FROM RICHES TO RICHES: BILL GATES & THE MICROSOFT MONOPOLY
By Gary Wilson
William Henry Gates III is your classic capitalist magnate. His success has nothing to do with innovations. It is based on robbery, deception and ruthlessly crushing his competitors.
Bill Gates was born rich. His father, William Henry Gates Jr., is one of the top corporate lawyers in the Northwest.
His mother comes from an affluent banking family. She sat on the board of directors of one of Seattle's biggest banks.
Young Bill went to all the right schools. His high school had a computer at a time when most kids could learn about computers only by looking at a picture in a book.
Gates went to Harvard University. There he connected with the "old-boy" network. He has all the right contacts.
So when opportunity knocked, he grabbed it. Well, not exactly. His mother, who sat on the executive boards of several corporations, sat next to the head of IBM on one of those boards. She hooked her son Bill up with IBM for the original deal.
Gates is not some poor genius who parlayed his invention into gold.
Microsoft's DOS, the operating system for IBM's personal computers, was developed by Tim Paterson for Seattle Computer.
IT'S NOT THE INVENTOR WHO GOT RICH
Bill Gates bought DOS from Paterson for a small amount and then sold the system to IBM. Paterson has not gotten rich.
Gates stuck with this pattern to build Microsoft into the monopoly it is today. Microsoft either bought out its competitors or copied their software and then crushed them.
Microsoft had access to bank financing that let it sell at a lower price, even if it meant losses, until its competition could no longer hold out.
Neither Microsoft nor Bill Gates contributed any significant innovation to the computer, high-technology revolution.
But Bill Gates is a very successful capitalist.
"Microsoft controls the operating system of 94.1 percent of the personal computers sold on the market today. It recently made a $150 million investment in Apple Computer to tie the other 5.9 percent of new desktop sales into an alliance.
"In major software applications, Microsoft has steadily expanded its market share--in the case of word processors from barely a third of the market in 1995 to over 80 percent in 1997," according to Nathan Newman's "Microsoft Word to Microsoft World."
The myth about the high-tech revolution is that small-time operators in their garages could invent something new and emerge as rich capitalists.
But the truth is very different.
KARL MARX AND MICROSOFT
Karl Marx, in his seminal study of capitalism, pointed out capitalism's tendency toward monopoly. He called it the law of centralization of capital.
In competitive capitalism, companies with the lowest prices tend to win. The best way to reduce prices is to expand the scale of production. Therefore the bigger companies almost always beat out the smaller ones.
The other factor, Marx said, is credit. Bigger companies get credit easier and at lower rates. This also favors the development of monopolies. So the two "most powerful levers of centralization [are] competition and credit." (Capital, Vol. 1, pages 777-778)
These factors propelled the rise of the Microsoft monopoly.
Like many other monopolies, Microsoft has actually stood in the way of technological innovation in order to defend its monopoly super-profits.
General Electric and Westinghouse did it in the 1930s when for a decade they prevented the introduction of cheaper and more efficient fluorescent lighting in order to protect their monopoly control of incandescent lighting.
Monopolies tend to be ruthless, cutting down the small fry in their path. Monopolies throttle those who do not submit to their dictation.
At the same time monopolies make the divide between workers and bosses fairly clear. They socialize production. The chaos inherent in competition is reduced as the monopoly puts its standards in place. Many great technological developments would have been impossible without the imposition of monopoly standards.
But while monopolies socialize production, they also increase the rate of exploitation. Monopolies become prisons for workers.
In the case of Microsoft, this is literally true. Much of the packaging and related work for Microsoft's software is done by prison labor.
TRUST BUSTERS AND CAPITALISM
Anti-monopoly crusader Ralph Nader has shown how Microsoft has done nothing to advance computer technology while blocking some major innovations to further its own interests.
But Nader's critique and his invocation of the anti-trust laws cannot bring about the necessary fundamental change. The anti-trust laws have in no way inhibited the growth of monopoly or reduced financial monopolies' power.
The Rockefeller oil empire's breakup led to continuing the Rockefeller oil empire. The original Standard Oil had become unwieldy. The smaller companies created from Standard Oil were still big but also more flexible.
Today these companies are called Exxon, Mobil and Chevron- -three of the biggest oil monopolies in the world and all still controlled by the Rockefellers.
AT&T was broken up into the "Baby Bells." What was seven are now four and more consolidations are expected.
The only way to break the ruthless hold of monopolies like Microsoft is to break private capitalist ownership. It will take workers' control of the corporation and its resources to turn around Microsoft and make it into something that produces for people's needs.
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