By: Ramsi Woodcock (What Am I Missing?)
Why do economic explanations feel so much more insightful than humanistic explanations? The answer may just be that economic explanations take social types as their axioms, the unsplittable atoms of the economic universe, whereas humanists–who make their home everywhere from sociology to literature–take mental states to be their atoms. And we have lost the capacity to believe–really, truly believe–in the inner life.
Consider economist A.O. Hirschman’s argument that monopoly may be better for consumers than the sluggish competition of highly concentrated markets if “exit is ineffective as a recuperation mechanism, but does succeed in draining from the firm or organization its more quality-conscious, alert, and potentially activist customer or members.”
One immediately has the experience of insight here. Yes! If the competitors are already so large that most customers can’t abandon an underperforming firm, but there remain enough options that activist consumers can still bail on underperforming behemoths and buy from some scrappy startup on the competitive fringe, then the behemoths won’t be subject to voice–to the pressure campaigns that only activists are likely to bring–and so the big firms may well perform worse than if there were a single monopoly and the activists were to have nowhere to go but into the streets, onto the message boards, and to Congress to compel change…
