For Austrian School economists, monopolies rise when consumer wants them to, buying its products and not those from other companies; and they fall when the smaller competitors surrounding them take advantage of the “monopoly’s” low moments to gain the confidence of consumers and unseat it with better products. Every company follows three cycles: birth, maturation and death. “Monopolies” are no exception.

 

Although it doesn’t dominate 100 percent of the market, people have accused Microsoft of being a monopoly, making everyone think this is “bad.” But in the past few years Microsoft, as is clear from its stock price, can’t get anything right. The latest misstep is the delay, once again, of its new operating system Windows Vista.

 

Despite this, the Redmond giant’s program’s traditional competitors don’t look like any real threat. But one of the characteristics of the free market is its ability to generate an incredible explosion of innovation and lower costs. This week a Chinese company announced it is going to manufacturer and sell computers equal to a Pentium III for $100. Its goal is to unseat hardware manufactures Intel and AMD. Not an easy task. Clearly, if the company is successful, the bureaucrats in Europe and the United States will impose high tariffs; can’t have consumers saving money or allowing anything to jeopardize their fat salaries –but, of course, it will be for the “common good.”

 

This example begs the questions: and why can’t another Chinese company make computer products for $60, $50 or $40? When it comes to hardware, China has been an advanced competitor for a while. It is now starting to get into the software market. In the free market, there are thousands of surprising and positive examples like this one. Capitalism is growing fast in some Asian countries. Asia has the capacity to support strong autonomous markets where Western creativity can find refuge from European and American statism. But what is Europe’s answer to this “threat” of innovation, low costs, fleeing capital and entrepreneurial brain drain? Its politicians, rather than open their minds (perhaps that is too much too ask), borders, lower taxes… just debate, restrict and regulate our freedoms –forcing us to lose money, opportunities and precious time.

 

Talk of the death of Microsoft or Intel is still premature, as is any mention of China’s triumph, but there is something we can be sure of: if we don’t open the doors to de-regulation and the systematic liberalization of every economic sector, in other words, the most “savage” capitalism, in a few short years Europe will end up like Africa. Profesor DiLorenzo’s conclusions are not only applicable to natural monopoly, but to countries: the best rules until another country better adapts to consumer changes and tastes. Nothing lasts forever, and even less so blocking free trade.