-Caveat Lector-
As a technology professional with over tens years Internet experience, I can
testify to William Hugh Tunstall comments. The subsidies are often
indirect through the granting of minor or major monopolies, (for a good
example see the history of AT&T, and the monopoly they had for well over a
half a century). The government often has a dual use/dual purpose agenda
in these areas, with strong linkages between industry, academia, and
government.
Capitalism does not thrive on competition, on the contrary the false
Darwinian construct of competition seeks to explain market forces, price
patterns as the justification of arcane economic mechanism is simply
derived non-sense.
Capitalism seeks to aggregate resources, and to wipe out threats to
expanding growth of competitors or monopolize energy, whether it be in the
form of money, information, food, fuel, or other raw material. However
monopolistic forces wipeout innovation because there is no incentive.
Does this make capitalism bad? No, just its false and widely practice
Darwinist credo which has slowly inculcated the modern economic thinking.
Innovation has always been the driver of capitalism, it like saying that
water is necessary for life. William Baumol's bullshit announcement
smacks of fascination with the obvious. Innovation has always been the
great inducer of capital, which is patently obvious to most casual observer.
It should not be surprising that firms sign strategic partnerships with
their competitors seeing that their innovations will ultimately fuel their
own innovations.
As Peter Drucker said nearly ten years ago"International economic theory is
obsolete, the traditional factors of production land, capital and labor are
constraints rather than driving forces, only information has become the one
true factor of production, it underlies the most powerful and radical
transformation in the global economy." A la Internet!
============================
Jeffrey C Hearon
Founder & CEO
SCIO-LTD
http://www.scio-ltd.net
http://www.scio-ltd.com
http://www.scio-ltd.org
============================
----- Original Message -----
From: William Hugh Tunstall <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Sent: Wednesday, June 09, 1999 3:14 PM
Subject: Re: [CTRL] Revising Capitalism/ rebuttal.
> -Caveat Lector-
>
> Much of the R and D in high tech industries is funded by
> the
> taxpayers... We have NASA, NSA, Livermore, MIT, the mammoth defense
> contractors...... Silicon Valley has had its share of government
> subsidies..
>
> So the argument that market forces (capitalism) are responsible for high
> tech innovations is false. When "the invisible hand" stays invisible,
> government comes to the rescue. Read the essay, "Cyberselfish" for a
> more balanced view.
>
> On Sun, 6 Jun 1999, nurev wrote:
>
> > -Caveat Lector-
> >
> > 6/6/99
> >
> > No matter what changes and inovations Capitalism goes through, there
> > always
> > remains the deadly constants.
> >
> > 1- Private ownership of large amounts of capital ALWAYS causes
> > concentration
> > of wealth into few hands. With that ALWAYS comes control and
> > exploitation
> > of society.
> >
> > 2- Capitalism, like cancer, is defined by growth. The ecology of the
> > planet
> > can no longer tolerate systems based on waste and growth.
> >
> > 3- Capitalism is theft. Its success depends on how much the capitalist
> > can
> > steal from the worker on one end, and the buyer on the other.
> >
> > 4- Capitalism causes mental illness in the form of addiction to money.
> >
> > 5- No Capitalist is really supportive of competition. Competition is
> > wasteful and chancy. Monopoly is the true aim of capitalists.
> >
> > Joshua2
> >
============================================================================
=
> > "Taylor, John (JH)" wrote:
> > >
> > > -Caveat Lector-
> > >
> > > New York Times
> > > June 5, 1999
> > >
> > > Revising Capitalism: Coorperative Innovation Steals Competition's Thun
der
> > > By MICHAEL M. WEINSTEIN
> > >
> > > Capitalism, every undergraduate student of economics learns,
> > > thrives on competition. The brilliant virtue of the invisible
hand
> > > of competition is that it forces firms to reduce costs, cut
prices
> > > and thereby enrich consumers. This engaging tale has buttressed
> > > every economics narrative since Adam Smith lucidly explained more
> > > than 200 years ago how competition channels the natural greed of
> > > individuals into serving the social good.
> > >
> > > Now William Baumol, an economics professor at New York
University,
> > > wants to rewrite the basic tale. Yes, competition creates wealth.
> > > But in his new formulation, price cutting becomes a sideshow.
> > > Innovation takes center stage as the "primary weapon of
> > > competition." And the key to innovation is a clever form of
> > > collaboration among rivals.
> > >
> > > Innovation, the process of translating inventions and new ideas
> > > into commercial products, is largely responsible for the tenfold
> > > rise in the living standards of American families over the last
100
> > > years, he says in a new manuscript. Baumol's contribution is not
to
> > > emphasize the impact of innovation but to pinpoint how
competition
> > > forces companies to make innovation routine, much as marketing
and
> > > advertising are.
> > >
> > > In Baumol's analysis, capitalism emerges as a system that hums
> > > because it has figured out how to make innovation humdrum.
> > >
> > > Baumol shows how companies pour money not only into their own
> > > research and development but also into such operations by their
> > > rivals. Yes, their rivals. Firms participate in joint ventures
that
> > > hire teams of researchers to develop technologies that the firms
> > > will share. They also engage in the largely unrecognized practice
> > > by which companies enter into technology-sharing compacts. Under
> > > these compacts, a company like IBM writes contracts with
> > > competitors, like Hitachi. The companies promise to license
future
> > > innovations to each other for a set fee. That way, if Hitachi
comes
> > > up with a spiffy next-generation disk drive, IBM is guaranteed
the
> > > right to incorporate Hitachi's new drive in its own computers.
> > >
> > > It might seem odd for an economist like Baumol to herald
> > > collaboration among potential competitors. By jumping into the
arms
> > > of rivals, companies appear to dull their incentive to innovate
on
> > > their own. After all, if they can imitate rivals, why bother to
> > > innovate on one's own?
> > >
> > > To understand Baumol's point, put yourself in the place of IBM.
You
> > > could try to piggyback off Hitachi's innovations, dismissing your
> > > own engineers. But that strategy would collapse. At the very
least,
> > > you would be dishing out hundreds of millions of dollars each
year
> > > to rivals without getting anything in return. Worse, Hitachi
would
> > > soon drop the agreements, because they make sense only if it
> > > expects to get about as many new products from IBM as it provides
> > > to IBM.
> > >
> > > Nor would it make economic sense to beef up your investment in
> > > innovations without entering technology-sharing contracts. If
four
> > > or five of your major rivals share innovations among themselves,
> > > then they will generate lots of ideas, drowning out the efforts
of
> > > your one research department. And anything you don't figure out
on
> > > your own will be offered to consumers by all your rivals. You
> > > simply cannot afford to bear that risk. The compacts eliminate
the
> > > threat that a misstep in the technology race will drive you out
of
> > > business. Besides, Baumol says, the compacts generate licensing
> > > fees that have become "a substantial business activity in
itself."
> > >
> > > Baumol's analysis makes a bigger point, far beyond the benefits
and
> > > costs to individual companies. Technology-sharing contracts also
> > > help the economy -- that is to say consumers -- by spreading the
> > > benefit of innovation far beyond the customers of any one
company.
> > > You don't have to buy Hitachi to get the benefit of its
> > > breakthroughs.
> > >
> > > Drawing on his career as a consultant as well as scholar, Baumol
> > > says "that of the 20 or so firms that engage in substantial
> > > research and development for whom I have consulted over the past
> > > few years, almost all had technology-sharing agreements of one
sort
> > > or another with other firms in their industries." The managers of
> > > these companies, he says, often agreed to them reluctantly. But
the
> > > scientists, especially the engineers, often required them as a
> > > condition of their employment: they simply refused to work for a
> > > company that would not allow them to communicate with their
peers.
> > >
> > > He points to a compact that Perkin-Elmer Corp., which sells
> > > scientific instruments using precision optics, has had with
Hitachi
> > > for the right to license innovations that either company might
> > > adopt. Under the compact, each company provides a menu of
> > > innovations under development, any of which it promises to make
> > > available for a fee that often ranges from 6 to 7.5 percent of
the
> > > price of the product that incorporates the innovation.
Perkin-Elmer
> > > has entered compacts with about 100 other companies. United
> > > Technologies' Pratt & Whitney, a manufacturer of aircraft jet
> > > engines, has technology-sharing agreements with a rival, General
> > > Electric.
> > >
> > > The computer industry, Baumol says, is littered with
> > > technology-sharing agreements. Baumol's point is that innovations
> > > are no longer left to historical quirk or random feats of genius.
> > > Rather competition has forced corporations to bring to market a
> > > steady diet of innovative products from their own scientists or,
if
> > > not, from scientists working for their competitors.
> > >
> > > Baumol's focus on innovation may not seem novel. Joseph
Schumpeter
> > > and others made it the core of their theories of economic
progress.
> > > But in fact, the Baumol formulation overturns the thrust of
modern
> > > textbooks.
> > >
> > > The typical (dreary?) presentation starts with chapter after
> > > chapter about how upward sloping supply curves and downward
sloping
> > > demand curves interact in idealized markets to determine prices.
> > > When all goes well, market prices produce efficiency, a wondrous
> > > social outcome whereby the economy churns out the most output
> > > possible with its limited amounts of labor, land and machinery.
> > > Nothing goes to waste.
> > >
> > > But market prices do not produce wondrous results in the presence
> > > of imperfections like monopolies. One imperfection, called an
> > > externality, is crucial to understanding the important message of
> > > the Baumol manuscript. Markets go haywire when the impact of a
> > > trade between buyer and seller extends beyond the two parties
> > > directly involved.
> > >
> > > Take innovation. The profit from innovation routinely leaks to
> > > third parties. A firm spends a lot of money bringing to market a
> > > clever new electronic organizer or tennis racket. Ten nanoseconds
> > > later, another firm tears the product apart and reverse engineers
a
> > > variation that gets around the patent. So the first firm winds up
> > > making relatively little money, a heavy disincentive for would-be
> > > entrepreneurs.
> > >
> > > Professor Edward Wolff, a colleague of Baumol at New York
> > > University, estimates that innovators can expect to earn about 10
> > > cents a year from each dollar they invest. But because the
> > > innovation leaks to other companies and other sectors, the
economy
> > > as a whole reaps a benefit of about 50 cents. The implication,
> > > according to the textbooks, is that capitalism provides
> > > entrepreneurs too little of the profit that investments create
for
> > > the economy. So they invest too little in the development of
> > > products. Consumers suffer from high prices, restricted choice
and
> > > delayed innovation.
> > >
> > > The traditional analysis, then, says that capitalism blunders at
> > > generating innovation over the long run. Baumol's manuscript
> > > reverses this presumption. Competition forces firms to innovate,
> > > engaging in what Baumol says "is tantamount to a technological
arms
> > > race." The technology-sharing compacts, by generating a steady
flow
> > > of licensing fees for IBM, Perkin-Elmer and other innovators,
turn
> > > innovation into a routine profit-making activity. The competitive
> > > system, he says, goes "a long way, perhaps all the way, toward
> > > generating the right amount of innovation." The compacts overcome
> > > leakage by pouring more of the economy's gains from innovation
into
> > > the bank account of the innovator.
> > >
> > > By reducing the risk of innovation (a company that goes down the
> > > wrong technological road can lease the innovations it did not
come
> > > up with) and increasing revenues, technology-sharing compacts
make
> > > innovation profitable, routine and plentiful. As proof, he points
> > > to nonmarket societies that generated plenty of inventions but
few
> > > applications. Medieval China, for example, invented gunpowder,
> > > paper, the printing press and probably the compass and the water
> > > wheel. But these inventions failed to raise living standards
until
> > > adapted into consumer products by societies that were less
hostile
> > > to commerce. The genius of Western capitalism was to translate
> > > invention into the goods and services that enrich everyday life.
> > >
> > > Baumol tells a tale rich in details about the market's use of
> > > collaboration to overcome problems of innovation. Along the way
he
> > > turns standard analysis upside down. Textbooks congratulate
markets
> > > for their short-run efficiency, even though the short run is
> > > nothing spectacular. Entrenched monopolies, labor-market
> > > rigidities, perverse management incentives and many other
problems
> > > are pervasive. The standard analysis goes on to criticize the
> > > market for shortchanging innovation and growth, when in fact
> > > "spectacular growth is the market's outstanding accomplishment."
> >
> > DECLARATION & DISCLAIMER
> > ==========
> > CTRL is a discussion and informational exchange list. Proselyzting
propagandic
> > screeds are not allowed. Substance-not soapboxing! These are sordid
matters
> > and 'conspiracy theory', with its many half-truths, misdirections and
outright
> > frauds is used politically by different groups with major and minor
effects
> > spread throughout the spectrum of time and thought. That being said,
CTRL
> > gives no endorsement to the validity of posts, and always suggests to
readers;
> > be wary of what you read. CTRL gives no credeence to Holocaust denial
and
> > nazi's need not apply.
> >
> > Let us please be civil and as always, Caveat Lector.
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> >
>
> DECLARATION & DISCLAIMER
> ==========
> CTRL is a discussion and informational exchange list. Proselyzting
propagandic
> screeds are not allowed. Substance-not soapboxing! These are sordid
matters
> and 'conspiracy theory', with its many half-truths, misdirections and
outright
> frauds is used politically by different groups with major and minor
effects
> spread throughout the spectrum of time and thought. That being said, CTRL
> gives no endorsement to the validity of posts, and always suggests to
readers;
> be wary of what you read. CTRL gives no credeence to Holocaust denial and
> nazi's need not apply.
>
> Let us please be civil and as always, Caveat Lector.
> ========================================================================
> Archives Available at:
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>
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> Om
>
DECLARATION & DISCLAIMER
==========
CTRL is a discussion and informational exchange list. Proselyzting propagandic
screeds are not allowed. Substance—not soapboxing! These are sordid matters
and 'conspiracy theory', with its many half-truths, misdirections and outright
frauds is used politically by different groups with major and minor effects
spread throughout the spectrum of time and thought. That being said, CTRL
gives no endorsement to the validity of posts, and always suggests to readers;
be wary of what you read. CTRL gives no credeence to Holocaust denial and
nazi's need not apply.
Let us please be civil and as always, Caveat Lector.
========================================================================
Archives Available at:
http://home.ease.lsoft.com/archives/CTRL.html
http:[EMAIL PROTECTED]/
========================================================================
To subscribe to Conspiracy Theory Research List[CTRL] send email:
SUBSCRIBE CTRL [to:] [EMAIL PROTECTED]
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Om
