.. ender their applications and software compatible with the parameters contrived by Microsoft. Consequently, these competitors must always at the mercy of changes made by Microsoft. This limits the ability of these companies to plan for the long run. As stated by Gary Reback, the attorney for the competitors of Microsoft filing a suit against the corporation, Microsoft retains a monopoly of the operating system in personal computers, which, essentially, is the brain. This brain controls the arms and legs of the computer (software) and inherently controls the arms and legs of the industry that are the competitive firms.
Reback, the firms, and many others deem this kind of control unlawful, unfair, and anti-competitive. It is this kind of control that strengthens Microsoft and makes the company that much more dangerous to competitors. Another example of the danger that Microsoft threatens toward its competitors is an issue involving the release of Microsofts new operating system, Windows 95. Whether intentionally or not, the arrival of this new operating system was delayed again and again by Microsoft. This in turn delays other companies dependent on the Microsoft operating system in order to maintain some degree of competition.
These delays result in additional, unwanted expenditures and other costs easily swallowed by the Microsoft Corporation, but inflicting severe detriments to other smaller companies who cannot afford the added costs. The danger of Microsoft to its competitors is now becoming more and more evident. Microsoft is further alleged of exploiting its ownership of the PC operating system in such ways as including secret parts of Windows that help its own applications (The Tyranny of Success.. The Economist; 5/25/96). When considering whether a monopoly should persist or not the factors must be examined closely.
Whether or not the consumers are being exploited is something that is essential when contemplating the break-up of a monopolistic firm. Often times, and in the case of Microsoft, the consumers benefit from the monopoly. In the matter of Microsoft, being in the industry of PC and the products that are complementary to the PC, economies of scale can only be present where there exists little or no competition. This is evident in the dealing with Microsoft. Because Microsoft is thriving, the other firms in the industry are thriving as well, but only not in comparison to Microsoft.
Microsoft freely provides the technical details of its software to rivals, thus allowing them to get up to speed with Microsoft and, to some degree, compete with it (How Dangerous, Econ.). Capitalism has allowed Bill Gates to thrust ahead of his former peers and develop what is nearly a natural monopoly. Under the perfect competition of capitalism Carl Marx deemed that the individualistic and unorganized process of this market system would eventually lead to its own downfall. Capitalism would become so complex that, without direction, its freedom would lead to ruination (p147, Heil.). Marx was in favor of monopoly, though he never foresaw their existence in capitalism.
He believed that, especially if the government should regulate it, monopolies would bring the market system into a more centralized and equal type of economy: socialism. In viewing Microsoft, Henry George, a Victorian economist, would be opposed. For many people have gained great wealth by obtaining what he calls unearned income. This unearned in come took form in the money that was made as a result of possessing shares of Microsoft, whose stock skyrocketed, leaving many people millionaires. Marshall, another Victorian economist, almost need not apply to the concerns of Microsoft.
His philosophy of supply and demand is principally in accordance with chief market doctrines of supply and demand. It is apparent to all of who study economics that in the short-run consumer demand takes precedence over supply, whereas the positions are reversed in the long run. Along with supply in the long-run costs of production helps govern and assert the price of the product. Now Microsoft, in the ensuing race for the Internet, finds itself not as a leader but a follower — in this case of Netscape. But this position may make Microsoft that much more dangerous. When it first sought entrance to the Internet market, Microsoft was not only down, but also presumably out.
But at this stage Microsoft has pulled itself up by the proverbial boot-straps and positioned itself closely behind Netscape. Estimates show Microsoft as little as six months behind Netscape. Microsoft did not neglect to use every advantage it possessed in order to persistently gain ground one the once untouchable Netscape. It used Windows 95 to push its Microsoft Network on consumers (it is alleged that installing Windows 95 and the Microsoft Network can disable rival on-line services). In addition Microsoft teamed up with Java to strengthen its potential within the Internet market.
Microsofts maneuver in dealing with its late coming to the Internet market illustrates its composure and confidence under the pressure of the volatile market system present in the fight for the Internet. Its about-face after initial failings with on-line services shows that Microsoft can evaluate a challenge on several levels and make educated decisions. If anything these events strengthened the company and made Microsoft far more dangerous to competitors such as Netscape. So while the Microsoft Corporation has become so large and powerful that it almost radiates anti-competition — for an important barrier to entry in the industry is capital. But while Microsoft may be limiting its competition, it is aiding the consumer.
For it is able to charge a lower price and produce more efficiently because of smaller costs than if it existed in a purely competitive industry. Moreover, Microsoft is not the stereotypical monopoly, in that it continues to innovate — how else are upgrades to its present software explained. Thus, by rule of reason it would not be right to break-up this firm, for its existence is beneficial to the public. Slight regulatory action may be needed though in order to provide its competitors with more of a fighting chance. Competition still exists though and in the unpredictable industry of technology a firm can plummet and rise swiftly (IBM, for example, replaced Apple Computers in the early 1980s, but was soon ousted by the incumbent Microsoft).
Microsoft recent affluence may connote a peak of its power. It seems to have saturated all easily obtained territory. Its profits may soon begin to dwindle as it loses its might — this will be proven in the near future as Microsoft takes on Netscape. It seems to some that the impatience and over confidence of Bill Gates may soon lead to his companys downfall as the leader of the industry. One more long running monopoly is the US Postal service.
Generally the best type of market structure for the general public is perfect competition because it creates the lowest possible price for the public. There are some exceptions were perfect competition isnt the best choice for the public on account of various reasons. The United States Postal Service is one of them and since the Postal Service is a monopoly, it is its own market. The discussion is the budget dilemmas that the postal service has faced for the past twenty years and if it is in the best interest of the economy for the United States Postal Service to continue as a monopoly. Since the Postal Service is a necessity for America, the government had to subsidize the service in order for it to continue in operation. In 1979 the United States Postal Service had a cash flow of $22.5 Billion and was additionally receiving $176 million from investing. Even with this added revenue the Postal Service was still greatly under funded on its own.
At the time it was discussed to privatize the postal service and introduce competition because of the extreme losses that the service was experiencing. A positive argument for privatizing the Postal Service was with numerous competitors in the market there would be more efficiency and the public would receive lower prices. These problems did indeed eventually did get solved over the past fifteen years and now the Postal Service is making record breaking profits. Now in the first quarter of the fiscal year 1996 the Postal Service already has a net income of $1.2 billion. These are examples of how capitalism has helped make America the place it is today.
We need a dash of Capitalism here and there to help us survive in the works of economics. The importance of understanding the philosophy that capitalism is built on lies in the fact that no social system can be understood completely or defended from its philosophical framework. Capitalism is the only moral social system because safeguards human survival, it is the only system that is based upon mans needs and recognizes that humans have the ability to greater themselves by thinking and it protects the individual mind of every man (person). Political Issues Essays.