[governance] FW: [IP] Google's Lawyers Work Behind the Scenes to Carry the Day - NYTimes.com

[Riaz K Tayob]

On 2013/01/07 10:13 PM, Milton L Mueller wrote:
> Guru, if you get badly personalized results from Google without asking 
> for it, what is to stop you from not using Google? 

The problem with this kind of analysis of "consumer choice" analysis is 
that it is theoretically grounded in the neo-classical and/or neoliberal 
economic theory. So let us look at what this says:

1. If consumers have choices, then there is not a problem
2. Consumers have choice NOT if there is a real choice (i.e. apples to 
apples) but if the market per se is contestable (Contestable Markets 
theory) - which is in part why oligopolies can be theoretically 
tolerated in anti-trust law (abuse of dominant position etc)
3. Government interventions are presumptively bad. Private initiatives 
(except for fraud and -as defined by law and action- anti-competitive 
behaviour).

Now what is the problem with this?

1. Consumer choice is elevated as a moral/ethical good, in spite of 
practical realities: there may be qualitative issues related choices 
that are NOT available (i.e. market failures)
2. The theory has an internal contradiction. Contestable Markets are 
fine, but yet almost all the analysis makes use of Alfred Marshall's 
representative firm. What is a representative firm as compared to a 
"real" firm? It does not have the observable tendency to "first mover" 
advantage or to reap the benefits of economies of scale. In other words 
the theory used to justify consumer choice ab initio excludes the 
advantages that flow to Google from first mover (with a great algorithm) 
and the consequent economies of scale.

Therefore, if one excludes these relevant tendencies from the analysis, 
well then one is not saying much.

While consumer choice may be a relevant approach in the 
North(tactically), it has its limits in terms of theory and of context. 
Analogously In the UK something as banal as supermarkets were found to 
have a dominant market position when they controlled about 4% of the 
market (i.e. sufficient to have upstream and downstream negative effects).

Now if one were to let reality impact on the theory/ideology, then 
perhaps we can chat. I mean this whole notion of consumer choice is 
aptly illustrated by the US crisis. Of course, you could have any 
Mortgage Backed Security you want - there was consumer choice - and that 
did not detract from the fact that the entire operation was hoopla. As 
spokesperson for this neoclassical theory Alan Greenspan said he was 
"shocked" that market participants breached their duties and took on the 
reputational risk (in a market governed by fides). Of course if he had 
been open to other ideas, then he might have seen this coming.

But in the North (with my limited experience) the adage, 'in the land of 
the blind, the one eyed is king', more like "in the land of the blind, 
the one eyed is mad".

Welcome to the mad world of heterodox economics...


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