Natural Monopolies Don't Exist

Why Monopolies Won't Form in a Free-Market [And How The Economic Calculation Problem Works]

I tried something different with the audio post-processing in this video, let me know what you think.

Below is the .org that I based this video on, it contains greater detail than this video, I strongly recommend you view it in emacs or doom emacs, I will also include my doom emacs config.

In this video, I go over how the idea of "natural" monopolies is wholly unfounded in economics and is without any historic merit. This destroys the common criticism that anarcho-capitlaism (ancap) isn't truly anarchist.

I also go over how the commonly cited worry of predatory pricing has not occurred in any case and how you would not expect it to either, due to numerous counter-strategies.

In the course of this video, I exonerate multiple condemned businesses, such as Rockefeller's Standard Oil, Vanderbilt's Steamboats, and Herbert Dow's chemical manufacturing firm. In contrast, I point to the many government monopolies the likes of the Dutch East India Company.

-- Chapters --

00:00 - Introduction
00:33 - What are Natural Monopolies?
01:33 - The Economic Calculation Problem
04:11 - Predatory Pricing
07:34 - Predatory Counter-Strategies
10:03 - Predation Is Competition
14:30 - Herbert Dow: Cartel Killer
16:49 - No Natural Monopolies Have Ever Existed
19:22 - Standard Oil
21:23 - Monopoly Pricing
22:12 - Vanderbilt
25:48 - James J. Hill
28:07 - Government Monopolies

-- Music (in order of appearance --

00:33 - Harris Heller - Trapped in Memories
01:33 - Your Best Friend Jippy - [PEJA] HOL UP
03:41 - Your Best Friend Jippy - Budjet Hallelujah
04:11 - Your Best Friend Jippy - 1ne for juju
05:32 - Harris Heller - Celestial Rewind
07:34 - $UICIDEBOY$ - HAIR
09:18 - Cypis - Gdzie jest biały węgorz
10:03 - Saxsquatch - One More Time
14:30 - Cowboy Bebop OST - Tank!
15:58 - HOME - Come Back Down
16:49 - HOME - This Will Pass
19:22 - HOME - Oort Cloud
21:23 - Your Best Friend Jippy - WERRDUP
22:12 - Your Best Friend Jippy - LIED TO ME
24:51 - Harris Heller - Bleeding Road
25:48 - Harris Heller - Drifted Wind
27:52 - Hari - Cheated On Once
28:07 - HOME - We're Finally Landing

-- Social media links --

-- See Also --

Title: Why Monopolies Won't Form in a Free-Market [And How The Economic Calculation Problem Works]

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[SuperBoyboys]

Man's got pro editing, this is good quality

[stlouisix]

Always good to see fellow Scottish capitalists!

[Brotato]

Tbh, the only place where I've seen any "predatory pricing" going on is in games where there's a cash shop, and the items are priced in such a way that you you won't have enough cash shop currency if you buy the cheapest packs and you're forced to buy a more expensive pack that gives you more currency than you actually need for the thing you want.

In a sense the companies who make these types of games have a monopoly for the market within the games they create, but in the game industry as a whole we can all just choose to not engage with such predatory games, because there is no actual monopoly.

[thefrenchareharlequins]

Diseconomies of scale would also play a factor.

[ZemikianUchiha]

Trying to understand these arguments better. What about theoretical resource control? At around 01:30, you mention that price gouging creates market opportunities for other actors to enter the market at reasonable prices. What about in cases where the skill is not necessarily controlled, but the resource is? Say coffee, or oil - or for the sake of steel-manning, all the agricultural goods for an entire economy (highly unrealistic, but still). In this case, would consumers have to forgo the product, or else pay whatever price for the good that the monopoly demands?

Trying to understand what other forces would be counteracting this, even if it's a mere hypothetical.

[VictimPoliticized]

I once made this argument against an AnCap years ago. How far I've come.

[mushrooom]

This stuff is cool, does anyone have an Aus-econ, ancap, libertarian, etc, reading list? Or recommendations?

[ShadoZP]

Its funny cause now today there is a baltimore gas monopoly, most of maryland is forced to pick only 1 gas supplier in the state B, G&E

[evanthesquirrel]

Amazon charges less than profitable prices because they're propped up by AWS. All in an effort to be the one with the most data.

[ohranjegallante]

Why would companies support ancap is all companies are (i hope someone had this moment watching this today, despite the appearence its not a blackpill, feller)

[grantbeerling]

Oversimplified commentary from Econ 101. Examples of natural monopolies. Utilities with huge infrastructure set-up costs were initially sponsored by governments due to high risks and lack of leverage, and since the 1980s, they have been sold off to 'private companies'. The natural monopolies are water utility = one pipe, rail often just one line, so, for safety reasons, one company has to run a service in x area, gas, one pipe, electricity, one cable. (Though road transport is a natural area for competitive business as many different companies can travel on the road network). To stop the companies from overcharging, ignoring maintenance, dumping illegal waste, and not supplying the product as in the contract, the government, setting these franchises, has to have specific ombudsmen for each industry. That is not a free market. That is intervention.

Land is the mother of all natural monopolies, as it only exists and has value in a fixed place and time.
Adam Smith, Ricardo, John Stuart Mill, and Marx all agreed that land should remain separate from capital because of its susceptibility to the non-productive Rentier landlord, who inflates land by creating scarcity, as once purchased, it cannot be reproduced in time and space.

The real issue is that free marketeers assume ( and they do an awful lot of this in their modelling) that human self-interest will root out deceit, lies and commercial theft, assuming that all trade on an equal footing and return to equilibrium in the long run. The reality is that we still live in the mercantile system that Smith was fighting against. The player who holds the leverage of vast wealth can manipulate (lobbying) the government to their advantage. Business aims to achieve a monopolistic stranglehold until government intervention ( US; Standard Oil, UK; Banks and Mobile phone companies and now EU breakups of Micro-soft, Google and Apple on some of their products and cloud-based services).

Thus, the Landlords Game (later rebranded as Monopoly) was created as a teaching tool to show how, if not regulated, one player will own everything. Many papers have been written on how people's personalities change when they gain or lose control within the game.

At the mom-and-pop trading level, there is a degree of equilibrium, but when you get to multinationals that have accumulated wealth often greater than many national economies, the problem arises that they are too big and intertwined in our daily lives to break up. Economics is not a Newtonian science of repeatable outcomes; it's a human science of infinite human butterfly effects and black swans within vast spectrums of brain wiring. All we can do, as Keynes stated, is predict the very near future with any accuracy and use the uncertainty principle to always intervene when economies crash, which they will.

[Sammysapphira]

It was said walmart was going to destroy america in the 2000s due to its incredible pricing model. The reality is walmart revolutionized the cost of random goods and groceries so much that every other company needed to adjust. Some disappeared, but many remained. Today, walmart isnt seen as an overpowering all dominating monopoly like it used to. I dare to say people would even list it in a top 20 list.

Even in the ideal circumsrances, a natural monopoly failed to manifest. One could argue that walmart had even more advantages than a natural monopoly would have (vendor exclusively), yet it still did not manifest.

Items at walmart quickly became associated with low quality. Shopping for clothes at walmart is considered a joke unless you are a small child. This creates a niche, and from the so-called monopoly of walmart sprung up various "high quality" stores particularly for groceries like all natural foods.

[kamerondonaldson]

they did. war economy natural monopoly. everyone's in denial that they died in the simulation and they're all asking vishnu for reincarnations.

[farawayquill]

What about Public utilities ? Like water supply. Without gov wouldn’t their still just be one pipe that can go to each house ?

[augustleo]

Would you say that reputation also plays a part in economics?

[GalliadII]

the assumption of the warchest can be made due to someone being "the first" supplier of a good and therefore a short term monopolist. sure we get other suppliers but only in the mid term, not in the short term. also you ignore any cost of entering and exiting the market completely. as well as the issue of companies in an economy in their sum having a lot of market power, which means they would be able in general to charge prices above an efficient rate. and due to entry and exit costs a new company cannot fill the spot to take them down. that is when you need the government to step in to stop a loss of welfare.

[HistoricalFanatics]

Man I don’t see why I thought this before, now it seems stupid that most people think that monopolies are caused by less restrictions

[Martijnica]

Excellent explanation, horrificly distracting music in the back... 😬

[TheEmperorsChampion]

Once when I was in the army we went to Ukraine to help train their national guard guys for 3 months. Just about everyone in the infantry dips so I brought 60 cans with me to last through the whole 3 months, no one else did so. For a short time I had a natural monopoly but that ended rather quickly as I sold the cans I had and couldn't get more, best lesson 9n supply and demand that I've ever had

[kockorzo]

While it is a matter much misconceived and worth a deeper exploration, I felt a lack of clarity and focus throughout your entire video. In failing to take the brunt of the argument head-on choosing rather to dawdle around just anarcho-capitalist theory, your presentation comes off as insipid and drab. Omitting the instances of horrific bias and lacking considerations for when the distribution of key resources are controlled by the monopolist (assuming no expectation of government intervention), your argument starts to spill. And in not evaluating the practicality of your assessment, you have shown to fail— I hope you hold a motivation for improvement and are smart enough to capitalise on this most humble critique.