Production vs. Force :: The Center for the Advancement of Capitalism
Production vs. Force
The Difference Between Microsoft's Power and the Government's Power:
One Wields the Power of Production, the Other the Power of the Gun
by Robert W. Tracinski
On March 3, 1998, Bill Gates was summoned before the Senate Judiciary Committee for a hearing to determine whether his Microsoft Corporation constitutes a dangerous “concentration of power” that threatens the American consumer. The irony is that the inquisitors examining him were politicians who wield a power far beyond Gates’s reach: the authority of a bloated, omnipotent government—an authority backed, not by the production of a useful product, but by armies of regulators and tax collectors wielding the threat of physical force.
To grasp this contrast fully, consider the source of Gates’s alleged “control” over the software industry. This “power” consists of Microsoft’s production of Windows, the operating system used in more than 80% of the world’s personal computers. But Microsoft cannot force anyone to buy its products. Its only power comes from its ability to sell its operating system to computer manufacturers, who pre-install Windows on their machines. These manufacturers, in turn, cannot foist their Windows-equipped products onto a defenseless public. Computer buyers can decide whether to accept or reject Windows—as many still do when they opt for Unix or Linux, or for the Macintosh operating system.
Why can’t Microsoft force itself on clients and consumers? Microsoft does not wield the power of physical force; it has no ability to punish or compel. All it can offer a customer is the opportunity to buy its products—or to go on his way unmolested. A computer manufacturer, for example, may be “required” to include Microsoft’s Internet Explorer with Windows, but what is his punishment for refusing? He will be left free to install another operating system. And what if other operating systems won’t sell? Then Microsoft’s “power” is earned—earned by producing a more useful product.
Without the backing of physical force, Microsoft’s dominance in the market for operating systems must be continually earned. Far from being immune from competition, Microsoft lives under constant competitive pressure, whether from Netscape and its Web browser, or from some other company with the next revolutionary innovation. Microsoft’s success in this competition is an extraordinary boon to the rest of us—since it can only be achieved by offering new, better, cheaper products. The competition between Microsoft and Netscape, for example, is now bringing us all free, pre-installed Web browsers, fully integrated into Windows.
Now let us consider the very different kind of power wielded by the government. The legislators who grilled Gates at last year's hearing routinely vote to spend sums greater than Microsoft’s annual revenues—to fund one of the federal government’s smaller programs. These politicians don’t produce the wealth they spend; they tax it from those who do. And what if they want businessmen to comply with their policies? They don’t have to enter into complex business negotiations; they merely pass a law, and the businessmen are forced to obey—or else.
If you don’t want to deal with Microsoft, you can seek out competing products or simply do without. But what if you don’t want to deal with Uncle Sam? If you choose not to pay your taxes, will the IRS allow you to go freely on your way? If you decide to drain a protected swamp, will the EPA adopt the motto “live and let live”? Of course not: These agencies will send armed police to seize your property and throw you in jail.
The contrast between Microsoft's power and the government’s power couldn’t be clearer. The one is a power conferred by production, by offering customers a useful product. The other is the power conferred by force, by threatening citizens with fines and imprisonment. It is, in the words of philosopher Ayn Rand, the contrast between the power of the dollar and the power of the gun.
In regard to the fast-growing field of software and computer technology, the difference between these two forms of power was starkly suggested in a comment made by Judiciary Committee Chairman Orrin Hatch shortly before the Microsoft hearings. Hatch threatened that if Microsoft did not settle the Justice Department’s suit, Congress might choose to create an “Internet Commerce Commission” to regulate the computer industry. This, then, is the alternative: the “power” of an innovative private company that knows it must constantly improve its product if it wants to succeed—or the power of a stultifying federal bureaucracy that imposes its dictates by force. Which of these represents a dangerous concentration of power? Which of these threatens to use coercion to crush innovation?
The answer is obvious: The real "concentration of power" that threatens us is not wielded by a businessman in Redmond, Washington; it is wielded by the politicians and bureaucrats in Washington, DC.
—Robert W. Tracinski is editor of the Intellectual Activist
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