{"id":25702,"date":"2014-05-11T10:19:11","date_gmt":"2014-05-11T15:19:11","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=25702"},"modified":"2014-05-11T10:20:27","modified_gmt":"2014-05-11T15:20:27","slug":"market-disruption-and-innovation","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2014\/05\/11\/market-disruption-and-innovation\/","title":{"rendered":"Market disruption and innovation"},"content":{"rendered":"

Innovation often leads to challenges to established markets. Existing players in those established markets have three choices when faced with a disruptive new competitor or technological change: they can innovate themselves, they can retrench and avoid direct competition, or they can do what most incumbents do — get the government regulators to fight their battles for them<\/a>.<\/p>\n

Market incumbents do not like disruption. Uber, the ride-sharing service that has loosened the stranglehold of the taxi cartels, has been the object of government attacks and vigilante attacks both. Various regulatory agencies have tried with varying degrees of success to shut it down, London\u2019s taxi drivers are even as we speak promising \u201cchaos\u201d in response to the firm\u2019s success, French vigilantes have attacked its drivers, and in Seattle \u2014 blessed Seattle! \u2014 self-styled anarchists are targeting its cars and drivers. \u201cAnarchists\u201d for state-enforced cartel economics to increase private profit \u2014 somebody is unclear on the concept, it seems.<\/p>\n

A great deal of the program of the old Left \u2014 from its full-on Marxist wing to its Proudhonian anarchist wing \u2014 is in the process of being accomplished by 21st-century capitalism. The means of production have been radically democratized, with multi-billion-dollar firms springing up out of garages and dorm rooms. The privileged position of dominant old-line financiers is being undermined rapidly by innovations such as Kickstarter, which blurs the line between the altruistic and the consumerist. The life expectancy of large corporations has collapsed, from about 75 years in the 1960s to 15 years and declining today. When Pierre-Joseph Proudhon called for \u201ca war of labor against capital; a war of liberty against authority; a war of the producer against the non-producer; a war of equality against privilege,\u201d he certainly did not have in mind Uber or Outbox; his most famous motto was, after all, \u201cProperty is theft.\u201d (I think there is rather more to his idea of property than that simplistic formulation communicates, but this is not the place for that particular essay.) But the characteristics of those firms \u2014 relatively modest capital requirements, subverting various kinds of political authority in the form of licensure and regulation enacted in the interests of market incumbents, empowering efficient producers to compete with rent-seeking non-producers, and, above all, undermining the privileged place of state-sanctioned monopolies and cartels \u2014 looks a lot more like what the 19th-century revolutionaries had in mind than the USPS does. If what you mean by \u201ccapitalism\u201d is the East India Company, then capitalism is not very attractive; if what you mean by \u201ccapitalism\u201d is Kickstarter, then it is.<\/p>\n

Not that a man transported from the 19th century to our own time would recognize that. If we could transport M. Proudhon or any of his contemporaries to the here and now, their eyes would not register any economic system with which they were familiar at the sight of the daily wonders we take for granted. They wouldn\u2019t see capitalism<\/em>; they\u2019d see magic<\/em>. But the DMV, the USPS, the housing project, and the prison would all be familiar to their 19th-century eyes. Our choice is not really between neat ideological verities with their roots in Adam Smith or Karl Marx, but between the DMV and the Apple store. Each model has its downsides, to be sure, but it does not seem like a terribly difficult choice to me.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

Innovation often leads to challenges to established markets. Existing players in those established markets have three choices when faced with a disruptive new competitor or technological change: they can innovate themselves, they can retrench and avoid direct competition, or they can do what most incumbents do — get the government regulators to fight their battles […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,831,84],"tags":[780,484,707,174,661],"class_list":["post-25702","post","type-post","status-publish","format-standard","hentry","category-bureaucracy","category-business","category-government","tag-communism","tag-competition","tag-crowdsourcing","tag-innovation","tag-regulation"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-6Gy","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/25702","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=25702"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/25702\/revisions"}],"predecessor-version":[{"id":25703,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/25702\/revisions\/25703"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=25702"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=25702"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=25702"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}