Competition between suppliers is supposed to be one of the key things that makes capitalism work, and in a broad sense it does a fairly good job in as much that it doesn't rely too heavily on the integrity of the players. This, I opine, is capitalism's main advantage over communism: communism degenerates too easily into "cronyism" where an elite few reap all the benefits and call all the shots. That can happen in capitalism too, but in communism it's almost inevitable. Note that I'm making broad, generalised statements here: take this as an indicator of mood rather than a hard statement of fact.

With that mood-setting out of the way, let me now describe what I see as one of the pitfalls of free-market capitalism: the two-edged natue of competition. In order to be a competitive success, there are two general approaces that one can take. The first is to be good at what you do. This is the kind of competitive technique that makes capitalism work. In principle, the market will reward those who are particularly good at what they do. In practice this is only true on average: there are plenty of counterexamples; but take it as given for the moment that this principle more or less works.

The second means of being a competitive success involves being good at impeding your competitors. Putting it another way, one can be a competitive success by excelling at unsportsmanlike behaviour. It sounds distinctly unglamorous, and probably unethical to boot, but the market knows nothing of glamour or ethics: only competitive success. Thus, if one can get away with bending the rules in one's favour, or creating a playing field that is not level in a general sense, one can also be a competitive success.

In principle, most capitalistic societies have trade laws which attempt to prevent the latter mode of competition, just as competitive sporting events have rules and referees to do the same. An obvious example is law which allows the government to regulate the behaviour of businesses that obtain extraordinary control of a marketplace (an effective monopoly). Unfortunately, the distinction between fair play and foul is not always cut and dried.

Microsoft provides an excellent example of this ambiguity. I consider Microsoft to be a particularly viciously amoral corporation that makes no ethical distinction between fair play and foul. The only distinction they make is in terms of how likely they are to be able to get away with any particular action. To this end, they are very good at ambiguating their motives and the benefits of their actions. Make no mistake, I believe that Microsoft is motivated by one thing primarily, and that thing is control of the marketplace, but they are quite good at couching their controlling tactics in consumer benefits.

Consider Microsoft's standard practice of absorbing any new and interesting technology into their operating system. In DOS 6 it was disk compression. In Windows 3.11 it was network file access. In Windows 98 the target was the web browser. In Windows XP it may well be streaming multimedia. It's very hard to exist in a marketplace when one of your competitors is more or less giving away your product for free, and thus companies like Stac, Novell, and Netscape have been driven into relative obscurity. They may still exist in some form or other, but Microsoft is now the strong player in the field they used to dominate. Microsoft isn't interested in snuffing the competition completely: they only need to do it to the extent that the competition poses them no real threat.

When you think of it in terms of the consumer getting something for free, it all sounds very attractive. You no longer have to purchase disk compression, network file access, or a web browser: they come with your operating system. On the other hand, that operating system is pretty expensive: I've purchased complete second hand computers which cost considerably less than an OEM copy of Windows 98. Sure it looks like we're getting the extras for free, but in actual practice we're having them added into the operating system at no extra cost until such times as Microsoft is in control, and then the price of the operating system can be nudged up to compensate. Given that most computers have an OEM copy of Windows installed by the manufacturer (at a price that is a confidential contract detail between Microsoft and the manufacturer), the consumer has no real way of telling how much all this "free" software really costs.

So you can see that Microsoft is in some sense bypassing the normal competitive market by bundling features into its operating system. We've no real way of telling what this is costing us, because free market competition is thwarted. On the other hand, who wants to buy all those fiddly bits and pieces from separate suppliers, and then make them work together? Microsoft knows that the market loves an "integrated product", and they use this to advantage. There's no simple solution to this tangled web, and if there were, Microsoft would fight it tooth and nail. From their perspective, their control of the marketplace is a feature, not a bug.

From the perspective of the consumer, however, the loss of choice and its associated freedom that comes from Microsoft's monopoly is a bad thing. It is a great shame that it is not simple to measure the cost of this loss.

I don't particularly intend this to be a Microsoft-bashing session: it just so happens that Microsoft provides the most vivid depiction of this phenomenon of which I am aware. Dirty tricks and mean-spirited business tactics are a part of today's capitalist culture, based on a philosophy of "profit above all". Capitalism may be the best and most workable alternative of which we know because it does not rely too heavily on people refraining from abusing the system, but it would still benefit immensely if our society had strong values of fair play and sportsmanship.

Capitalism will lend itself to rotting from the inside out just as much as communism the more we concentrate on competing by hobbling our competitors, rather than competing by outperforming them.