The Great Transformation

Reading The Great Transformation by Karl Polanyi. It is certainly one of the great cross-disciplinary conceptual efforts of our time, and is the best book about economics I’ve read since Amartya Sen‘s Development as Freedom. Essential to Polanyi’s views is that our economic structures are embedded in a wider social and political context, and he makes the great point that men can not be reduced to economic automatons, as so many economists were (and still are) apt to do.

One of the insights he has is that there are some inherent conflicts within the dominant neo-classical liberal creed, specifically between the idea of laissez-faire policies and the institution of the self-regulating market:

“Strictly economic liberalism is the organizing principle of a society in which industry is based on the institution of the self-regulating market…For as long as such a system is not established economic liberals will call for the intervention of the state in order to establish it, and once established, in order to maintain it.” (page 149)

And I found a great example of this contradiction right over at that libertarian website, TLF:
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The Great Transformation

Do Monopolies contribute more to the world economy than a healthy, competitive market?

Cord Blomquist, sometimes e_f Commenter, asks a question over at TLF:

While I agree that Bill Gates ought to be admired for his monumental charitable efforts, can’t we also admire him for being an entrepreneur and creating countless billions in wealth?

He answers his own question thus:

After all, Gates didn’t just create wealth for himself or Microsoft, he’s also made the world a whole lot richer. Like it or not, it was Windows that provided the platform for much of the information revolution, which subsequently created a worldwide economic boom. We shouldn’t relegate this accomplishment to a mere footnote in Mr. Gates’ biography and it’s certainly worth considering the moral implications of that sort of wealth creation.

Note how Cord includes an assumption in his question, i.e., that Bill Gates has created countless billions in wealth. I am not prepared to stipulate agreement with this assumption, so I’ll restate Cord’s question, without the assumption below.

But, leaving aside Cord’s presentation of his argument, let’s look at the substance of what he is saying. The trouble I have with this thinking is that it shows almost zero faith in outcomes provided by authentic market structures and forces, so my response post over at TLF is:

This is a silly argument, for a variety of reasons that should be apparent to anyone with a slight faith in market based outcomes. I’ll just give the single largest example here, and follow up in few days with a post on this misinformation.
Had Microsoft or Windows never existed, another company would have stepped in to fill the market demand for a PC Operating System. So to make the argument that Bill Gates is personally responsible for the wealth creation of the PC revolution doesn’t hold water unless you demonstrate that there was something unique that Bill Gates brought to the table. So, when I bought a PC in 1991 for a construction site office (it was rare at that time, believe it or not) it came preloaded not with windows but PC GEOS, a non-MS product that MS used it’s anti-competitive practices to crush. If a true competitive market for PC Operating System had been part of the regulatory policy at the time (i.e., had MS been quickly enjoined from using it’s anti-competitive practices to first crush PC GEOS and then BEOS) it’s quite probable that we would have had better OS’s faster, due to competitive market forces. Instead, we had MS enrichment, not wealth creation.

Of course there are plenty of other reasons why Cord’s line of reasoning doesn’t make much sense, and he really steps into when he starts comparing Bill Gates to Mother Theresa:

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Do Monopolies contribute more to the world economy than a healthy, competitive market?

The tipping point…

The OLPC has succeeded, far beyond what I had expected. What has made it very clear that it has succeeded is the competition that the OLPC has created.

The most interesting competition comes from ASUS’s fabulous little subnotebook, the eeepc, which sells for as little as $299. (Thats right $299–I’m not missing a zero!) It’s the result of collaboration between Intel and ASUS. Despite having a rather weird acronym, it is the tech geek toy and it is also a mass market phenomena. It is the future of mobile computing, and ultimately the consumer desktop as well. It has already sold 350,000 units in its first five months, and ASUS expects to sell 3 to 5 million next year. And it ships with Linux (TM):

1907_l.jpg

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The tipping point…

The End of the Beginning

Microsoft probably thinks themselves very clever, having figured out a way to get revenue from GNU/Linux®. Their thinly veiled threats to sue, and to extract a fee for the right to use GNU/Linux®, seems to have borne fruit in that Dell is now buying SLES (SuSE Linux® Enterprise Server) licenses from Microsoft. However there are at least three silver linings to this development.

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The End of the Beginning