The Market Power of Technology: Understanding the Second Gilded Age

The relationship between economic inequality and technological change is explored in Mordecai Kurz's book, which argues that technological innovations can lead to market power and increase inequality. He proposes policies to address this, such as restricting corporate mergers, reforming patent law, improving the labor market balance, increasing taxation, promoting upward mobility, and stabilizing the middle class.

Format: Paperback / softback
Length: 456 pages
Publication date: 03 January 2023
Publisher: Columbia University Press

The United States has witnessed a significant decline in economic equality since the 1980s, reminiscent of the Gilded Age in the late 19th century. At the same time, technological innovation has played a pivotal role in shaping society. As a result, promoting innovation has become a core priority in public policy. However, the relationship between economic inequality and technological change is a complex and multifaceted issue that requires careful examination.

Mordecai Kurz, a renowned economist, develops a comprehensive integrated theory of the dynamics of market power and income inequality. In his work, Kurz argues that technological innovations are not merely sources of growth and progress but also contribute to the rise of market power. In a free market economy with intellectual property rights, firms that control over technology gain the ability to expand, attain monopoly power, and earn exorbitant profits. The competition among innovators, while intense, does not eliminate market power because technological competition differs from standard competition. It often results in only one or two winners, leading to increased concentration of power and wealth.

Kurz's analysis is grounded in quantifying technological market power and its effects on inequality, innovation, and economic growth. He outlines the factors that contribute to the rise and fall of market power and details its macroeconomic and distributional consequences. Kurz demonstrates that technological market power tends to rise, leading to increased inequality of income and wealth. Unchecked inequality poses a threat to the foundations of democracy, as it undermines the trust and legitimacy of the political system. Public policy becomes the only counterbalancing force that can restrain corporate power, achieve a more egalitarian distribution of wealth, and make democracy compatible with capitalism.

In conclusion, the relationship between economic inequality and technological change is a complex and multifaceted issue that requires careful examination. While technological innovation has brought about significant benefits, it has also contributed to the rise of market power and increased inequality. Addressing this relationship requires a comprehensive approach that includes policies aimed at promoting innovation, restraining corporate power, and achieving a more equitable distribution of wealth. Only through such measures can we ensure that the benefits of technological progress are shared by all members of society.

Weight: 686g
Dimension: 155 x 234 x 41 (mm)
ISBN-13: 9780231206532