Fred brings up a very interesting question. Market forces still exist, but there is probably a direct correlation between the social and political powers of any business and the degree of its need to respond to market forces.
There was a famous American case in which Westinghouse had entered into contracts for uranium. The price shifted very unfavorably for Westinghouse; they went to court and had the contract abrogated. No small company could have done anything comparable. Large corporations, when they are in trouble, managed to get lucrative government contracts. I remember when General Dynamics was on the edge of bankruptcy. An Air Force contract saved them. Again, political influence, not acuity in following market signals. Small companies do not get such favors. Bailouts for Lockheed, Chrysler. Of course, those companies that do manage to play the market well will prosper. I would also add that he ever-widening scope intellectual of intellectual property rights also limits the force of the market. Fred's note should open up what I consider to be a very important topic that I have never seen fully analyzed. I would love to see more exchanges about the subject here. If you are to look at the archives for recent months, you would hardly guess that this is a list supposedly for economists. Frederick Guy wrote: > Just because companies have monopoly power and owe > their power (property rights and all) to the state, > doesn't mean that market mechanisms have become > unimportant. Markets serve as a serious constraint on > the choices open to the directors of almost any > company. -- Michael Perelman Economics Department California State University [EMAIL PROTECTED] Chico, CA 95929 530-898-5321 fax 530-898-5901
