Is there a general trend in capitalism for competition within a given industry to decline over time thereby gradually becoming more oligopolistic/monopolistic?

Asked by: geeklamb
Is there a general trend in capitalism for competition within a given industry to decline over time thereby gradually becoming more oligopolistic/monopolistic?
  • Capitalism 101: Your Monopoly Game

    It is an obvious historical fact that that money in a purely capitalistic society tends to accumulate in fewer and fewer hands. Without any checks and balances, capitalism is self-cannibalizing. It only rewards superior competitors at the beginning of any given industry and then declines, providing consumers with lower quality at higher prices. Fewer and fewer new industries can emerge as control of resources and basic services are snatched up, leaving later generations with fewer and fewer options. The same thing happens in miniature in the game Monopoly when one kids ends up with all the money; it just takes longer in a large-scale economy. Ironically, the balancing factor comes from what capitalists hate most -- government regulation and socialist redistribution of wealth. That's how FDR "fixed" the Great Depression -- with the "New Deal" that reinvigorated the economy. On its own, or if left unchecked, socialism and regulation are also self-cannibalizing, so the trick is striking the balance.

  • The rate by which competition is introduced always tends to fall behind the rate by which competition is reduced.

    Over time firms tend to outcompete their competitors or collude and/or merge with them. The result is eventually oligopolistic and/or monopolistic industries that require anti-trust laws to create new competition. Additionally, firms that acquire large amounts of political and market power, engage in practices to ensure there are barriers for other firms to enter the market. They can lobby the government to impose excessive regulations, practice predatory pricing methods (where they drop the price and even take a loss just long enough for their competitors to go out of business), as well increase the demand of their products/services through marketing and other methods that make the demand more inelastic.

  • No it does not...

    First, it should be noted that whilst competition has decreased in the sense that companies, corporations, businesses and firms are now larger, that can mainly be linked to globalisation and industrialisation, in which economies of scale and mass production are possible. The fact that firms are now larger than before as well as the fact that mass production is more massive and common than before indicate that competing firms can now produce goods more easily, thus allowing for a decrease in price. Therefore, if oligopolistic/monopolistic practices are taking place, the mass production and economies of scale seem to be overweighing the negatives, which is indicated by decreasing prices (when adjusted for inflation).

    Secondly, whilst firms and companies tend to be larger, capitalism and free trade have now allowed companies overseas to compete against each other, which would not happen (or happen less) under a protectionist government. Indeed, an example of this is the increase competition in the automobile industry, as over the last 50 years the range and diversity of cars in a country (especially more capitalist countries) have dramatically increased.

    And finally, your last comment on firms/corporations lobbying the government is in a sense redundant. If the government was to engage in subsidies and protectionist policies, it would be by definition less capitalist or free trade. So unless the question is does capitalism typically lead to non-capitalism, then the statement doesn't apply.

    Posted by: WXL

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