AskProfWolff: How Socialism Deals with Monopoly

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A Patron of Economic Update asks: "How do you prevent monopolies without the use of government? Furthermore, how does a socialist mode of production prevent monopolies from forming? Or would government intervention still be a necessary function? Is this because socialism is usually predicated on the idea of cooperation instead of competition, or would this require a shift in the paradigm of how we conduct our business?"

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[fcvgarcia]

Thanks for sharing your knowledge and sharp reasoning, Professor Wolff!

[johnlewis]

The people who are requesting these questions and Prof. Wolff’s responses are always on point. Nuanced, enlightening, and exactly what the world (especially the US) needs. I’m so grateful for this program!

[nrrork]

I deal with Monopoly by never upgrading my houses to hotels, creating a shortage of houses so that my opponents can't develop THEIR property.

[skydroid]

A very interesting question indeed. Great video as always!

[DeathToMockingBirds]

Thank you, very good explanation.

I was however wondering how the possibly low amount of employees would prevent a monopoly. If we look at online services, such as Facebook, a relatively small number of employees could conceivably take over a whole market.

Also, if we look beyond the enterprise, and agreed as a society to guarantee certain goods and services "for free", running the whole thing centrally, but in a democratized way, it would become a monopoly of our own making... But would it be bad?

[craftycoaster]

Prof. Wolff, I have a question.
In your Democratic socialist world, who would be insentivived to START a business? Government? An entrepreneur? A co-op?
I am legitimately asking.

[Domi_]

In Germany we call it "Räterepublik".

[GroundThing]

One thing to note is I feel like monopolies would be far less likely to occur under socialism, or at least the socialism you describe (so not including "socialist" State Capitalist monopolies), simply because of the way scaling works differently: under capitalism, since profit is revenue minus expenses, if you open up a second factory or store or what have you, and double the revenue while doubling labor and other costs, you double profit, incentivizing expansion and acquisition under capitalism. Under socialism, the pay of a worker would be (revenue - expenses - retained assets ect)/# workers (for simplicity I'm assuming each worker gets an equal share, but it applies the same if this isn't the case), so if you double revenue, double expenses and double the number of workers the pay of a worker would be roughly the same, so there'd be less incentive for expansion and acquisition. There'd still probably be some economy of scale, but I think you'd be less likely to see monopolies, in favor of probably federations that pool knowledge, technical standards and/or brand iconography, akin to something like a democratically managed franchising operation.

[lorrainewest]

What I find intriguing is people criticise Socialism but use the practices and Assets of Socialism such as Parks or Public Buildings or facilities to climb up the social ladder.

[theartificialsociety]

No, that is not brutal and abusive enough. We need homelessness, bankruptcies, slums, food banks, uneducated, prisons instead of helping, charities to justify religion. If you take all of that away, it will be utter chaos.

[clarkebowers]

I have thought about this.. In a socialist economy, to enhance competition, a dominant "company" which produces a higher quality product (or service)or a less costly product (or service) of similar quality would be tasked with educating and enhancing or "bringing up to speed" the less competitive "companies" and be rewarded financially for it. In other wards the institutions of research and education would be staffed by representatives of the more competitive sectors, and receive higher compensation so "companies" competing remain competitive.

[Sol-Invictus]

I fear your words fall on ears that don't comprehend more than struggle and entertainment, professor. But at least somebody attempts to explain and educate in these concepts. So winning I suppose.

[RichardSewill]

In our capitalist society, we have regulated monopolies such as the the utility company. We don't want multiple companies digging up the streets, each laying their own pipes.

Would we have regulated monopolies in a socialist society?

[georgegates]

Great video Professor Wolff!! On another note: I wonder if Socialism has INFLATION or does their system naturally get rid of it? .. And if inflation does exist, how would it handle it??

[ivanoffw]

So, a worker cooperative would be limited to around 150 people based on Anthropologist Robin Dunbar's work?

[johnchristopherdelegero]

What's the bases of value of product? As in monetary value.. does it base on measurements of energy and matter?

[fod]

How does one implement democracy in a company, if leadership decides who is part of the company? What would stop a majority opinion group getting rid of all workers in a minority opinion group in a company? Would you give voting right perpetually to people having worked in this company? In that case, could they become toxic voters that try to cause harm to the company they aren't part of?
I see that many unions"solve" this issue with a "last-in-first-out" clause, but this discourages effort in my experience. I would not want to save workers from rapacious slave drivers to push them into the arms of laziness and apathy.

[jameswalkup]

Is it illegal to start a workers owned company now? In a workers owned company is everyone’s salary equal? How would one transfer from a capitalist society to a socialist society (is it phased in or do create a deadline for all capitalist companies to become socialist)? For a company like amazon is every decision the company make have to be voted on? Do you think a company that large could successfully function when every time a decision needs to be made you have to get thousands of people to vote on it? For a company like Microsoft do you think Bill gates vote on what direction the company should go be equal to the janitors vote?

[andywehre]

Wolf 2024 on #PeoplesParty ticket would be my dream!

[RichardSewill]

In a Socialist Society, would we get rid of the concept of Patents? I had a Libertarian friend who argued we need to get rid of Patents. I told him it was politically impossible in our Capitalist Society.