How Platform Monopolies Failon January 14, 2012 at 10:32 am and modified on February 4, 2012. at 2:49 pm
Technology platform tend towards monopoly. Whether physical or virtual, platforms provide a level playing field for other actors to use to their advantage. The predictability of monopolies allows other actors to plan for the future, and the technological stabilization they present make the road ahead a lot less frightening for most involved. Monopolies cannot and do not “charge whatever they want” — they price their goods so that they capture a portion of the value they provide that is still low enough to deter other potential competitors from entering the market.
Markets fail through either lack of empathy or lack of understanding. Lack of empathy occurs when the monopoly is blind to the political concerns of other stakeholders, and they therefore use their power to break the monopoly. For instance, in the United States, the left-of-center turned strongly against the physical sciences after the Vietnam War, at the same time at the right-of-center was agitating against government control. The Bell System, by continuing to fund physics research while relying on government control of rates, thus back unempathetic to other actors, and was broken up.
General Motors was a much more empathetic monopoly. They encouraged the growth of the United Auto Workers, allowing both the capital and labor sides of the organization to strongly influence the Republican and Democratic parties, respectively. GM cleverly overcharged for their products, allowing niche competitors such as Ford and Chrysler to survive (and providing a veneer of competiton), while keeping those marginal companies captive through the threat of lower prices. Indeed, GM as an organization was so empathetic that management and labor was bailed out by the Bush and Obama administrations! Unfortunately for GM,the shock of high oil prices lead to a decline nonetheless.
In the US education system, the Teachers Front Organizations opeated as a monpoly for nearly a century, until being replaced by the federal-academic complex.The reason was both lack of empathy and an external shock. The lack of empathy was exhibited primarily from the Teachers Front Organizations’ lack of concern with State power or Employer’s seeking workers that can be hired. The external shock was first the sexual integration of the American workplace, followed by globalization.
I imagine that if either of these things had not been there — if the Teachers Front Organizations had not been lacking in empathy, if the workplace had not been integrated, or if globalization had not occured, the Teachers Front Organizations would stil be the platform monpoly in the US educational system. If the workforce had not been integrated, teaching would not have suffered from the lobotomy of low wages, as the sexism discount would have still brought many high-performing women into teaching. Likewise, if globalization had not occured, large employers would not have faced the stress of tring to hire a proportionate fraction of their labor force in the United States while facing a disproportionate incompetent labor force in the form of public school graduates.
The consequences of this failed monopoly are as hard for teachers as the failure of the Bell System or GM where for their stakeholders. The teacher leadership in the United States has left everyone — including teachers — down.
Monopolies do not last forever. And monopolies are not all bad. But the Teachers Front Organizations died as a monpoly because it was bad at its most basic job: survival