On Monopolies, Quality of Service, and Possible Solutions

Probably the biggest reason for the degeneration of the quality of service provided by a company stems from it controlling a monopoly over a specific area or market. When a firm faces no competition, it becomes unprofitable to maintain an above average level of service. Why is this? Because while the marginal cost to the consumer of enduring a sub-par level of value remains smaller than the marginal cost of having to switch to another company, the customer will remain loyal. The monopoly could go the extra mile to be above average, but this would be simply beating a dead horse, as this would be a sufficient rather than a necessary condition to keeping that customer. Therefore, the firm provides the minimum level of effort necessary to keep from losing patrons.

We could discuss the violation of ethics and morality that is clearly evident in this practice, but in a capitalist society, anybody could contrive a justification for any of his actions, provided he thinks long and hard enough about it. No, combating monopolies will take more than appeals to the heart. The first method of combating monopolies is the same one that we have seen time and time again. The government must step in and impose some form of restriction or ban to clean up the inefficiencies in the free market. This solution is acceptable and effectual, as has been demonstrated by history, but it’s not perfect. With every step that the government takes against monopolies, there is an inevitable contraction of the liberty present in the market, and while this may not seem like a huge deal in the short run, it is possible to see how things could get out of hand in the case that the government ever began to lean heavily towards the side of business.

I propose a different solution, a solution that focuses more on using the dynamics of the free market to combat its own failures. How do the constituents of an oppressed nation combat their much more militarily powerful oppressors? The answer is guerrilla warfare, and I believe a similar tactic can be employed by the people who are hurt most by monopolies. Instead of boycotting the goods of the monopoly, which is often not an option due to the necessity of the good, the people must take it upon themselves to provide the competition that would begin to ameliorate the situation. Local mom and pop shops must spring up and take command of small shares of the resources, planting the seed that will eventually lead to the monopoly's downfall.

But how to gain access to these resources, which are locked away by the monopoly? The people must organize and pool all their available capabilities to try to rent away as much as possible from the monopoly, using the market itself. Where there is private property, there is an owner, and where there is an owner, there is an opportunity to purchase the property. If the price is right, the people should be able to purchase at least a tiny share of the monopoly's resources. From this tiny sliver of resources can potentially bloom a self-perpetuating cycle, in which local businesses can now appear that sell those resources, which in turns leads to more purchased resources and more local businesses. Furthermore, the monopoly could potentially be broken up from the inside by offering higher salaries to its key employees. 

How do I know that these regional businesses will be successful? Despite the prices that these shops charge relative to the monopoly, I predict that a particularly hostile atmosphere created by said monopoly's unscrupulous practices will be enough to make people buy locally out of principle alone.  Slowly but surely, these small firms and organized individuals should begin to whittle away at the authority of the monopoly. Eventually, there should be a return to normalcy, equilibrium, and efficiency within the market, after which people will no longer feel obligated to purchase from only certain purveyors.

So, if this approach is so great, why has it not been employed widely? I believe the problem lies in the rarity of talent and leadership readily available to guide the masses. To organize an operation of such magnitude would take a truly unique individual, not to mention the necessity of that individual being in the right place at the right time. To have such a figure at the helm is largely a matter of sheer luck, and the rarest luck at that. Another downside to this approach is the necessity of the collective group to have some baseline level of resources available to even begin the operation. I fear that the only recourse for a people who cannot together reach even this baseline would be violence. Given the very special conditions that my solution requires, and the potential for violence if such a solution was to fail, it's not surprising that the governmental approach has prevailed throughout history.