Globalism, Technology, and Oligopolies
Some interesting insights from a book called Human Society and the Global Economy by Kit Sims Taylor. It puts the dilemma quite well: is the new technological age of the Web going to make oligopolies irrelevant or is it just another area for oligopolies to master. My guess is the latter.
There is no question that taking a global - rather than national - view makes the industrial landscape look much more competitive. And there is no question that this global vision must affect our antitrust policies. But it is possible that we are merely enjoying a temporary respite from the curse of oligopoly.
If there are still advantages to bigness, it is likely that these advantages will not stop at national borders. A strictly national picture of the automobile industry shows us the 'Big Three' with dangerous levels of economic power. A global view shows us the big ten instead, and market power is much less worrisome.
Shall we than relax our antitrust enforcement? Should we let Toyota buy Chrysler? Or let Ford merge with Fiat? Perhaps by 2010 there will once again be a big three.
Of course, the author wrote this before Daimler Benz did acquire Chrysler. And Fiat is still an independent. but just barely.
Yet there are also technological and social forces leading in the other direction. Some optimistic observers of modern technology - we might call them the techno-utopians - claim that the advent of the desktop computer has given a new impetus to small business. The instant availability of information and independent ability to examine and process information may be undermining the dominance of the technostructure. Mere manufactured products may become commodities. IBM launched a successful series of desktop computers, but was not able to hold its market share as small shops began to assemble them out of standardized components. Ideas are the only 'commodities' with lasting value, and our new technologies might allow ideas to proliferate outside of the large corporate management structures.
True, IBM could not hold its share in the PC industry and lost share to a dozen small companies. But now, Dell and HP reign supreme, and the once free-for-all market in desktop computers has become an oligopoly once more. And we suspect that the same thing is happening on the Web.
Principles illustrated
All industries tend toward oligopoly.
Oligopolies are tempted to go multinational.
