The Market Power of Technology: Understanding the Second Gilded Age

by Mordecai Kurz

Overview

Since the 1980s, the United States has regressed to a level of economic inequality not seen since the Gilded Age in the late nineteenth century. At the same time, technological innovation has transformed society, and a core priority of public policy has been promoting innovation. What is the relationship between economic inequality and technological change?

Mordecai Kurz develops a comprehensive integrated theory of the dynamics of market power and income inequality. He shows that technological innovations are not simply sources of growth and progress: they sow the seeds of market power. In a free market economy with intellectual property rights, firms’ control over technology enables them to expand, attain monopoly power, and earn exorbitant profits. Competition among innovators does not eliminate market power because technological competition is different from standard competition; it results in only one or two winners. Kurz provides a pioneering analysis grounded on quantifying technological market power and its effects on inequality, innovation, and economic growth. He outlines what causes market power to rise and fall and details its macroeconomic and distributional consequences.

Kurz demonstrates that technological market power tends to rise, increasing inequality of income and wealth. Unchecked inequality threatens the foundations of democracy: public policy is the only counterbalancing force that can restrain corporate power, attain more egalitarian distribution of wealth, and make democracy compatible with capitalism. Presenting a new paradigm for understanding today’s vast inequalities, this book offers detailed proposals to redress them by restricting corporate mergers and acquisitions, reforming patent law, improving the balance of power in the labor market, increasing taxation, promoting upward mobility, and stabilizing the middle class.

Product Details

ISBN-13:	9780231556521
Publisher:	Columbia University Press
Publication date:	01/03/2023
Sold by:	Barnes & Noble
Format:	eBook
Sales rank:	830,904
File size:	8 MB

About the Author

Mordecai Kurz is Joan Kenney Professor of Economics Emeritus at Stanford University. His books include Public Investment, the Rate of Return, and Optimal Fiscal Policy (with Kenneth J. Arrow, 1970) and Endogenous Economic Fluctuations: Studies in the Theory of Rational Beliefs (1997), and he has published widely across many fields of economic theory.

Table of Contents

Preface
Suggested Nontechnical Reading of the Book
Introduction: Why We Are in a Second Gilded Age and What We Can Do About It
1. The Nexus of Market Power, Technology, and Public Policy
2. Economic Growth Under the Effect of Market Power
3. Monopoly Wealth and Intangible Capital
4. Determinants of Market Power in the United States, 1889–2017
5. The Effect of Market Power on the Diffusion of Innovations
6. Market Power and Asset Prices, 1950–2019
7. R&D and Technological Competition
8. Policy Reform
9. Policy to Restrain the Expansion of Market Power
10. Taxation, Public Investments, and Redistribution
Concluding Remarks
Bibliography
Index

Editorial Reviews

In an era of dominance of IT firms, a sector which has been long known for its strong tendency for monopolization, The Market Power of Technology provides important reasoning and substantiation of how this increasing industrial concentration goes hand in hand with the income inequalities of our time.

Nicholas S. Vonortas

A book that is worth reading and evaluating.

David A. Teich

Starting with the simple idea that established firms can use their technological innovations to deter entry, Kurz constructs an account of the rise in wealth inequality in modern societies. Beautifully blending analytical reasoning with empirical evidence, the book offers a picture of contemporary macroeconomic growth and development that is at once novel and convincing. This is economics at its best.

Sir Partha Dasgupta

We live in a time of unparalleled technical innovation that ought to be bringing unparalleled and widespread prosperity. Mordecai Kurz gives us a clear, eloquent, and impassioned account of what has gone wrong and how we can fix it. This book is a key contribution to one of today’s most important intellectual and policy debates.

Sir Angus Deaton

Economists tend to believe the market power enjoyed by innovators is a necessary evil. Mordecai Kurz shows that the resulting monopolies are neither temporary nor a minor hindrance. Kurz has written a book that is rigorous in its theoretical and empirical underpinnings, yet radical in its policy implications. This is a hugely important book that goes right to the core of the central contradictions of our current economic system.

Dani Rodrik

We live in a time of unparalleled technical innovation that ought to be bringing unparalleled and widespread prosperity. Mordecai Kurz gives us a clear, eloquent and impassioned account of what has gone wrong, and how we can fix it. This book is a key contribution to one of today’s most important intellectual and policy debates.

Angus Deaton