- Capitalism and Alternatives -

More on 'imaginary monopolies'

Posted by: Stoller on December 15, 1999 at 13:24:50:

In Reply to: Nice try, Barry. posted by Stuart Gort on December 15, 1999 at 00:06:33:

: You read Marx well but you never read my posts well. I only pointed out that the natural inequity of life is present in this example.

Fair enough, I rushed through your post. Although I got to the LTV point here, time constraints limited my argument's presentation.

Veblen actually used the term 'differential monopoly resting on popular conviction' (Theory of Business Enterprise, Scribners 1904, p. 55) but for all practical purposes it means 'imaginary monopoly.'

Although he used the concept to denote advertising and past business practices (which add up to intangibles such as public trust), I believe one can also add the idea of natural monopolies (remember Marx's argument regarding diiferential rent here?) to monopolies 'resting on popular conviction.'

First, I must say that we're BOTH taking for granted that Kevin's guitars are worth $4,500.

Those who make these determinations are 'celebrities' (as you describe Kevin's customers), individuals who earn---and expect to pay in many casess---astronomical amounts of money.

Anyway. . .

These celebrities each add to the 'value' of Kevin's workmanship by playing these guitars in public and perhaps mentioning them to other musicians. The 'value' of this advertising can be calculated NOT by Kevin's craftsmanship, but by the reputation of the celebrities (of which a great deal of advertising is involved).

Now, let's get to Jack---who presumably did not sell his guitars to celebrities (at least you never made mention of that).

Unlike Kevin, Jack never could access the 'popular conviction' of celebrity customers and, likewise, could not access the 'popular conviction' of the celebrities' advertising.

Kevin had a natural monopoly on certain celebrity endorsements.

This factor GREATLY increases the value of his work over Jack's.

Kevin, most likely, was lucky enough to have one of his guitars come to the attention of a celebrity so inclined to consider buying it. I would presume that some luck went into this event, as celebrites are usually hard to find (and solicit). I'm not saying that Kevin didn't have a REAL fine guitar to offer, I'm only pointing out that when his first sale to a celebrity happened, he then was in possession of a special type of monopoly.

Now apply this to Marx's definition of differential rent as I explained prior---and you will see that Kevin has ADDITIONAL labor costs added to his guitars, even ones that might have fell into his lap (as natural monopolies do).

Now, add to this the 'presentation' that Kevin---or his proxy---made in attracting the attention of the (first) celebrity, and you find yet more labor going into each guitar ('s sale).

: Nevertheless, under a socialist system Kevin will not be allowed to sell his instruments for $4500.

There are over 40 MILLION Americans who cannot afford health insurance (some of them are YOUR employees) and you're shedding tears for some dude making $4,500 guitars for pampered celebrities.

What a twisted set of priorities!

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