The Death of the Duopoly in the Wall Street Journal

Matt Welch and Nick Gillespie from Reason Magazine have a new book out: Declaration of Independents, How Libertarian Politics Can Fix What's Wrong with America.  I have not read the book, but its release has led to a number of interviews and articles discussing the two-party state in at least a semi-critical register.  Today, the two have an essay adapted from the book in the Wall Street Journal, entitled "Death of the Duopoly."  After summing up polling data showing the rise in Independent affiliation, the brunt of the piece discusses the Republican-Democrat two-party state in comparison with familiar duopolies from the private sector, arguing that such economic configurations are never as stable as they might appear.  Ironically, however, though the headline declares the "death of the duopoly," the piece concludes on a cowardly note by regurgitating the conventional wisdom that two-party state isn't going away any time soon: "Such new configurations do not mean that the Democrats and Republicans will disappear anytime soon."  Excerpt:
Economists have a particular fondness for studying what Democrats and Republicans have become: the longest-lived duopoly in American history. The Nobel Prize-winning economist John Forbes Nash (the subject of the book and movie "A Beautiful Mind") was all about duopolies. He showed that two powerful competitors frequently end up locked in a stable, mutually beneficial dance of tit-for-tat—they collude, in short, to carve up a captive market.

Economists have paid less attention to the chief vulnerability of duopolies: How collusion against the interests of customers produces an inevitable revolt, sweeping one or both dominant players into the dustbin of history.

In a widely circulated 2009 paper surveying the economic literature on the topic, the late Larry F. Darby presented a list of classic duopolies, including such familiar pairings as MCI and AT&T, and Macy's and Gimbels. Tellingly, several of the players no longer existed: MCI (then known as WorldCom) became history's largest bankruptcy in 2003; Gimbels was the country's dominant department store chain in the 1930s but went out of business in 1987.

There is nothing inherently stable about two organizations dominating a particular market in the hurly-burly of modern American life. In fact, there are many reasons to suspect that such arrangements are unstable—particularly when technology allows captive consumers to flee.
The Wall Street Journal's community section is also holding a discussion of the question: "Would you vote for a third party?"  In the corresponding online poll, there are currently over 1600 "yes" votes and only 325 "no" votes.


Samuel Wilson said...

As of June 20 "yes" still outnumbered "no" by nearly six-to-one. Meanwhile, there seems to be no point to noting the bipolarchy's loss of "market share" when their lost customers have more or less pulled out of the market. The authors' consumer analogies regarding duopoly point to the problem. What would be a counterpart to the technological revolutions that undermined all the market duopolies they cite? Would it be a new party with supposedly new ideas -- or would it be a new way to vote? As long as we still vote the old way, the bipolarchy still dictates the rules to deny real parity to third parties. The authors are actually more optimistic than you make them out to be, but the basis for their optimism remains questionable.

TiradeFaction said...

Perhaps activists (third party and otherwise) are going about this the wrong way? Maybe instead of trying to gain more say in the current market, we need to create a new market for us? Perhaps instead of changing the rules of the Chess board, we ought to change the board itself? Or give ourselves our own board.

d.eris said...

imo, given the fact that the wide majority of voters do not vote in the majority of elections, there is a massive untapped market out there, TF.

Gillespie and Welch are optimistic, Sam, but they seem hesitant to endorse a third party or independent political strategy, maybe because they are afraid that it would relegate them to the fringes just as they are breaking into the mainstream?

TiradeFaction said...

>imo, given the fact that the wide majority of voters do not vote in the majority of elections, there is a massive untapped market out there, TF. <

I agree, we need to find ways to bring those folks in, and get active without our market, rather than the same ol' Dems and Repub markets.