… is from page 225 of Martin Wolf’s excellent 2004 book, Why Globalization Works:
The evidence bears out the proposition that companies do not dominate markets, but rather that markets dominate companies.
DBx: Were Wolf’s claim untrue, then explaining our high and rising standard of living would be very difficult, and perhaps impossible. Economies in which existing companies are not responsive to market forces – not responsive to consumer demands, and not bound by the need to innovate in order to have a chance of surviving in the face of others’ innovations – are not economies in which hordes of people, left and right, routinely complain about the state of the economy by blogging, using social media, and typing angry tweets on their smartphones while sipping Frappuccinos at Starbucks.
Also, if Wolf’s claim were untrue we would witness few, if any, calls for protectionism. If existing companies generally dominated markets – rather than had to compete actively, incessantly, and creatively in markets – owners and managers of those companies would have little need for the kind of protection from competition that governments dispense. Among the most bizarre myths that fuel protectionist hysteria is the notion that tariffs and other trade restraints are instances of ‘the People’ successfully resisting the predations of ‘the Man.’ The ‘Man,’ of course, is happy that so many people embrace this myth, for it blinds them to the reality that tariffs and other trade restraints are a chief means by which ‘the Man’ does predate on the masses.