Capitalism, and at the Same

¶ … capitalism, and at the same time, since the 1980s, with the change of Soviet Union into Russia, it is probably the only major economic system left in the world. There are many phases of capitalism and the earliest form was mercantilism started in Rome and the Middle East in the middle Ages. The form was the distribution of goods by traders in a manner that they could get a profit. To achieve this, the goods were bought at one location for a low price, shifted to another area and then sold at a higher price. Even today, capitalism follows the same principles, and gets large amounts of profit by getting goods at prices lower than they are sold for. Yet in the entire process there some other results and that is that the means of production meaning material, land, tools, etc. become the property of some people. This property is also the "capital" and those who end up owning these goods are the capitalists. These goods are then used by the owners to produce goods with the assistance of labor who are compensated with wages. Thus humans start working for wages and not for the goods that they produce. The original hunter does not get a share of the prey, or the farmer does not get a share of the crop.

This builds up the effectiveness of the labor, as they are no longer directly involved in the product. It is said to become more "efficient" and the contribution of the laborer to the product is measured in terms of the productivity that he can get. This has to be increased by the capitalist and he increases the productivity of individuals by dividing the labor into small components. This break up of labor ends up reducing the value of the labor individually in terms of skill and wages of the laborer. These problems were seen in the 19th century and the early part of the 20th century. Thus it is clear that the aim of capitalism is to earn a profit for the capitalist, and it puts a lot of emphasis on him. Thus the entire concept puts stress on that all individuals are different and that all these individuals pursue their own interest and in society, all individuals should be permitted to pursue their own interests. The entire concept is thus based on the premise that leaving individuals free to pursue their own path will ultimately lead to growth. This does not end up at any place, as all nations are expected to become continuously wealthier. This view separates the process of preparation and sale of goods from other factors of human interests like politics, religion, ethics, and so on. The entire view of the world is taken as it existing only to make more and more money for the capitalist. The consumers are not viewed as having much importance, and they are not viewed as having any relationship to the people who produce the goods. (Capitalism)

This view is resulting in manufacturing and services moving from high cost economies like the United States and Nike has shifted to the Third World countries. This also helps the Third World citizens to find jobs, and reduces the costs for the Americans who use the goods. It helps the investors, or the capitalists earn a good return. But the American worker is not always happy. Let us take the example of their boycott of the garments coming in from Bangladesh where it was estimated that there were 25,000 to 30,000 children working in these factories. At the same time, United States is the biggest user of these goods produced in Bangladesh and its estimated that nearly 50% of the $1.6 billion of their exports come to USA. This is a permanent problem with capitalism, and can be seen in the problems faced by English textile dealers in the middle of the 18th century. The cotton cloth from India was much cheaper than the cotton cloth manufactured in England. To save the British textile industry, it was decided that Indian textile industry be nearly destroyed, and this resulted even India buying British cotton textiles. This was stated in the House of Commons by Charles Majoribanks. (Global Problems and the Culture of Capitalism) Even today U.S. is facing a similar situation for some industries which are rapidly shifting out of the country.

Question

The interest in this case started as early as 1991 when there was an enquiry by the Federal Trade Commission as to whether there was a misuse by Microsoft of its monopoly system on the PC operating systems market. In the initial attempt, there was a deadlock among the FTC commissioners with a 2-2 vote and that closed the attempt. This was followed up by a DOJ investigation in August 1991 and that came to a settlement on July 15th, 1994. This was settled by Microsoft agreeing not to tie up other Microsoft products with Windows, but left them free to tie additional items into the same operating system. This was followed up with the Windows 95 plus pack where Internet Explorer was integrated. The company however claimed that it was not a product, but a separate feature in Windows. This was not accepted by the government. This was followed by the now famous antitrust trial where there were 20 states and DOJ started against Microsoft alleging that the company had misused their monopoly power through this bundling of operating system and web browser. The case was started in May 18, 1998. This bundling together is said to have permitted Microsoft to win the browser war as every Windows user had Internet Explorer in his computer.

The competing web browsers had to be purchased or slowly downloaded over the Internet. The unique position also permitted Microsoft to provide high visibility over bookmarks, search engines etc. On the other side, Microsoft claimed that Windows and Internet Explorer were part of the same and that consumers were now getting IE free. The competing manufacturers of browsers argued that browser was different from operating systems and that also a separate edition was available for the Mac OS. The development costs and marketing costs of the product were naturally absorbed in the Price of Windows. The DOJ had started off with an accusation that Microsoft had not kept up to the consent decree it had agreed to earlier. To solve the problem the judge ordered the company to provide a Windows system without IE. The company said that it could offer the users only an obsolete version of Windows or one that did not work properly. The judge then asked "It seemed absolutely clear to you that I entered an order that required that you distribute a product that would not work?" (United States v. Microsoft)

The reply from Microsoft was in the affirmative. They said that that they had followed that order and it was not their responsibility to look at is after effects. This led the Judge to issue his findings of fact on November 5, 1999 which stated that Microsoft was a monopoly due to its dominance of the personal computer operating systems market. (United States v. Microsoft) the judgement stated that "By refusing to offer those OEMs who requested it a version of Windows without Web browsing software, and by preventing OEMs from removing Internet Explorer -- or even the most obvious means of invoking it -- prior to shipment, Microsoft forced OEMs to ignore consumer demand for a browserless version of Windows." (United States District Court for the District of Columbia)

In his ruling, the judge wanted the company to be broken up into two separate companies - one for the operating system and the other for software components. This led to an appeal from Microsoft and the decisions of the judge was overturned as it was felt that he had given interviews to the media which showed that he had a bias against Microsoft. This went on till the DC Circuit found that Microsoft had used its monopoly position and wanted the case to be solved by Judge Colleen Kollar-KOtelly. In the meantime, the DOJ had moved to being under George W. Bush and the DOJ said that it did not want to break up Microsoft. The new settlement was that Microsoft shares its application programming interfaces with other companies. There should also be a panel of three members who should be able to look over the companies systems, records and source code, so that Microsoft does not tie up any other software with Windows at a later date. This led Microsoft that it would agree make some concessions regarding the suggested settlement before the judge gave the verdict. Finally the judge gave the verdict on November 1, 2002 mainly based on the DOJ settlement. This has been felt by nine states and District of Columbia which has felt that the judgment is not enough to be able to stop the anti-competitive practices of Microsoft. (United States v. Microsoft)

Question

There are great differences among Americans in terms of income and the reports by the U.S. Census Bureau indicate according to a December 1997 data that in the last twenty years "incomes of the richest fifth increased by 30% or nearly $27,000 after adjusting for inflation." The average income of these people was $117,500 and that is 13 times the bottom one-fifth's income of $9,250. but, are these people still the rich of the country. Not at all, and the best that can be said id that these people are middle income. The real rich and super rich are not included n the data collected by the U.S. Census Bureau. The reports by the Bureau provide the figures about the rich, and they did not interview anybody who had incomes higher than $300,000 in a year. Even if by some chance, a person with a higher income was interviewed, the person was not recorded as being above the upper reportable limit as it was not allowed by the computer program being used by the bureau. (the Super Rich Are Out of Sight)

As late as 1994, the reportable limit has been increased to $1 million in a year, but still that does not include the super rich. Thus the super rich are not a part of the data that one gets, as they are removed by the computer, and the reason for this procedure is that the bureau says the computers are not able to handle bigger figures, but that is not likely as the increase to $1 million was handled without any problems. Thus if the figures are to be raised again, one is sure that the computer could handle the job without a problem. Other officials gave the reason for this secrecy as being confidentiality, and the increase in the income figures might identify people with a really high income. Apart from this, the people with a really high income generally declare their incomes at levels 40 to 50% below the real figure. But in hiding the real income figures of the real rich, the result is that many people who are making as little as $70,000 a year are being included in the top fifth.

When the income figure climbs to $100,000 then the individual becomes a part of the top 4%. Well can their behavior be compared to the real rich like Mellon, Morgan or Murdock? The differences in income are of the level of 61,000 to 1 for Michael Eisner the CEO of Disney and a poor guy who earns $9,250. Both of them ideally belong to the top one fifth and bottom one fifth. It is also clear that the more one earns, the more the person saves and this has been noted by the economist Paul Krugman. According to him the top fifth have become richer than the others below them and the top twentieth have become richer than the next three fifth. This logic keeps going on and the top 0.25% has probably more wealth today than the rest of the people - 99.75%. (the Super Rich Are Out of Sight) it is thus really difficult to say whether we really know much about them.