The Free Market 18, no. 5 (May 2000)
Watching Joel Klein of the Antitrust Division on television, speaking about the dangers that Microsoft poses to the public, calls to mind a passage from Martin van Creveld’s The Rise and Decline of the State: “Born in sin, the bastard offspring of declining autocracy and bureaucracy run amok, the state is a giant wielded by pygmies.
Considered as individuals, bureaucrats, and the highest-positioned among them, may be mild, harmless, and somewhat self-effacing people; but collectively they have created a monster whose power far outstrips that of the mightiest empires of old.”
Indeed, the Microsoft saga teaches us this stark lesson about politics: the market creates and the government destroys. Think of it: Bill Gates and his employees are frantically working to stay ahead of the curve in the web applications market, finding new ways to bring people what they want at prices people can afford. To the extent they do, their market share of the applications business grows (which is in turn a signal that the company is being managed well). Meanwhile, the company must also fend off a vicious assault by little men at the Justice Department and their henchmen, the state attorneys general.
The excuses for state management of economic life have dwindled over the decades. But thanks to the failures of non-Austrian theories of economics, the excuse of controlling monopoly and preserving competition has survived. The pygmies are capable of doing enormous damage in the name of protecting the public interest.
Now, it is of course possible that Joel Klein and his armies believe they are doing the right thing, and, in any case, they wrap themselves in the garb of neoclassical economics when wielding violence against the verdict of consumers. They can even find lawyers-for-hire like Robert Bork to front their case to the public.
But there remains the question of the ultimate reason for the government’s attack on Microsoft. Public opinion is running upwards of 8 to 1 in favor of Microsoft as against the Justice Department, thereby eliminating a main driving force behind most of the Clinton administration’s day-to-day decisionmaking.
Of course, there is the issue of Microsoft’s bitter and unprincipled rivals, who feared that Gates would take away their fixed market share in server software just as he came to dominate the browser market by offering the best product on the market. Behind every antitrust suit there are conspirators in the business world bringing complaints and cheering on the intervention, and the Microsoft case is no exception.
And yet there is still more going on here. Microsoft is not just another big company hated by its rivals and investigated for having a noticeably large market share in operating systems. It represents a threat to the State itself, especially during times when the State’s power and prestige have been in a free-fall. During the cold war, the State could mostly count on being treated with deference and respect. But throughout the 1990s, as its technological prowess has declined and the market’s prowess has soared, its social status has been eclipsed by capitalist-entrepreneurs acting as the real driving forces of history.
By smashing Microsoft, the government is attempting to humiliate the company that has done more than any other in recent history to demonstrate the power of free enterprise. Leave a sector like the web unregulated by the state and it will perform technological miracles, bringing amazing benefits to the masses. That is precisely why the malevolent DC parasite despises this company.
The attack on Microsoft, then, is a way for the denizens of power to scream: “Pay attention to us! We still matter and we are going to prove it!” True, a breakup of Microsoft could prove devastating to the industry and could set back information technology in a myriad of ways. There will be no accounting for the many innovations that otherwise might have been. Indeed, there is no telling how much damage has already been done.
As van Creveld argues, the state is in decline in every way, pushed from its central role in the history of the last hundred years to an inferior role in culture, society, and economy. But it is still a monster capable of enormous destruction. And as the pygmies strive to retake their place on the stage of world events, their behavior becomes ever more arbitrary, destructive, and evil.
