By Manifesto Joe
We Americans are indoctrinated, usually quite effectively, in the notion that capitalism is an ultimately fair, if sometimes unmerciful, economic system. It is supposed to be merciless competition itself that disciplines the market. If you make an unsatisfactory product, your competitors, in theory, eat your lunch, and your company soon goes under.
There are many examples of why this is merely theory, divorced from reality. The latest comes to us from the company that sold me the very computer I am typing this on, Austin, Texas-based Dell.
A recent New York Times article reported that Dell employees knowingly sold millions of defective computers "from 2003 to 2005 to major companies like Wal-Mart and Wells Fargo, institutions like the Mayo Clinic, and small businesses." The University of Texas, in Dell's hometown, was another victim of this corporate malfeasance.
This came out as a result of a 3-year-old lawsuit against the computer giant. "Documents recently unsealed ..." the Times report says, "show that the company's employees were aware that the computers were likely to break. Still, the employees tried to play down the problem to customers and allowed customers to rely on trouble-prone machines, putting their businesses at risk."
To read the full article, go here.
The obvious question is: How the hell is Dell still even in business? The Times article does mention that Dell has been going through harder times in recent years, with complaints of poor customer service (I can attest to that) among other problems. That they would knowingly sell defective machines to companies and institutions big and small seems the most damning thing.
Why are they still operating? Granted, they don't have the market share they used to, and they have a few competitors. But that is a key word -- few.
For 120 years, the U.S. hasn't seen many blatant monopolies in our economy, mostly because the Sherman Antitrust Act more or less outlawed them. Intentional monopolies, such as can still be found in some places among utilities, are an exception.
But better economists understand the very strong presence of oligopolies, and also monopolistic competition, in the contemporary corporate world. "Bigness" is the defining factor here. We've seen it all too well among the banks, some of which are now termed "too big to fail," so they rate bailouts with taxpayer money. But it exists in plenty of other enterprises that don't benefit from such wide-open subsidization. (The subsidies are there -- but often indirectly, so you have to poke around to find where they are. The tax system is a good place to look.)
Dell became so staggeringly big that it could engage in this kind of malfeasance and yet still be in business, years later. Its competitors are few, and they are huge, too. All these folks appreciate a quiet life as much as anyone else. One of the crucial lessons of real competition is that you can lose.
So, Dell has lost market share, but it retains a great deal. It's so big, it almost can't fail. I still get plenty of junk mail from them, and here I sit, typing this on a five-and-a-half year-old Dimension 3000.
The marketplace discipline that competition is supposed to bring may have been very real in Adam Smith's day. There, we're talking about microeconomics at the village smithy and yeoman farmer level -- maybe small manufacturers. But today's enterprises have grown so large, they can get away with astounding things and still pay a very limited price for their misconduct. They still have the profits from the sales of millions of faulty computers; and even the aforementioned lawsuit, yet to come to trial, won't really compensate the victims.
So, what's the alternative? There aren't many good ones. But one thing seems clear. The "free market" model of popular indoctrination looks, in reality, nothing like it does in theory.
Maybe I could go to some bank, get a loan, hire techs to start building good, moderately priced computers, and put these rapacious bastards out of business. Which bank would you suggest? One of those that's "too big to fail?"
Manifesto Joe Is An Underground Writer Living In Texas.