Company A produces (however it manages it)
a better quality and/or a lower price than Company B. So we all go to company A.
Company B can’t find any buyers because it’s not competitive. Or, to say the same
thing in other words, Company A outcompetes
Company B. Here’s what happens. Company B collapses because it can’t sell its
goods. We’re all going to company A. So Company B, sooner or later, declares
bankruptcy. It can’t continue. It lays off its employees. It stops buying inputs,
because it can’t compete. Now what happens in Company A? Company A says “Hey,
there’s a whole bunch of workers that have just lost their job at Company B.
They’re trained in producing what we produce.
Let’s go hire some of them.” And likewise, Company A says “They’re not using their
computers, or their trucks, or their other inputs. They’re gonna have to sell them
on the second-hand market. We can get some important inputs we need at a lower
price than we would have to pay if we bought them new.” So what begins to happen
is where before there were two companies (A and B), there’s now one larger A and B
has disappeared. Or, to say the same thing in simple English, A (the winner in the
competitive struggle) eats, absorbs into itself, what’s left of Company B. And this
process is repeated over and over until 30 or 300 companies have become one, or
two, or three. That’s the result of competition. That’s how competition is
supposed to work. That’s how competition does work. It’s important to understand
monopoly is where competition leads. And there’s
if that weren’t enough (let me make sure you understand this from the business
point of view) it is the great dream of every entrepreneur to become the last
one standing in the competition, to win the competition. Not just because it
makes you feel good, you outmaneuvered your competitors, but because if you’re
the last one standing you’re the monopolist. The reward for
having out competed the others is that you’re now in a position to jack up the
profits and the prices way beyond what you could have done before. So we have a
system that produces monopoly, and all the incentives for every entrepreneur in
competition to work as hard as possible to become the monopolist. So why is
anyone surprised that monopolies keep happening? Because they’re the whole
point and purpose of capitalist competition.