liberal

There is a well-known assertion that monopolies do not form in a free market. This, of course, is not true: in a free market, everyone has the opportunity to secure a monopoly for themselves. All it takes is very little: simply invent something that others haven’t thought of, implement it, and start selling. That’s it, you have a monopoly. If your product is in demand by the market, this monopoly will also bring you superprofits. Then competitors will catch up, and for a while, you can maintain your superprofits if you enter into a cartel agreement with them. Then someone will start to break it, hoping to seize a larger share of the market, and after some time, nothing will remain of your cartel.

But why suspect people of bad intentions? Let your cartel agreement remain sacred and inviolable, because each of its participants has learned the prisoner’s dilemma by heart and knows how to think a couple of steps ahead. Let’s raise our glasses to the cloudless future of your business!

Alas, the weather is fickle. Tomorrow, someone will appear who dreams of a monopoly. They will invent something that no one has thought of before, implement it, and start selling. After that, it will suddenly turn out that this was a substitute product for your cartel’s goods, and now you have competitiveness problems. You will urgently have to agree to increase production and lower prices to maintain market share, but still, your horse-drawn carriage, which was so progressive until recently, will gradually begin to lose to that wretched tram.

What is to be done? The market is free, entry is open to anyone who wishes, and this is an unavoidable obstacle for anyone who wishes to rest on their laurels from past achievements. One should invent some kind of thing that would allow limiting free entry into the market; then the old, respectable business will certainly be threatened by nothing. What should it be called? There, let’s call it the state! Great, all that’s left is to implement this product and start selling it.

Ah, what? Did I answer the wrong question? Well, sorry…