I think there is some merit to the idea of "natural monopolies". If you look at England and what they did to the railway system, this becomes apparent: it's just insane to think many companies can compete on such a "market". It just leads to chaos. You simply have only one railway infrastructure, and building redundant infrastructure would be crazy. So they came up with the idea to separate the infrastructure from the companies - instant chaos followed.
Yep, it looks like it has been a real disaster in more way than one. Found this analysis "An illusion of success: The consequences of British rail privatisation":
This article accounts for the British experiment with rail privatisation and how it has worked out economically and politically. The focus is not simp…
That made me wonder why the railroads were nationalized in the first place. Haven't found all the details, but this caught my eye:
A key reason this latest privatization push failed is vertical separation. This was controversial from the start. Before the railways were nationalized by Clement Attlee's Labour government in 1947, they were run by four major companies, each of which controlled its own infrastructure and operations. Rumor is that when the Conservative government won the 1992 general election and was deciding on how to privatize British Rail, the prime minister himself, John Major, was in favor of a return to this old "Big Four" structure.
There were multiple problems leading up to nationalization, which in turn created more problems (see: Britain's railways were nationalised 70 years ago – let's not do it again for example).
At the time, the network was in dire need of investment. The Railways Act 1921 had consolidated over 100 operators into “the big four” – Great Western; London, Midland & Scottish; London & North Eastern; and Southern Railways. They had been financially squeezed by rules that forced them to carry freight at rates that were often unprofitable, and competition from an emerging road sector that had been prioritised for public investment.
There is a strong sense that whatever the level of investment in trains and track, it will never be enough. But this endless quest for a modern efficient railway can only ever be pursued with the heavy support of public finances. Nationalisation is likely to have little impact because the state is so heavily committed already.
Nationalisation was no panacea in 1940s. It was driven more by circumstances and political ideology rather than any great strategic vision for a modern railway. The investment errors of the 1950s look like a classic example of the ills of public sector management: poorly defined objectives, loss of focus, little sense of realities at senior management level and wasteful extravagance.
The current model, on the other hand, exposes the private sector to excessive business risk and builds instability into the system. It also still depends heavily on state infrastructure investment or guarantees.
The best way forward is probably to optimise what we have: re-evaluate the rail franchising process and look at different ways to share business risk between the public and private sectors.
And it looks like the problem now is the same as it ever was: railroads are expensive. The only way for them to be affordable is to operate on a loss. From the first article:
Since the birth of the British railway network in the UK in the mid-19th century, matters of access, ownership, and standards have been a source of recurring controversy, but the underlying driver of periodic reform over the past 50 has been the issue of costs: how to meet the expense of a capital intensive industry which produces diffuse social and economic benefits, but cannot recover costs from passengers without pricing much of the population off the railways. The logic of nationalisation in 1945 was that British Rail, as with other strategic nationalised industries, would provide a cheap service for the rest of the productive economy, with operating losses tolerated because profit was not a privileged indicator of performance.
As long as people agree to the level of taxation that will provide the necessary subsidies, then all power to them, IMO. But at what point does it become simply propping up a dead industry? Are there any alternatives?
Filing this under read later: Murray Rothbard on railroad pricing, subsidies, and cartels: Books / Digital Text
That's what they say, but as human beings, is that what they do? Would they voluntarily help competitors, for example, just to avoid becoming a monopoly? Bill Gates did such a thing with Apple, but arguably only to avert the antitrust case brought against him.
That's really the central thing, I think: as human beings. We have to keep in mind what human nature is, our general shared features, as well as variations and deviations. (That reminds me, I still want to finish posting those Lobaczewski sections, then write up some of the implications I think they have.) I think in general, the majority of people aren't complete jerks. But neither will those people be total altruists. They will be primarily concerned with their families, and hopefully a wider, but still relatively small, community too. And the way they provide for their families is by doing something that serves the wider community in some way, and for which they get something in return. There is an energy/money exchange going on here, which will be imbalanced in various ways at various times, but which is constantly in flux.
As I mentioned in a previous post, I'm not convinced monopolies as described are necessarily evil (i.e. if defined as having a large market share). And if they are behaving in a truly evil manner, social mores and laws should be in place to punish such behavior. But like you point out, people in general won't 'help their competitors' in certain ways. Should they? Why, how, and in what circumstances? Sometimes giving without the expectation of return is the right thing to do, but in most situations doing so would be naive and self-defeating (for self, family, perhaps even the larger community).
To use an example outside of economics: for the most part, academics don't write their colleagues' papers for them, and they shouldn't. And the discoverer of a major new breakthrough doesn't call up the other experts in her field to let them all share in the discovery. They may give advice, mentorship and feedback, like humans do in general. Even direct competitors do sometimes. They may even give an opportunity to join together in a mutually beneficial collaboration. But there's a line between what should be shared and what is the other person's responsibility. If there is a super successful biologist with hundreds of papers to his name, it's not his responsibility to his work with you, or share his prestige. It's your responsibility to produce - to think, criticize, come up with better ideas, etc. - if that's your calling. And if he's a decent person, he might even support you. But it would be unrealistic to EXPECT support. A similar dynamic applies when it comes to money/business, IMO. (The similarity only goes so far though...)
So for the self-described capitalists I made reference to, yeah, they'll say the believe in the free markets and competition. In practice they will not like competition to varying degrees: either because of the work that has to be put into it, or because they fail, or because they're incompetent. And some will be more selfish than others. But I still think the majority of people operate the way Lobaczewski described: they have a basic level of social intelligence and sense of fairness. They might cheat when the temptation is too great, but overall they will play by the rules. (And of course a minority will break all the rules, and that always has to be taken into account.) And they will rationalize when they are actually producing harm in addition to whatever good they're producing, which will require pushback to correct.
Translating my point to the academic example. Every ambitious biologist will want to produce original, groundbreaking work. They may even be resentful when others are more talented and successful (or more successful and less talented). But no matter how much they dislike the actual practice and existence of competition in their field, they will accept on some level that it is necessary for science even if inconvenient to them. It will be a rare biologist who tries to take out all the competition and create a totalitarian system of biology where they're the only one allowed to succeed (that's the government's job - j/k!). It's probably even a rare biologist who doesn't try to mentor young newbies and collaborate with colleagues. In other words, very few people are motivated SOLELY by naked ambition. Those who are are the ones to watch out for.