local guilds and the local community in general. Small business cannot afford to upset the local community on whose custom they depend to maintain their livelihood. Therefore, the only real option under Distributism would be for the local guild members to produce high quality products.

Would the Guild System Result in Price-Fixing or Higher Prices?

Price fixing is a practice used by cartels comprised of big businesses exerting control over a market. It only works if they collectively have a monopoly in a large enough area to make the fixing of prices effective. As is the case with protectionist regulations, the inability of a guild to fix prices beyond its local community would effectively prevent them from engaging in this practice. Additionally, the fact that you have to have a larger number of willing participants could make it more difficult to accomplish. The real point here is that price-fixing cannot be used as an argument to stay with Capitalism over Distributism because it is easier for a few big businesses to fix prices under capitalism than it is for groups of small businesses to do so under Distributism. Even if multiple guilds attempted to team up to fix prices, government would still be able to correct this abuse as it currently can under Capitalsim.

One of the factors that determines price is the labor cost of production. Because distributism would effectively curtail certain options currently used by capitalist monopolies – like firing local workers to employ workers in other countries for slave wages in slave conditions – it is true that prices on some products could be higher. However, this will be curbed by the increase in local producers. Additionally, the implementation of subsidiarity will tend to reduce the tax burden as local communities implement less costly means to substitute for the current level of wasteful big-government programs.

Would the Guild System Result in Fewer Options?

Under our existing capitalist monopolies, huge businesses buy out or undersell the local competition. The need for their product or service can no longer be met by local providers which means that buyers effectively have little choice other than those the monopoly chooses to offer. In my own area, a very large local dairy stopped milk production because they could not compete with the high volume farms from other states. The big chain stores that once carried the local product switched to the cheaper product trucked in from out-of-state. Capitalism not only reduced our options in regard to locally produced milk, but put many local people out of work. This is how capitalism works, and it can have wide-spread consequences. The same thing has happened in manufacturing and even to some aspects of the service industries in cities throughout the country.

Under Distributism, huge chain stores and franchises could not qualify for the local guilds; they would be replaced by smaller locally owned and managed stores which would have an incentive to support local farmers. The need for more local farms to provide for the needs of local cities would result in more farmers. The increase in local farmers and the lack of centralized corporate control over the business would mean more variety and more options. The same principle applies to manufacturing.

Conclusion

The overall result of monopolistic capitalism has been less competition, less variety, lower quality, the loss of local jobs and less power for the people to do anything about it. When big business leaders lead an economy to the brink of economic disaster, the government deems them “too big to fail” and bails them out at the expense of the general public. Monopolistic capitalism has resulted in the shift of economic power and influence away from the average citizen and big businesses use that power to gain advantages not available to citizens or smaller businesses. How exactly has this protected the consumer?

The guilds envisioned by distributists consist of small local businesses. Small businesses cannot afford to make enemies of the local community upon whose custom they depend because it is easy for their customers to go outside the community to get better quality or prices. This means the local producers must either produce good quality products at competitive prices or go out of business. Therefore, the small businesses of the local guild under distributism are simply not able to establish the same kind of protection schemes as have been done by big business interests and monopolies under Capitalism. This would tend to prevent local guilds from being too restrictive in their regulations, from having low standards for quality, and from having unjust prices, would it not? Since wide-spread monopolies cannot be formed, there will be producers and service providers wherever there is a market to support them. The result would be the opposite of what our detractors suggest. Research and development could be collectively funded by the guilds for the benefit of all members instead of exclusively funded by single businesses as is done under Capitalism. Distributist guilds would provide more competition, more variety, better quality, and more true economic power for the people.

 

About the author: David W. Cooney

 

David W. Cooney serves on the Editorial Board of The Distributist Review. His articles have appeared in Gilbert Magazine and he has also contributed to The Hound of Distributism, a book of various authors. Originally from Southern California, he now lives with his wife and two children in Western Washington state where he works as a network administrator.

 

Recent posts in David W. Cooney

 

49 Comments

  1. Stephen Peterson

    Great argument David (as always!) I’m certainly more confidant with the idea of promoting distributist guilds as an alternative to the capitalist system.

  2. Hmmmmm.

    Show me a capitalist monopoly.

    t

  3. Good arguments. I wonder how standards and standardisation would work under a purely distributed guild system.

    It used to be royal charters and decrees that set arbitrary standards. Now we have standards bodies which employ clever people who fuss over a standard for years to get it right.

    At the moment US businesses implement standards by momentum, guild systems in the past have implemented them by force. Much as the EU does now. Closed standards are to be avoided, but how would guilds prevent themselves from generating closed standards?

  4. “In my own area, a very large local dairy stopped milk production because they could not compete with the high volume farms from other states. The big chain stores that once carried the local product switched to the cheaper product trucked in from out-of-state.”

    Call me a distributist neophyte; here’s what I don’t see addressed in your article. Big business can sometimes offer lower prices than local businesses not just because of abuse (slaves wages, etc.) but also because bigger scale can itself lower costs. (Obviously, this becomes increasingly true as government regulation gets bigger. But take out a big regulatory structure and you still have lots of baseline costs that scale can take advantage of.) This isn’t necessarily damning, but it does admit that, yes, you lose the advantages of scale — hopefully the gains will be greater overall.

    Am I missing an important link in the distributist chain of reasoning?

  5. So, what exactly makes the distributist guilds local? Why couldn’t they morph into something like we see now in the AFL-CIO, for example?

  6. Pingback: MONDAY AFTERNOON EDITION | ThePulp.it

  7. Dear Tom,

    I am sure that whether speaking of monopolies or oligopolies, we can certainly pinpoint food companies like Monsanto or Dupont, clothing retail companies like Target, Wal-mart, and the GAP (owners of Old Navy, Structure, Banana Republic, Piperline, and Athleta), office supply stores like Staples and Office Max, or, in service, the merging of Delta/Northwest/Air France and Continental/United.

  8. @Jeremiah – They’d be chartered specifically to disallow them from acquiring, merging or otherwise creating/joining oversight organisations.

    @John R – Economies of scale do exist, but they have to be well understood before you can quantify how the work-flow costs are effected. Some examples: the difference between working one cow with an expensive machine and working ten cows with the same machine, saves you investment costs and labour costs (since your labour isn’t just sitting around). On the other hand if your economics of ‘scale’ are because you’re the only employer in town and so employees have to accept whatever wages you’ll pay, then it’s economies of control instead.

    Interestingly the most productive increases in ‘scale’ I’ve seen seem to stem from increased education, organised work-flow management and basic standardisation of best practices. When everybody has a farm with poor tools and no one is educated, it’s not very productive. Give everyone education and regular ways to improve their own standards of working and they too could reach many of the scale economies but distributed.

    On the other hand if you’re making washers, it’s probably a good idea to make a few million of them a day, but the general rule of thumb is that if your business needs more than 50 people, it’s probably too big.

  9. David W. Cooney

    Tom – Microsoft

    Jeremiah – I will read the article you linked as soon as I get the chance. I have written another which attempts to address your question. http://distributistreview.com/mag/2011/01/quis-custodiet-ipsos-custodes/

    John R – It is quite true that not all low costs are the result of the level of abuses I mentioned. However the economics of scale do tend toward the same end – a contentious relationship between management and worker and management attempts to get the absolute lowest cost for labor possible, even at the expense of firing local workers in order to move jobs to a cheaper location where they can pay less or provide fewer benefits. The benefits of large scale production are always for the profit margin, not for the employees. Some argue that this is also a benefit for the buyer but, since the buyers are overwhelmingly employees, as corporations grow, they have less and less to spend. http://distributistreview.com/mag/2010/11/justice-fairness-and-taxation-part-one/

  10. David W. Cooney

    Martin,
    I don’t see any reason why the basic structure of the international standards organizations could not continue. The difference would be the ability of high-level government to impose those standards with the same kind of absolute authority it has today. Standards would certainly still be followed – especially by those companies that want to sell abroad. Instead of government involvement in approving standards, guild organizations would be more involved. That would help avoid the criticisms that things like the recent passing of the OOxml standard. http://www.theregister.co.uk/2007/08/29/microsoft_ooxml_sweeden_rigged_vote/

  11. David W. Cooney

    John R – I have often heard that the gains of centralized high volume production are greater than any perceived loss. I suppose that can be a matter of opinion. Clearly I am one who disagrees with that assertion. http://distributistreview.com/mag/2010/08/a-problem-with-over-centralizing-production/

  12. @David W. Cooney – No need to tell me about OOXML, Microsoft’s bribery of foreign governments. I use that little factoid as proof that anyone stupid enough to buy Microsoft, buys world corruption.

    Something I’d hope the guild of computer software developers would not allow.

  13. David W. Cooney

    Martin,
    Within the software realm, I would expect something very close to what is currently done for open source software – if not simply joining those organizations already existing today.

  14. I would not be so sure that the capitalist monopolies identified will persist for as long as we think. China is changing the world.

    There are a couple of areas I would highlight.

    First, abundant capital. The world is no longer short capital – in 19th and 20th centuries capital was scarce and very concentrated. Labour was abundant and so unions and guilds were required to regulate capital’s behaviour. Today, capital is abundant, why are long term interest rates so low? The Fed’s not buying too far out the curve but the Chinese, oil states etc are. Labour is actually the scarce resource, truly. (The problem is policy – policy is killing economic demand in the US).

    Abundant capital means abundant competition, less monopolies and lower prices. Think Nortel, put out of business by the Chinese or Amazon competing directly on price with Wal-Mart. Think Southwest airlines and other low cost carriers. Mnay can now achieve scale, the trick is achieving a product that people want, which is where labour is so important, see Apple.

    Second, China hates monopolies more than you do. China refuses to protect copyright, not because it wants to take jobs, but because it wants to eliminate producer surplus. The carrot of innovation has become the stick of innovation – if you don’t innovate you go out of business. If you don’t believe me, see the returns in the Chinese stock market – despite 10% annual economic growth the Shanghai exchange has done 5% per annum since 2000 (20% from the low in 2005). Monopolies make excess returns (see India where it’s 12% since 2000) competitive markets don’t.

    Guilds are a backward step – they would raise the cost of goods for households and be uncompetitive. It would be much more useful to take advantage of abundant capital to create more proper competition, lower returns on capital and pay labour more.

  15. I would also say that guilds may have an important role to play all the same, just not as the building blocks of the economy.

    Globalisation creates localisation – the cost savings created by scale create opportunities for others to offer higher quality niche products. Mystic Monk Coffee is a great example – the transport network enables an isolated coffee roaster to sell competitively around the world.

  16. So, for DR writers a “monopoly” is any business entity other than a Guild having pricing power or multiple locations. Microsoft is a monopoly because it sets a price ceiling for computer operating systems and other software; GAP is a monopoly because it has multiple locations and brands even though it has no pricing power. Does that get it?

    Does “Distributism” mean “Guild System” to DR writers?

    t

  17. Tom,

    You can call us what you will, but every writer from Belloc to Penty, from Chesterton to Henry Somerville advocated the restoration of the guilds, so if you wish to argue the merit of a guild system, fine. But please spare us the “DR Distributists” nonsense, as if we are advocating something alien to the early movement.

  18. David W. Cooney

    Tom,
    We are using the same meaning of monopoly as is generally accepted by societies around the world today. A monopoly is a company that has sufficient power to control a market. The average person who thinks himself a capitalist believes the continued existence of competition – real competition – is good for the market. A capitalist monopoly uses its position as a monopoly to engage in anti-competitive behavior – to eliminate competition in order to gain an ever greater share of profit. These behaviors are common and have been frequently been sited at our site, as well as at those sites advocating for small and independent businesses.

    Your statement about Microsoft is a perfect example. Their products are adequate, but certainly not the best. The evidence that led to their losses in anti-trust suits all around the world show that we are right about the nature of capitalist monopolies. When they lost a patent suit recently, they actually argued that they should be allowed to violate that patent because of how big they are! The power they have demonstrated in those cases – including arm-twisting the US government to allow them to set the terms of their own punnishment – show that we are also right about the corrupting nature of capitalist monopolies.

  19. David W. Cooney

    James,
    I don’t believe that the current monopolies will necessarily last. Capitalism is unstable by its nature so there will be constant fluctuation. What you seem to miss is that we believe the current monopolies will be replaced by new ones that are just as bad. They won’t be replaced by a larger number of smaller companies, resulting an a wider distribution of capital. It may look like that in the short-run, but that will quickly fade as companies buy each other out or otherwise eliminate their competition. That is the nature of capitalism.

    You seem to believe that a return to the guild system would stifle innovation. We have already addressed why this is wrong. Useful innovation can easily occur within a guild system as it did in the past. The medieval guilds were constantly researching new methods of doing things – and sharing their findings for the benefit of all.

  20. Friends,

    This weekend I will add a series of books by Arthur Penty to our “Classic Reading” section on the site (under “Resources”), available free for download.

  21. Stephen Peterson

    Richard,
    Are you able to make those available in an eBook format, like ePub?

  22. I didn’t think you could have a mismatch between capital and labour. Unless you’re talking borrowing and idleness, two scourges of depressions.

    If there is an abundance of capital, I don’t see it. I’d rather say the opposite; that at the moment banks aren’t lending capital and there is a dearth of it.

  23. David W. Cooney

    James,
    The modern distribution network and the internet are not incompatible with Distributism. As I have repeatedly stated, there is nothing wrong with making your products globally available. My issue is with the methods accepted and used by Capitalism to do so.

    If Mystic Monk can produce coffee that is in demand and can sell and distribute it all around the world using the internet, that is great. If they can get a local retailer to sell their product in my town, that is great. It illustrates my point that local producers must maintain high quality in order to remain competitive in a distributst scenario. The principle of “the economy of scale” is not in itself incompatible with Distributism. It only becomes so when the methods involve injustice, as is too often the case with capitalist monopolies.

    Increasing the number of suppliers, establishing strong local economies and protecting them from being dependent on one huge corporation, not having to rely on remote or foreign producers for the basic needs of life as well as for the niceties we all enjoy. These are the goals of Distributism. These are the things against which Capitalist companies all fight as they grow larger. Those that are successful become monopolistic powers.

  24. @Richard, I hadn’t intended an “as if”; I’m looking for what the scope of your (collective) thinking is. I want to know the extent to which other modes or instrumentalities of distributed ownership are foreclosed under the banner “Distributist Review”. I am not against the Guild idea, and I hope I am not seen as a “detractor”. I do want some concreteness.

    @David, So what’s Distributist remedy for the “problem” of the Microsoft Monopoly? Shall we require Microsoft raise its prices to allow the producers of software you purport to be better a “fair” chance to be considered? Shall we ban all FOSS software for the same reason? I think this exactly is what a Guild would do.

    It is difficult for me to understand a Distributist objection to Microsoft. A long time ago in a galaxy far, far away, one guy created a brilliant tool for programing microcomputers that a hobbyist could afford, and sold it out of the back of magazines. He dropped out of college and teamed up with a buddy of his and they went looking for other opportunities. One came along, and they hired a few more guys to adapt and extend a truly stupid program loader and file system to work on a crippled hardware platform nobody (including its builder) except for those five guys thought would amount to anything. Instead of selling their work to a huge corporation (IBM), they kept ownership of it themselves. They became wildly successful doing what they do: write and distribute software for small computer systems intended for what we called back in the day “interactive use”.

    Microsoft have done more to promote competition in computer hardware, software and services than any company in history. Ever. In an important way, Bill Gates and Microsoft CREATED the software industry as something separate from the computer hardware industry. This in turn created a huge number of small businesses. Microsoft even created Linux — without cheap, powerful, consumer grade hardware around to tinker with, there’d be no Linux, and without Microsoft there’d be no cheap, powerful, consumer grade hardware around to tinker with. I witnessed it all, up close and personal.

    If you want to talk about monopoly, I’m puzzled you didn’t say “Apple”. Try to buy MacOS without a Mac. Or a Mac without MacOS. Try to be an “independent” Apple dealer (I looked into it, it isn’t pretty). Try to install ANY program on your iPhone without going to Apple’s retail store and giving them a 40% cut, no matter who actually wrote the program. Apple’s monopolistic behavior for the past 30 years has made Apple a niche player in general purpose computer systems. Fortunately for them Steve Jobs is a UX (User eXperience) genius who saved them by making a very nice special purpose computer to play digital music, and then by making a little tiny computer into a very nice Multipurpose Portable Electronic Assistant and Telephone. Otherwise they’d be dead. Apple would probably be more profitable to drop the Mac entirely and donate the code to the Free Software Foundation. It’ll be interesting to see what happens when Jobs isn’t in charge anymore.
    Here’s a Distributist objection to Microsoft: Microsoft’s success was fueled in part by other small teams of programmers consciously planning to be acquired by Microsoft in order to distribute their software. They’d get far, far more for their work selling it to Microsoft than they’d ever get trying to sell it on their own. Visio is a prime example. They were in essence “joining the Microsoft Guild”. A Distributist might object that Microsoft ought not be allowed to buy software to re-sell, perhaps because the power imbalance gives Microsoft the ability to under-bid (even though the seller is still much better off that going it alone).

    A Guild might create its own distribution mechanism and the Guild members would fight internally over the division of the proceeds. That at least would keep the fight out of the courts. It is less monopolistic in that all producers have equal access to the distribution channel. I am not sure that actual outcomes for buyers would be much different and could easily be worse: the Guild would be doing exactly what Apple is doing. Bill Gates’ and Steve Ballmer’s personal fortunes might be half the size they are. Perhaps a tenth the size. The rest would be distributed among the other Guild members roughly according to their contributions to the Guild. Lawyers would be poorer, especially government anti-trust lawyers. That would be good.

  25. Good read! Earlier I’ve read much about Austrian economics, but have now decided to also take a good look at Distributionism. Though, I have a few questions. In this article you wrote:

    “..they are actually examples of how Capitalism creates a situation where big-business powers can manipulate state authority.”

    Would you say that huge corporations ex. Coca-cola, are a result of Capitalism?
    I know many “Austrians” would say that we haven’t had a truly capitalist state in quite some time, and that huge corporations are a side effect of capitalist states gone keynesian. Jacob Spinney brings up some similar points in this video:

    http://www.youtube.com/watch?v=eO8ZU7TeKPw&feature=related

    Would be grateful if I could hear your take on it.

  26. David W. Cooney

    Tom,

    (If this appears as one long paragraph, I apologize. My typed line breaks don’t seem to be preserved when I submit.)

    What I find truly amazing is how you persistently ignore everything we have written when rehashing the same old attack against our position. Please, Tom, considering everything I (and others) have written concerning the limitations of a guild’s authority, explain exactly how a guild would force Microsoft to raise its prices. I supposed a software producers guild in Redmond, Washington could attempt such a thing, but one on Waltham, Massachusetts or Raleigh, North Carolina could not. By the way, Microsoft doesn’t sell cheap. They are much more expensive than many of their competitors for products that persistently get reviewed as not being as good as their competition.

    Your history of Microsoft’s rise to its current status is quite fanciful. As someone who has worked full-time in the computer industry for over 25 years, and who has followed the various claims and cases against Microsoft, I completely disagree with the history you have presented. Microsoft has done more to deliberately stall the introduction of technology (until it can release it itself) than any other company on the planet – and this has been proven in court – not just once, but several times.

    As for a solution to Microsoft’s monopoly. My personal view is that companies, especially governments, should allow submissions in any internationally accepted standard. That way, if I want to submit a bid or proposal, I am not required to spend hundreds of dollars on one particular vendor’s product as I am currently forced to do. The solution is to put the ability to choose what software people use back in their own hands. The solution is to encourage companies and public organizations to accept industry standards rather than vendor buy-in. (This, by the way, is also the solution if a guild attempted to impose its own proprietary standards.)

    Microsoft is notorious for not complying with standards. It doesn’t even comply with the international standards it pushes to get accepted. OOxml is a perfect example of this. They could have made Office 2010 compliant with that standard, instead it is compliant with a version rejected by the standards commission. They could easily make Office capable of opening and writing in the already existing ODF standard, but they refuse. This is Microsoft’s pattern of behavior and they have been consistent in this going back at least to the RTF days.

    As for Apple, I completely agree. The difference is that Apple doesn’t dominate 80% of the world-wide market. Apple cannot abuse its monopoly position because it doesn’t have one. Apple stays in business because they have a fanatically loyal customer base. I have no problem with that. Microsoft did not become the biggest by having a fanatically loyal customer base. Microsoft is larger than double all of their competitors combined and they didn’t get there by being the best or having a better marketing department. This has been demonstrated in court. They used coercive anti-competitive behaviors going all they way back to the DOS days, before they copied Apple (who copied Xerox) in creating a GUI and before they copied Novell in creating an integrated office application suite. They are not innovative leaders in the industry. They may have been in the early days, but those are long gone. My personal opinion is that they have become insatiable predators, constantly following others who are truly innovative and then either crushing them or swallowing them.

    If you want a prime example of the problem of the power of monopolies, just take a look at the “penalty” they got as a result of being found guilty on six counts of violating US anti-trust laws. They were “forced” to give their software to schools. Note – they were “forced” to do something which, if they had done it on their own, would have landed them in court for anti-trust violations. Microsoft itself pushed for this “penalty.” Tell me, Tom, in how many cases do those convicted get to set the terms of their own penalty? Hmmm. Let’s think a minute, just how dependent has our government become on Microsoft products? Do you really not see the corrupting influence of their monopoly power here? Imagine what might have happened if they used software that complied with industry standards. They would be free to switch vendors without nearly as much difficulty as they faced.

    Visio did not “join the Microsoft guild.” Your equating corporate buy-outs to joining a guild is just sad. If Visio had joined a guild, then it would have remained as a separate company with an equal vote along side of Microsoft. That’s not what happened, is it? As I already illustrated in my article, if a guild tried to enforce a distribution method or standards that hurt its members, only the members of that guild would suffer the consequences as customers turned to other sources.

    Another point is that there need not be a guild for every sort of occupation. We do not propose a farmer’s guild. Would there really need to be a software developer’s guild? I don’t know, but I suspect the answer is no.

  27. @Tom – You give Microsoft far, far too much credit for the birth of the personal computer. Even if Microsoft’s programmer perspective isn’t quite as toxic as Apple’s, they’re still an shiny example of how a single monopoly can retard the entire industry.

    Tell me that if it wasn’t for Firefox, that Internet Explorer 6 would still be the only thing anyone could use for the internet. Explain to me how the Heros, both volunteer and paid, haven’t dug this society out of the crap heap created by Microsoft.

    Far from being the single reason in an inevitable industry, they’ve been a plague on IT. The industry will be a much better place when Microsoft _and_ Apple are no longer able to do harm in the way they are currently allowed.

  28. David W. Cooney

    Antagonist,
    Welcome to the discussion. I discuss two streams of capitalist thought in parts 1, 2 and 3 of my article on taxation. http://distributistreview.com/mag/2010/11/justice-fairness-and-taxation-part-one/
    While I hesitate to say that all Libertarians are Austrian capitalists, many would likely admit to falling into that category. I would suggest that those who claim we have never truly lived in a capitalist society simply reject the Keyensian branch of capitalist thought. In fact, they probably misapply the label of “socialism” to it.

  29. David W. Cooney

    Antagonist,
    In answer to your question, both capitalism and socialism result in huge corporations. The main difference is who owns and controls them.

  30. David W. Cooney

    Martin,
    As you say, “banks aren’t lending capital.” This doesn’t mean that there is a derth of capital. It means that those few who control capital are preventing those who need it from obtaining it.

  31. It looks like you’re using WordPress for your website: I think you can get a web developer to fix up the CSS for comments to solve the “one solid paragraph” problem. Be sure to create a child theme to keep your maintenance issues to a minimum. Even if it isn’t WordPress you can probably do that. Let’s just test right now whether it works to put two blank lines between paragraphs.

    > Visio did not “join the Microsoft guild.”

    I am sorry you don’t see the analogy. My point is that selling out to Microsoft WAS VISIO’S PLAN FROM THE START. They were not gobbled-up and they are not alone in having this strategy. Maybe the inventors of Visio would be better off under a Guild System whereby the Software Developers’ Guild of Redmond handled distribution issues for its members, including Microsoft. On the other hand, maybe Microsoft overpaid for Visio. I certainly thought so at the time. I suspect the Visio crew thought so as well.

    > We do not propose a farmer’s guild.

    Why on earth not? Don’t you want innovation and best practices shared among farmers without fear of an anti-trust lawsuit? Don’t you want them to get a just price for their crops? (i.e. collude on price-setting?)

    > Would there really need to be a software
    > developer’s guild?

    Absolutely, there ought to be if only to protect programmers from unreasonable demands made by clueless managers. Then there are the issues of distributed ownership. I have thought ACM or IEEE could be guilds, but both organizations have been entirely coopted by industry.

  32. Well, no two blank lines don’t help. Maybe it isn’t WordPress either.

    @Martin — Bill Gates and Microsoft almost singlehandedly created the market for software separate from computer hardware. That is simply a fact. AT&T and Berkely were there too, but they couldn’t run on an 8086 — their heads were stuck in minicomputers, not micros. Everyone else developing software for sale was writing it for their own hardware. The history of all this is widely available.

    Your Firefox example is laughable. It is quite the other way `round.

    As for Microsoft’s being some kind of plague — if you weren’t developing software in the 70’s or 80’s (even into the 90’s) you don’t know what a blessing Microsoft and Intel and “commodity computing” have been. Would I have preferred Motorola 68000s to Intel? Sure. Much easier to program being a flat address space (and a knock-off of the very cool DEC PDP-11). But they didn’t win. Did DEC blow it big-time not porting VMS to Intel? Yep. We had to wait for Bill Gates to hire Dave Cutler away from DEC before we got VMS on Intel, but then it was called WNT. Was DEC a day late and a dollar short with Alpha? Yep. Ditto MIPS. By this time anyone who could embrace openness & ramp up manufacturing & distribution had a chance. And don’t cry for Gary Kidall & Digital Research either — he blew it too. We’d have been a lot better off with MPM than we were with MS/DOS but he couldn’t be bothered. Lots of companies blew it, some of them more than once. If something enough better comes along, Microsoft or the manufacturer will write a new HAL for Windows and we’re off to the races. That is, if the new better thing doesn’t obsolete Windows (and Linux and the rest of what currently exists) altogether.

    Now, to end the trip down memory lane. Would I like to see a model of industrial organization that makes more owners and even millionaires out of the people who invent this stuff and cut Gates’ & Ballmer’s & Ellison’s personal fortunes by a factor of five or ten or 100? Yes. Absolutely. We should organize in such a way that does not permit this kind of concentration of wealth. We should organize in a way that tends towards greater stability for families. We have models of how that might be done, and they should be explored. At the same time, we have to convince conservatives that economic liberalism shouldn’t be conserved.

  33. David W. Cooney

    Tom,

    Just because Visio planned to be bought out by Microsoft all along does not make that action analagous to joining a guild. It isn’t even close. As I said, the multiple companies that join a guild all have equal membership and an equal vote.

    I assume you are joking regarding the farmer’s guild and anti-trust lawsuits over innovation. If not, too bad because it truly is laughable. Even under capitalism, companies are not subjected to anti-trust lawsuits for innovation or following best practices.

    I’m sorry, Tom, but the more I deal with you, the more it seems that you want us to take your questions seriously but don’t hold yourself to take our responses seriously. You seem to blithely ignore points made against your stated positions and then demand “concreteness” from us. I just don’t have time for that.

    I agree that Microsoft was a benefit to the computer industry in its early days. I readily acknowledge that the personal computer would have gone nowhere if not for Microsoft’s persistence in creating a market for it. However, it quickly morphed beyond that and, according to court documents, used some of the most underhanded tactics to undermine and eliminate its competition. They told the courts that there was no way they could separate Internet Explorer from Windows – they had been too completely integrated. The European court didn’t fall for it and, lo and behold, Microsoft was able to separate them (but only for their European releases).

    Sorry, Tom, you will never convince me that Microsoft continues to be more than a very slight benefit – and not overall – to the computer industry today.

  34. @Tom Leith – I said you gave Microsoft far too much credit. I didn’t say they weren’t due any at all. The personal computer, the commodity market was inevitable; just like software commoditisation is inevitable with free and open source.

    It doesn’t take any vision or tenacity to follow the river of time and take advantage of all the clueless established businesses. Just get on the boat tending towards the future of this very immature market.

    From the way you talk about DEC, I’m guessing your an old-tech head. Could it be that you’ve lost the passion to hold Microsoft accountable for the wrong they’ve committed as much as you are able to nostalgicly venerate them for all the glorious nonsense they’ve created?

    That you don’t see the value in Firefox is very telling on your attitude. Microsoft turned up to that party a day late and a dollar short, using Mosaic to jump start the corpse and still managed to batter to death an entire industry using their desktop monopoly illegally. Microsoft had then disbanded it’s IE department after they had ‘won’ the internet browser wars and only restarted development because of Mozilla, a non-profit effort that put society and progress before profit.

    You might have been there when it happened, but since you can’t tell right from wrong; it’s a little hard to take your advice on what should be praised.

  35. I am taking you quite seriously and I’m not ignoring your points: I think you’re wrong, and pointing to court decisions does not prove you’re right. I think the examples you’ve come up with fail utterly to prove that Microsoft has hindered the development of information technology or even to create a monopoly in the sense that we have no choice but to use their product. I think the EU courts are arrogant and arbitrary to decide (at the behest of the EU software industry and of EU politicians as an instrument of foreign policy and demagoguery) what functionality is or is not proper to an operating environment. So are US courts.

    Not that all is sweetness and light. On our current understanding of monopolizing behavior, there is a lot to think about with respect to Microsoft. Great Plains Software comes immediately to mind. MSN. MSNBC. Bing. But IE? WMP? Please.

    FWIW I think I heard IE is “removed” in Win7. My understanding is that they couldn’t really “remove” it in WinXP; it wasn’t factored with that in mind. They sort of “hid” it to cripple for the EU but it was still there and still was used for browsing non-http URLs. And here you go:

    http://bit.ly/h7s98B

    After all the strum und drang, free American browsers STILL dominate the EU. Because free browsers are good enough. Because top-notch engineers at Microsoft built IE on top of the first free browser and MADE free browsers good enough. But hey, the politicians put on a good show and got $500MM to split with the lawyers. Bravissimo. Or rather, tres bon.

    I see what you mean about the farmer’s guild: I could have said that better. I’ll try again.

    In every other industry you want to “guarantee quality” and so-forth by imposing standards of practice at the guild level, backed by state authority, as a condition of entry to the market, and you want to permit collusion within the guilds with respect to price in order that members receive a just price for their labors and the common good of the members is protected. But not for farmers? Not for the food safety of the public? Will you leave that in the hands of the State? I can understand leaving certain aspects of environmental regulation to the state (no runoff, no uncapped wells, no erosion) but if the guild is your organizing principle for industry, why leave out agriculture?

    t

  36. Tom,
    Clearly we have a disagreement on the chronology of development of certain technologies. However, Microsoft’s own internal memos – revealed in court – show conclusively that their reason for their actions was because they found the most effective method for getting people to use their products was to include them with Windows. They were losing ground in the browser market, so they embedded IE into Windows. This is just one of several examples that do, in my opinion, prove this point very clearly.

    In regard to the farmers guild. The reason I didn’t say there couldn’t be one; I said I don’t think one is necessary. Collusion within a guild in respect to price is still subject to the same limitations I explained in the article. Setting high prices will cause them to lose business because they cannot force other guilds to do so. The authority of the guild’s regulation is not really backed by the state. It belongs to the guild itself by its very nature and it replaces the authority to regulate and control entry that is currently excercised at the city and county level. In addition, the ability of the state to interfere in the local economy is reduced. City government (county in unincorporated areas) has jurisdiction in cases between guilds, a guild and a member, or a guild and a non-member.

    In regard to agricultural quality and public safety, I believe the natural market forces created by the interaction between local farmers, local merchants and the local buying public will do much more to protect the public than a government regulatory agency imposing rules from on-high.

    Monopoly doesn’t mean you have absolutely no other choice. That is the ultimate goal of monopoly, but once a single provider becomes the only practical source in an area, it has become a monopoly. It is possible to find computers that don’t come with Windows pre-installed, but it isn’t easy for the average consumer who buys his computer from Best Buy, Wal-Mart or Costco. Of course, until recently, even if he chose another OS or a non-Microsoft office suite, he paid for the Microsoft version in addition to what he chose anyway.

  37. Tom – Seems you might have an anti-European chip on your shoulder.

    The pro-Microsoft stuff is just silly, I’ve never heard someone so completely vindicate such a slimy toad of a company with a strait face. I hope they’re paying you well for your activism.

  38. > The authority of the guild’s regulation is not
    > really backed by the state. It belongs to the
    > guild itself by its very nature and it replaces
    > the authority to regulate and control entry that
    > is currently excercised at the city and county
    > level.

    ????? If the authority of the guild to regulate an industry is not backed by the state, what stops someone from simply ignoring the guild and doing what he wants?

    > Setting high prices will cause them to lose
    > business because they cannot force other guilds
    > to do so.

    Setting high prices PERMITS other guilds to do so. Read about Cournot Competition: http://bit.ly/gCvwhI
    Since you’re setting up an industry of small relatively inflexible players, Cournot competition is the likelier case versus Bertrand competition. The price set by the dominant player will act as a price umbrella for the rest and the basis of competition for gross revenue will be based on quantity. But now you’re going to introduce a guild and permit the producers to cartelize!

    > I believe the natural market forces […] will do
    > much more to protect the public than a government
    > regulatory agency

    Read Upton Sinclair’s “The Jungle”.

    How many guilds do you expect to exist in the State of Missouri? (population ~6MM)

    There are four “metropolitan areas” in Missouri, and St. Louis Metro is about as big as the other three combined even if you leave the Illinois side out of the equation. The County of St. Louis City & St. Louis County are two separate counties. The population of St. Louis City is about 10% of the St. Louis Metro Area. There are about 100 municipalities in St. Louis County, each having a mayor and a council. More than half have police departments. A great deal of business is conducted across state lines.

    Who charters guilds? Individual cities? What counts as a “city”? Who sets the standard for the terms of a guild charter? Suppose all the shop owners in Krikwood got together and decided not to compete on price and never to pay clerks more than $7/hour and never ever pay for health insurance? What stops this happening?

    t

  39. Stephen Peterson

    @Tom,

    I’m not certain how you can say that there is free competition in the OS market. I haven’t spec’ed my own machines for over ten years and am now out of touch with computer hardware (so much has changed). If I now went out to buy a new desktop machine, firstly, I’d be hard-pressed to find a (non-Mac) system that didn’t have Windows pre-loaded. If I walked into a major retailer and asked for it, I’d probably be met with blank stares from the sales assistant. If I walked into a small retailer and asked for a system with Linux pre-loaded, I’d end up paying more, and this despite Linux being open-source.

    Let’s face it, at the moment Linux is only used by people who are pro-active and have a great deal of technical experience with computers. For your average consumer who doesn’t know much about computers (include here the purchasing officers of large companies and governments), the only choice is between a PC with Windows or a Mac, and because Macs cost a lot more upfront, only loyalists tend to buy them. There are no other realistic alternatives.

    Your problem, Tom, is that you know *too much* about computers, so *you personally* have more choices because of your knowledge and experience. You are not representative of the consumer market. The average consumer does not want to fork out a couple of thousand dollars on a computer that they will then have to load up themselves and not even be confidant if it’s going to do what they want or not (or even if it’s going to work) because they are not familiar with the software.

  40. @Stephen if you want to talk more about computing, contact me through http://bit.ly/dTXD3o

    @David I see on DR’s Facebook page you-all have posted a paper “Craft Guilds and Christianity in Late-Medieval England. A Rational-Choice Analysis – Medievalists.net”. (http://bit.ly/dMNYOr) Do you consider this authoritative-enough about the historical organization of guilds to serve as a basis for discussion?

  41. Tom,

    I see I did miss part of your point on what backs the authority of a guild. The city backs the authority of a guild. Remember subsidiarity. The most local government authority would grant the charter. The most local authority (law enforcement) would become involved in cases of those who try to operate outside of the guild or without a temporary authorization from the local government. Therefore, Missouri could potentially have as many guilds in a single trade or craft as there are local government authorities.

    Tom, I may be wrong, but the trend I see in your questions seem to revolve around the difficulty of implementing Distributism within a capitalist society that works according to capitalist principles and capitalist philosophy. The answer is that it won’t really work. Distributism will only work if the transition to it is accompanied by a philosophical shift in society. This should not be a surprise because that’s how Capitalism came to be the predominant economic system – the philosophical view of society shifted. Almost every example you have brought up to argue against our positions are things that occured under Capitalism or during the transition to it. They are things people with a capitalist philosophy did.

    That is the greatest challenge we face. There are examples, both in history and some in the present day, which show that the principles work, but they won’t survive without the philosophical shift. The philosophical shift won’t occur unless the status quo is challenged by people who are willing to question it and consider the possibility of alternatives. That is why we cannot discuss Distributism in purely economic terms, ignoring the philosophical and moral aspects of economy. Yes, we must discuss the economic terms, but we cannot do so in the same way capitalists do. We will not let the capitalists dictate the terms of our discussion. The idea that economy can be separated from morality is a capitalist idea born of its underlying philosophy. The idea that corporate profits are more important than the local economy and the local workers is part of the capitalist philosophy. The idea that owners and management must be in a combative relationship is part of the capitalist philosophy.

    Regarding your scenario about the shop owners in Kirkwood collectively deciding never to pay their clerks more than $7 per hour, even employees would have representation in the guilds. If that representation failed to protect them, they could take the guild to court (at the city level) and, if necessary appeal to higher courts. They could also take their plight to the court of public opinion.

    Cournot competition wouldn’t easily apply to the guilds. The first feature the article mentions is that there is no product differentiation. All other features seem to be dependent on that. You would be hard pressed to achieve no product differentiation between all the members of a single guild – let alone between all the members of several guilds.

  42. @Tom, we have several admins that post links of interest on our FB page. Instead, I’ve included links to the works of Arthur Penty on our recommended reading page. You may review the books here: http://distributistreview.com/mag/test-2/recommended-reading/

    @Stephen, instead of downloading these files onto our site, I chose a link to archive.org, this way you can choose to download the files as ePUB, PDF, or any other file type they offer.

  43. David W. Cooney

    Jeremiah,
    Thank you for the link. It is very good. It also reveals something that needs to be addressed. I have repeatedly said that the guild structure would mitigate the problems of price fixing and other unjust actions by businesses. This writing points out that, despite the mitigating nature, it won’t ever be completely eliminated. This was implied, but not specifically stated in my article by the “what if” statements.
    Guilds in the past certainly did attempt such things for there is nothing truly new in the nature of human activity these days – we have merely found new ways of committing the same old sins. As the paper to which you linked pointed out, however, reputation played an important factor. If a guild engaged in unjust behavior, recourse would be found. The paper illustrates that, even in medieval days, importing and exporting goods far and wide was common practice. Only the limits of transportation prevented the consumer from avoiding dealing with a guild gone bad. The improved methods of transportation and the ability to order things online makes it easier for people to avoid overpriced items and items of low quality.
    The article also points out an answer to your question regarding the morphing of several local guilds into a single organization capable of becoming its own monolithic power. The only way such a thing will work is if some members can get all other members to go along. This has to occur – and be maintained – in each guild. Is it impossible? No. It is, however, much less likely to occur among a group of people whose reputation is tied to their guild and personal business than it is among a group of executives who frequently switch companies as they seek an ever higher paycheck. It is also more likely to fail due to the need for continued compliance of al members and the limited area over which each individual guild can exert its economic power.
    The paper also addresses an aspect of the guild system I completely neglected to include – the social responsibility aspect. Distributism, as a product of Catholic social teaching, does not envision a guild system that excludes the needs of the local community. It is true that a guild system without that aspect can be imagined, but such a thing is not compatible with Distributism and must be addressed under a different name.

  44. Stephen Peterson

    @David,

    By the way, interesting choice of photograph to introduce this topic, but I can’t deny wondering about the relevance.

  45. > Remember subsidiarity. The most local
    > government authority would grant the charter.

    Subsidiarity says the most local COMPETENT authority deals with issues the authorities “beneath” it can’t deal with. That is an important qualifier. None of the “cities” in Missouri are competent to deal with business and labor issues, but a few of them might become competent if they had to. I can imagine the state chartering four regional commerce associations to charter guilds. I can also imagine the state chartering guilds directly. But I can’t imagine Gerald, Missouri doing much of anything beyond setting speed traps. Shoot, they couldn’t identify a fake DEA agent (http://nyti.ms/f45s6c) who said he didn’t need a search warrant to kick doors down. I don’t think this is a mere “difficulty”.

    > Thank you for the link. It is very good

    OK, I take it the Richardson paper is authoritative-enough about the historical organization of guilds to serve as a basis for discussion.

    According to the paper, price fixing was an essential function of the guilds of Late-Medieval (ca 1275 — 1550 AD) England, it wasn’t something occasionally attempted by a bad actor. So was wage fixing. So was inspecting the materials and methods used by members. So was restricting entry to the crafts and trades. Masters were guild members, journeymen and apprentices were not — they had no representation at all, no “vote”. It was illegal for journeymen and apprentices to organize. A guild member offering higher wages or other considerations than the others would get ejected from the guild. It goes on. According to the paper, these were common features of all guilds.

    You have repeatedly said that the (the!) guild structure would mitigate the problems of price fixing and other unjust actions by businesses. I point out that when the just price of a thing is above the competitive price, then price fixing is not per-se unjust, but this is an aside. The universal fear of hell the paper says existed is (I submit) what mitigated the abuse of the guild institution. There was nothing in the STRUCTURE of the guild institution itself that did it. Reading the paper, it seems the only thing the actual guilds of Late-Medieval England have to do with dreamt-of future guilds as you’ve described them is their name.

    You’re right about the necessary philosophical shift. Of course with the necessary philosophical shift there wouldn’t be capitalism. That doesn’t mean there would be guilds. With the fear of hell and the hope of heaven the institutions themselves don’t matter very much. Conversely, without the hope of heaven and the fear of hell the institutions themselves don’t matter very much. It is all about the people in the institutions.

    You have said that the guilds were eventually suppressed because of their power and abuse of same. The paper says they were not suppressed by Catholic Princes for the price-fixing they actually did; they were suppressed by Protestants and Jacobins for being Catholic.

    Dorothy Day wanted to build a sort of distributist subculture within the dominant (capitalist) culture. One reason I’m so attracted to Kelso is he articulated a path from where we are to a better place (on Natural Law / Catholic Social Teaching grounds) with a set of relatively minor institutional reforms whereby wealth could naturally be more widely-distributed.

    With respect to your comment about the Cournot model: It is a model. Models make simplifying assumptions that permit us to talk about what’s salient. In a duopoly of producers that make roughly substitutable products (PC & Mac, for example) the Cournot model has explanatory and predictive power. Here’s some pretty good lecture notes: http://bit.ly/gpPdAB It has examples and no differential equations but it does presume you’ve done some reading.

    @Richard I’m reading now Penty’s GUILDS, TRADE AND AGRICULTURE. Thanks for the link. I’ll see what he describes.

  46. David W. Cooney

    Tom,
    I’m sorry, but once again you are trying to pick individual statements and ignore the whole – when considering one statement, you treat the rest as if they have never been said. It doesn’t work that way, not when considering Distributism, not when considering Capitalism, not when considering most things in life.
    The only reason cities in Missouri are not competent to deal with labor issues is that under the present circumstances they are frequently dealing with huge corporations whose employees may range far and wide. However, I would stipulate that they are already competent if they were dealing with a local business as they would be under Distributism. The only reason incompetent people get elected to local offices is that local offices are not important in our capitalist system. Really, what do local city officials do these days? Who really pays more attention to who is running for mayor than for a state or federal office? However, if the city official actually had real authority, people would immediately start paying attention. I maintain that they would pay even more attention than they currently do for the higher offices because they can have more influence over the local office.
    I am not willing to say that the paper is “authoritative” because I don’t know that it is. I merely acknowledged that it pointed out things I neglected. It seemed good to me. I may have worded myself poorly in the past. My point about price and wage fixing is that, because a guild can only affect a small area, the problem is not only mitigated, but more easily resolved because you don’t need to immediately jump to the state and federal levels where you have almost no voice. Distributism existed in all but name during the Middle Ages without anything like state-wide price fixing or regulations. That didn’t occur until after the philosophical shift that resulted in Capitalism. As the paper indicated, trade with other areas was prevalent. I believe this mitigated the problem even back then. Modern distribution would do so even more today. Under Capitalism, we can’t fix such things without state, federal, or international effort. You think this is better than what we propose? You say that the guild does not automatically prevent such things. True, but neither does Capitalism. So what’s your point? Mine is that it is better to restrict the ability to affect such injustices to a smaller area so they are easier to correct. THAT is the point, Tom. How do we mitigate the human tendency toward greed and avarice since we can’t eliminate it?
    It is true that the medieval guilds often fixed prices and wages. It is not true that they constantly did so at unjust levels. Remember that, because the guilds could not fix prices and wages outside of their own city, and because reputation was such an important factor in getting business from outside the city, they had very powerful incentives (in addition to the fear of Hell) to avoid such actions. The paper also points out that they had great difficulty in maintaining the necessary cooperation of all members for very long.
    The guilds were not suppressed for being Catholic. They were suppressed because their structure limited the scope of their influence. Guilds could not engage in state-wide price fixing or regulation. The structure was eliminated so that such things could take place, and they did start to take place as soon as the guilds were eliminated and continue to take place today.
    Tom, Jeremiah’s article says there can be no product differentiation for the Cournot model. Yours suggests that there must be rough similarity. The first article uses bottled water as the example and the second uses beer. Do you really think that Windows and Mac computers meet that standard of similarity? The notes you point describe how prices are determined under certain market conditions. However, it does not imply that these prices are necessarily unjust. It is entirely possible that the settled price is just. Remember, Tom, price fixing is not necessarily bad; it is only so when the fixed price is unjust. The same is true for wage fixing. While I abhor what unions have become, they were necessary because Capitalism provides less protection for the worker than the guilds it eliminated.

  47. David W. Cooney

    Antagonist,
    I watched the video. I understand why this person has this take on things. This is what I was taught in school as well. One comment in particular struck me.

    “If they like your business they will stick with your brand, even if you charge a bit more.”

    So, there are no examples of small businesses with satisfied customers who were driven out of business by predatory prices? Where this commentator misses the point is that the large corporation knows that it only has to keep its prices around what the small business can accomplish. Because it frequently achieves this by acquiring its products from overseas where working conditions and pay are very low, they effectively prevent the small businesses from reappearing. After that, prices are raised gradually so that, like a frog in gradually warmed water, the consumer doesn’t realize it. This, however, is accompanied by frequent “rock bottom” sales which keep the consumer coming back. Consumers shop where they are accustomed unless there is a compelling reason to switch. The movie “You’ve Got Mail” (minus its fairy tale ending) illustrates this.

    I saw this in my own area when a big-chain discount store moved in. The prices were very low when they first came in. After the local competition shut down, their prices went up, but only around the level the smaller stores had. This is what keeps them from returning. I’ve seen the same in the so-called “half-price” stores where the prices gradually went back to what the other stores where charging. What this commentator shows, though, is how the involvement of high levels of government switch from colluding with big-businesses to pandering to voters according to the political need of the moment.

  48. Pingback: (Maundy) Thursday Links « Push of Pikes