Much Ado About Microsoft
We are hearing and reading a lot about Microsoft the Monopoly nowadays. Maybe
more than we need. Break up of monopolies is supposed to be all for our good. If
Microsoft is split as is being rumored that is supposed to lead to "greater
competition and lower prices and rates." Whenever we hear that it reminds
us that the same was supposed to happen with the break up of Ma Bell. It didn't.
The Standard oil break up years ago was also supposed to lead to lower prices
down through the years. But we all know what has been and is happening at the
gas pump. This does not mean we are in favor of monopoly ownership. We're all
for control of monopoly. But monopoly today arises out of control of all
production through financial control which always tends toward monopoly in order
to increase profits. What it is all about is competition among profiteers who
see opportunity to increase their profits by cutting in on Microsoft's take of
the market.
So we need to know how Microsoft got so much profit. While its edge in the
market undoubtedly contributed to its multi billions, another factor, likely the
major one, is an exaggerated exploitation of its workers. While productivity in
industries has steadily increased during the last decades, the rate has reached
phenomenal proportions at Microsoft.
For instance, according to Monthly Review, an independent Socialist magazine:
"A concrete example of the radical changes taking place .... in large
corporations can be seen in the case of Microsoft. In the fiscal year 1997,
Microsoft had a total sales revenue of 11.4 billion dollars, while its labor and
material costs of production were only 1.1 billion dollars. (Research and
development was 1.9 billion dollars, sales and marketing 2.9 billion dollars,
general administration, 362 million dollars, and gross profits before taxes 5.3
billion dollars.)
Prime production costs (the labor and materials costs of production) thus
accounted for less than 10 percent of sales revenue, while profits made up 47
percent of sales revenue. The remainder was accounted for by the pursuits of
monopoly power. The 5.3 billion dollar profit was earned with a total investment
in equipment, inventory, and buildings of less than 2 billion dollars."
So the story goes. If it weren't for the productivity of Microsoft workers,
those billions would not be in the pockets of Bill Gates, Mr.Allen or the
Microsoft share holders. For instance, if we just take the ratio of gross
profits to labor costs, we see it is over 5 -1 in favor of profits! But we also
have to take into account that the other costs of production listed above also
come out of corporate income which is also based on labor productivity. Long
live the cause of unionism. It is a route to putting people above profits!
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