The Market and the Monopoly
A chapter addition for Transforming America: From a conversation between Thomas Abshier and Isak Gutierrez, 2 October 2026
Claude edited the dialogue below for clarity. The essay that follows continues in Thomas’s voice.
The Conversation
Thomas: Charlie had the idea of a walker made of laminated birch. If it works, it could be priced at a fraction of everyone else’s. It would start a price war, and everyone else would do the same thing. But that’s capitalism. Everybody copies everybody. The point of a market is to serve, and you get a percentage of it, and you work very hard to get that percentage.
The bottom line is that almost everybody in capitalism is barely making a living. If you’re first into a market and you have a patent, you have a monopoly of sorts for as long as the patent lasts. But everybody is trying to break the patent in the meantime, with look-alike designs. It’s a cutthroat, barely-survive, always-swimming-upstream kind of experience. There’s no rest. You can’t say, “I’ve got my market now, I’ll coast.” You’re always pushing against the competition, because they’re trying to survive just like you. A job is “just over broke,” and that’s exactly what you are as an entrepreneur too. You’re always looking in your rearview mirror.
Isak: It’s a system where, if you’re lucky and in the right place and reading the cards right, you can make a lot more money than everybody else. But you can also make a lot less and end up deeply in debt. Not that socialism is the answer. There just isn’t much of a bailout. It’s like real life. We’re all swimming with sharks. When somebody cuts open a new market and the money starts spilling out, all the sharks smell it and come do exactly what you’re doing.
Thomas: That’s the “greed is good” thing. The shark’s drive toward the money is what gets the market served. Without that drive, the need wouldn’t be met. The market’s purpose isn’t to support the people producing the product. The market exists to meet people’s needs. Producers are servants working for customers. Your customer is your employer. If you’re an entrepreneur, your boss is your customer, and capitalism is a question of how well you can serve him.
There are two forces. The buyer says, “I want it cheap.” The seller says, “I want to sell it for more.” Underneath them are all the competitors, saying, “I’ll sell it for less to get the sale.” Some of them misjudge, sell too cheap, and go out of business. Some misjudge the quality the market desires, build the best, but people want it cheap, and they go out of business. There is a price at which people will buy and a price at which a business can deliver the product, support its workers and financiers, and reward the entrepreneur for the risk; that is the product’s price. It’s price discovery. Communism doesn’t have that. Under communism, the government decides how many widgets to make and what to charge.
Here’s the problem with monopoly. The innovator opens the market. Then a company with capital, production, and distribution capacity comes in and says, “These inventors are rubes. We have marketing, we have a distribution chain, we have producers lined up. We’ll invest millions and flood the market at a low price.” The innovator goes out of business, along with others who cannot survive the low price the copier sets. Everyone else goes out of business, and once the water clears, the copier raises the price back to what the market will bear. It never intended to keep the price low. It only did that to clear out the competition. Then it finds the point on the price-versus-sales curve where profit is greatest, because profit maximization motivates the business. The number of units sold is not the important metric.
The Essay
Every business wants a monopoly
A fact of life lies at the heart of the free market. Every business, if it could, would be a monopoly. No one opens a shop hoping for competitors. Every firm wants a market it alone supplies, customers who cannot go elsewhere, and a price it can set without fear of being undercut. Some say so openly. One prominent investor titled an essay “Competition Is for Losers,” and built his advice to founders on finding a market they can own outright.
This is not a defect in businessmen. It is the natural wish of anyone who works hard and wants to rest. The restless, rear-view-mirror life Isak and I described is exhausting, and monopoly is the dream of escaping it — of finally saying, “I’ve got my market now, and I can coast.”
So the free market contains, within every participant, the desire to end the free market. This chapter examines that tension. It is also, I will argue, the key to understanding both what is right about capitalism and what communism actually is.
What the market is for
Begin with purpose, because purpose decides what counts as a perversion.
The market does not exist to make producers rich. It exists to meet people’s needs. Producers are servants. The customer is the employer. Even the entrepreneur, who answers to no boss, answers to every customer who might walk away. A business succeeds exactly as far as it serves.
Seen this way, the market is not a contest of greed but a structure that harnesses self-interest to the service of the neighbor. Adam Smith put it plainly in 1776: we get our dinner not from the benevolence of the butcher or the baker, but from their regard for their own interest. The butcher wants to prosper. The only way the market lets him prosper is by giving his neighbors meat they want at a price they’ll pay. His self-interest is bent, by the structure, into service.
This is why I can say greed drives the market and still say the market is moral. The test I apply throughout this book is simple: would a neighbor feel loved by this act in the public square? A voluntary exchange passes that test. Both parties come away better off, or they would not have traded. The buyer wanted the meat more than the money; the butcher wanted the money more than the meat. Each served the other. No one was forced.
Why competition is the guardian of the purpose
What keeps the butcher honest is the other butcher. If he overcharges or sells bad meat, his neighbor goes down the street. Competition is the mechanism that keeps self-interest bent toward service. It makes the restless life restless. It is also what makes the price honest.
No one sets price by decree. It is discovered. The buyer pulls it down. The seller pulls it up. Competitors bid it toward the point where someone can still make a living providing the thing. Some misjudge and fail; that failure is information, telling everyone the price was too low to sustain. The price that survives is the one at which people will buy, and people can provide. No planner could compute it. It emerges from millions of free choices.
Remove competition and both things fail at once. The seller’s self-interest is no longer bent toward service, because the customer has nowhere else to go. And price stops being discovered and starts being imposed.
The two kinds of monopoly
Here a distinction matters, because not every monopoly is a perversion.
The first kind is earned by service and held only as long as service continues. An inventor creates a market that did not exist. For a time he is the only supplier, because no one else has thought of it yet. A patent protects him for a limited term, and the limit is the point: the inventor gets a season to recover his risk, and then the idea passes to everyone. This kind of monopoly rewards having served first. It is temporary by nature. Copiers arrive, as they must, and the price falls toward what it costs to provide. The neighbor is served, and then served more cheaply.
The second kind is won by excluding rivals and held by excluding them. This is the sequence I described in the conversation. A large firm enters a market an inventor opened. It prices below what anyone can sustain — not to serve the customer, but to drive out everyone who cannot survive the loss. When the competitors are gone, it raises the price to whatever the market will bear and sits there, at the point on the curve where its profit is greatest, with no rival to bring it down. This lasts until a competitor reenters the market at the realistic price, or possibly below if the monopolist was making excessive profits that made entry desirable for the competition. In a market dominated by an established business, the competitor must offer some distinction to gain market share (color, weight, size, ease of use, etc.)
The difference between these two types of monopolies (first entrant and producer giant) is not size, and it is not profit. It is the means. The first monopolist has the market because he served it best. The second has the market because he made sure no one else could serve it.
The low price in the second case is not a gift to the customer. It is bait. The firm accepts losses as an investment, expecting to recover them once competition is gone. The customer pays for those losses twice: first in the competitors he loses, and then in the higher price he pays for years afterward. Ask the test question. Would a neighbor feel loved by this if he was courted only so he could be captured?
This is what I mean by the perversion of the free market. It is not an outside attack. It is the market’s own engine — self-interest — slipping free of the competition that bent it toward service. The same drive that serves the neighbor when it must compete exploits him when it no longer has to.
Other roads to the same place
Predatory pricing is not the only route. A firm can reach the second kind of monopoly in several ways:
- Buying up rivals not to combine strengths but simply to remove them.
- Capturing regulators and writing rules the incumbent can afford but newcomers cannot. Licensing burdens, compliance costs, and approval processes are often defended as safety measures and most eagerly supported by the firms they protect.
- Patent thickets: surrounding a product with so many overlapping patents that the temporary reward becomes a permanent wall.
- Collusion, where rivals agree not to compete. Smith saw this too: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Each is the same move: replacing service with exclusion as the way to hold a market.
Scale is not the enemy
It’s easy to conclude that bigness itself is the problem. I don’t think it is.
Real economies of scale exist. A company with an established sales force, accounting staff, and distribution network can add a new product at a fraction of what it costs a newcomer to build all of that from nothing. That is a genuine efficiency, and the customer benefits from it.
But the advantage has limits, and the market enforces them. When a company grows into businesses that share nothing — computers and clothing under one roof — the economies disappear. One management team cannot focus as well on the nuances of the market and make good decisions in two unrelated worlds. Such conglomerates tend to break apart again, because size without synergy is a burden, not a strength. Mergers make sense when two firms together can genuinely do what neither could alone; Brad Jacobs’s How to Make a Few Billion Dollars is an account of building companies on exactly that principle. They make no sense when the only aim is to get bigger.
So the market, left free, disciplines size. The danger is not that firms grow. It is that they grow by exclusion rather than by service, and then use their size to make exclusion permanent.
What communism actually is
Now the comparison the chapter set out to make.
Communism presents itself as the cure for all this: the end of greed, the end of competition, the end of the restless, rear-view-mirror life. No one swims with sharks. The state decides what is made, how much, and at what price.
But look at what that is. Communism is not the opposite of monopoly. It is monopoly made total and permanent.
Every business dreams of being the only supplier, with captive customers and a price no one can undercut. Communism grants that dream — to one entity, the state, across every market at once. The state is the only butcher, the only baker, the only employer. No other shop sits down the street. No rival can bring the price down or the quality up. The customer cannot walk away, because there is nowhere to walk.
Everything wrong with the second kind of monopoly is therefore present in communism in its purest form:
- Self-interest is no longer bent toward service. The officials who run the monopoly have their own interests, as every human does. Nothing forces those interests to serve the citizen, because the citizen has no alternative.
- Price is no longer discovered. It is decreed. Without competing sellers and free buyers, no one knows what anything truly costs or is truly worth. This is why planned economies produce shortages of what people want and surpluses of what they don’t.
- Law enforces exclusion, and ultimately force does. A private monopolist must keep out rivals by cunning. The state simply makes rivals illegal.
The monopolist capitalist and the communist planner want the same thing: a market without competition. They differ only in who holds it. And the planner’s monopoly is the worse of the two, because a private monopoly can still be broken — by a new invention, by the courts, by the customer finally finding another way. The state’s monopoly answers to no one but itself.
The narrow road
If both the unchecked monopolist and the communist planner pervert the market, what is the right course?
I don’t believe the answer is to abolish the restless life. That restlessness is the price of being kept honest. The innovator who must watch his rearview mirror is the innovator who keeps serving. A world where no producer ever has to fear losing his customer is a world where the customer does not have the market regulating quality and price for him.
What I would argue for, held open to a better argument, is this:
Protect competition, not competitors. The aim is not to shelter any particular firm from failing, nor to punish success. The aim is to keep the market open, so that whoever serves best can enter and win. The question in every case is the one that separates the two kinds of monopoly: did this firm win by serving, or by excluding?
Keep the inventor’s reward temporary. A patent should reward the pioneer for a season and then release the idea to all. When protection becomes permanent, through renewal tricks or thickets, it turns the first kind of monopoly into the second.
Distrust rules that the incumbents love. When the largest firms in an industry lobby for a regulation, ask whom it really protects.
Judge size by its means, not its scale. A large firm that grew by serving deserves no punishment. A small firm that grew by colluding deserves no protection.
Underneath all of these is the same moral rule. The market is good when it is a structure of mutual service, where each person’s interest is bent toward his neighbor’s good. It is perverted whenever someone finds a way to take from his neighbor without serving him. That is true of the predatory monopolist. It is true, in its completest form, of the communist state.
A last word, from our own shop
This is not abstract for us. Ideomotion lives inside this exact dynamic. Charlie pioneered the lift-walker decades ago. Others copied it, built the market, and now sell in a field he opened. If his birch walker succeeds, we will be the ones lowering the price, and our competitors will copy us in turn.
That is how it should work. The customer will be better served, and served more cheaply, by our competing. We will have to keep inventing and keep serving to stay ahead. We will not get to rest.
But we should do it by serving — by building something better and cheaper (at a price that allows us to support costs) — and never by trying to make sure no one else can. The temptation to the second kind of monopoly will come to us as surely as to anyone, because it lives in every business. The test we should hold ourselves to is the one this book applies everywhere: would our neighbor feel loved by what we are doing in the market? If the answer is yes, we are on the right road, however hard it is.
Notes
- On predatory pricing. Economists debate how often below-cost pricing actually succeeds at driving out rivals, since the predator must absorb real losses and competitors can return once prices rise. U.S. law reflects this caution: in Brooke Group v. Brown & Williamson (1993), the Supreme Court required both below-cost pricing and a realistic prospect of recouping the losses. The pattern described in the conversation does occur, but it is harder to pull off than it sounds, which is why exclusion more often comes through regulation, acquisition, or collusion.
- On the profit-maximizing price. The conversation called this “a minimization problem.” It is a maximization: the monopolist raises the price until the profit lost from fewer sales just equals the profit gained from the higher price per unit. The point stands as stated: the monopolist seeks that price, not the most units sold.
- On “Competition Is for Losers.” This was the title of a 2014 essay by investor Peter Thiel, drawn from his book Zero to One. He argued that founders should seek markets they can dominate. He meant chiefly the first kind of monopoly, earned by creating something new; the argument here is that the same impulse, unchecked, slides toward the second.