MP3s, free markets, and mixed economies
Apple gave the record labels that flexibility on pricing as it got them to agree to sell all songs free of “digital rights management,” or DRM, technology that limits people’s ability to copy songs or move them to multiple computers. Apple had been offering a limited selection of songs without DRM, but by the end of this quarter, the company said, all 10 million songs in its library will be available that way.
Great news for consumers. One thing that’s interesting about the choice is I think it highlights a relevant issue for the thinking liberal, namely the difference between the free market and capitalism (which are erroneously conflated in our culture). It also shows why conservatives who squall about how liberals are closet socialists who want to nationalize every part of our economy are wrong.
On the first part, it’s a real shame to me that people think that capitalism is the same thing as a free market, which perversely means that a large percentage of Americans, probably the majority at this point, would think that a monopoly is acceptable in a free market. In truth, the free market ideal is one where anyone is free to enter into the market and compete, and the natural tendency of corporations to stake out a monopoly is actively resisted by the government for the good of the consumer. This example shows why. I’m sure Apple would love to have a monopoly on music distribution, and then they could set it up so there’s not only DRM on every song, but that your account deletes it after a week, and you have to buy it again. But they made this decision solely because they were facing competition, legitimate (Amazon) or not (file-sharing), and they didn’t have much of a choice. Because they were working in a free market and not in the ideal capitalist situation (where they have a monopoly), they had to cater to consumer demand.
Not, of course, that the free market model works for every sector of the economy. Which leads me to my next point. For some reason, from the ideological bickering in this country (especially that coming from the right), you’d think that the only choices would be to be supplicant to our capitalist masters or a gun-toting communist, with no in-between. The reality that we’re already living, however, is that of a comfortably mixed economy, where some parts are left to the private markets (with government assistance where need be, and government regulation hopefully) and some parts are left to be nationalized. While the crazy right wing punditry is generally ideologically supplicant, their fans generally aren’t. People don’t love Ann Coulter because she wants to steal their Social Security and spend it on martinis; they love that she’s a meanie who makes their penises feel bigger. Most Americans, right or left, are pretty happy with the idea of “socialized” education, a “socialized” military, and “socialized’ pension programs like Social Security and Medicare. And panicked right wingers are right—if we get universal health care (which is far from socialized, but is a mix of government and private provision strategies), then even their peeps will like that too, and there’s no getting rid of it. Not that they don’t try to dismantle popular government-owned sectors of the economy. Look at how they’ve sold off most of our military under our noses. By the way, the government taxing you and giving the money to their corporate friends in no bid contracts is not the free market, but it sure is capitalism. In sum, the truth is that the best economy is a mix between government-controlled sectors and private entity-controlled sectors, with government regulation keeping both clean and fair.
How do we know what parts to put under government control? Unfortunately, it’s not an ideological decision so much as a pragmatic decision. Schools are public because the whole society benefits if everyone has a basic education. Social Security reflects the job-hopping that Americans do that prevents us from having a coherent pension plan with any one employer. If you wonder why the military is government-owned, look at the disaster that is Blackwater and you have your answer. One thing that comes into play is whether or not the natural tension between the free market and capitalism is working in this sector. Capitalism is a system where you try to give the least amount of service for the most amount of money in order to maximize profit. A free market controls that, by making sure that the providers have to compete with each other for your money. In a system where logistics make a truly free choice impossible—for instance, you don’t really have free school choice since geography limits your choices—it’s best for the government to step in and take over, removing the profit motive and focusing all its energies on service.
You see that in health care. Conservatives laughably try to suggest that you with that broken leg and the bone sticking out should be able to calmly assess your options as if they were iTunes vs. Amazon. But in the real world, you’re rushing to the nearest hospital to see a doctor that you’ve never met before. But even in more sober-minded times, picking your health care provider rationally is not doable. We don’t have stats on our doctors, and most of us go with one nearby that our HMOs let us see. When we see specialists, it’s because of a referral. There’s no free choice in any real sense. And that’s just with providers. When it comes to insurance, you go with the one your employer provides, full stop. That’s an effective monopoly for you. If you’re buying on your own, then you tend to go with the one that will have you. Choice is extremely limited, especially since they all drop you the second they get a chance, so they can take your money and run. Health care in this country is a shambles, because it’s a capitalist system with no free market to keep its worst impulses in check. Time for the government to take over.
Of course, the plans offered are not ideal single payer systems, but a way to incorporate all the various insurance companies by forcing them to provide service or be ejected from the system. That will not be enough, but it will be a drastic improvement over our current system.