Microsoft and Monopolies – All In One
Is Microsoft a monopoly?
A monopoly in fact cannot ever take advantage of its situation to abuse consumers as long as there is freedom to compete in law. Indeed, as soon as it raises its prices such that its profit rate (that is, the difference between the income and the marginal production cost including investment amortization) are noticeably above the average rate in other industries, then capital will rush into competing firms to leverage such profit opportunities, cancelling any situation of de facto monopoly. Similarly, if the main or unique producer decreases the quality of its services in such a way that there is an unsatisfied market segment that could pay enough to generate above average profit by investing in the field, then new competitors will appear. Hence, as long as there is freedom for new competitors to enter the market, there is no situation in which enough people can legitimately feel harmed or wronged or unserved by the market. Freedom to compete implies that de facto monopolies have “virtual competitors´´, even though they may have few or no actual competitors. In a free market, as characterized by the presence of freedom to compete, no company may ever extract arbitrarily high profits or “undue´´ profits from any so-called “dominant position´´.
What is the libertarian position on the big Redmond giant?
So while it is important to know what should be done about Microsoft, namely to cancel its privileges, the more important question is to determine what should be done about Government, that caused the whole mess to begin with. We will soon reach the conclusion that what should be done is to identify and cancel the Government’s über-privilege, the source of all privileges. The tricky problem will be how such a thing can be achieved; however the solution to this particular problem deserves a study of its own, and is beyond the scope of this long enough essay.
The first thing to do is to understand the nature of Government and of privilege, so that whatever is done to existing governments is not, like splitting Microsoft, the displacement of the very same Evil into different entities with different names, without removing anything from that Evil. To make a long story short , the source of the Evil is in Coercion: the resort to force to deprive people of the liberty of using their legitimately acquired property as they see fit, and to evade the responsibility of one’s decisions. Coercion is the tool that characterizes Government when people submit to it and that characterizes Bandits when people resist it. To a libertarian, whether done by people wearing an official blue ribbon or by plain outlaws, both kinds of coercion are just as criminal. In other words, Might does not make Right. Once these basic concepts are understood, things are easily put in their place, and it is possible to determine the “proper limits of government´´: the Government should do nothing, it shouldn’t exist, for in a libertarian society, there is no place for coercion.
What NOT to do about Microsoft?
Libertarians all agree that the current governmental settlement, with Microsoft giving zillions worth of computer software to schools, is not any kind of atonement for the prejudice caused to millions of people who are not any of these schoolchildren — on the contrary, it is but a marketing move to increase the number of victims. And the previously considered penalty, consisting in splitting Microsoft into separate companies with a prohibition for these companies to cooperate, was even worse of a measure to take: it would have repaired absolutely nothing, and benefited absolutely no one, and only have introduced inefficacy in software development; the privileges would have remained as strong as ever, only more expensive to the public. Indeed, splitting a criminal organization into several parts doesn’t make the resulting organizations any less criminal — for crime is characterized by the activity, by the fact that the means used by these organizations are disrespectful of the liberty and property of third parties. Splitting a criminal organization into smaller chunks might make the crime less visible, by being more diffuse, and it can even isolate some legitimate activities from those illegitimate activities that make the organization criminal; but it can’t magically turn these illegitimate activities into legitimate activities.
Even if Microsoft is the problem, using government to solve it is like using nuclear bombs to dig trenches. (That’s actually been tried, believe it or not).
In conclusion, it’s wrong to prosecute a company for being successful, and it’s also wrong to give it legal privileges in the form of imaginary property rights. The only solution to this problem (as well as many many others) is to remove government from the picture.
In the case between government and Microsoft, Libertarians don’t have to take sides. Their role is to refuse and denounce the common underlying assumptions behind both government and Microsoft. Their role is to reveal and delegitimize the common principle of injustice behind these two evils and their sameness of nature and origin, hidden as they are under a veil of propaganda and censorship: both are de jure monopolies established in the name of the public interest, but actually in the private interest of monopolists, under the a priori axiom that politics is a universal solution to any problem [B8]. Libertarianism rejects the political view of the world  as a struggle in which what matters is what side you identify with. Libertarians defend justice, and the natural principles of Law that underly it. For Libertarianism is a theory of Law, a theory of what is or isn’t legitimate for individuals to do.
The libertarian tradition has always strived to delegitimize the privileges of those who claim to live at the expense of others, through force and fraud. But more than that, libertarians seek to delegitimize the political power that grants those privileges to begin with, and that can do nothing but grant privileges. We show the naked injustice, without its drapings of false justifications, for Truth is the greatest ally of Justice. We libertarians are abolitionists [B17] [B22].
Read the rest HERE.