> But on the other hand, no IP means economy of scale is a lot more important, and that favors huge corporations.

"IP" is the thing that favors economies of scale.

Suppose you're a manufacturing company and you want to make your own computers. You're great at making the chassis and screen and batteries and things like that, but to make a whole device you also need an operating system, a compiler, a web browser, a CPU, etc.

If you're free to use existing ones then you have a chance. If you have to develop every one of those things in-house because every existing one is the property of an incumbent who is using it as a moat then you have to be a megacorp or you're sunk.

Notice that this is what all of the smaller companies actually do. Every small consumer device OEM and some of the big ones are using some variant of Linux/Android or BSD rather than developing their own OS. NeXT, the scrappy company Apple bought and turned into Mac OS X when they were themselves the underdog, was based on BSD. RISC-V has shipped more than 30 billion cores and is taking a decent chunk of the embedded market from ARM, which is itself a company that licenses its designs to companies that compete with each other (and run Linux on their chips) rather than using exclusivity and mandatory vertical integration to try to monopolize the whole supply chain. Which is how the mobile market went to them rather than Intel and Microsoft. Who themselves took the desktop and server markets from even more vertically integrated mainframe companies.

The availability of composition is what allows you to be a small company that does one thing well. Which is the thing you can't do when someone else has a monopoly on something you don't make but need, and correspondingly isn't willing to sell it to someone who is trying to compete with them in a different part of the supply chain.

Moreover, the economies of scale you're talking about on the other side actually have diminishing returns. Suppose anybody who wants to make a product that typically sells for $100 has to buy a $10,000 machine in order to do it, but then can make an unlimited number of them. If you're so small that you only ship 100 units, the cost of that machine by itself is adding $100 to the cost of producing of each unit and you're pretty screwed. But if you're a medium sized company and you ship a million units, it's only adding one cent. The advantage of the medium company over the small one is dramatic. Whereas the megacorp that ships ten billion units shaves it down to 1/10000th cent, but then the advantage of the megacorp over the medium one is still less than one cent.

On top of that, it's often something like you need a $10,000 machine that can make a million units even if you only use it to make a hundred, and then the scale advantage of the medium company over the small one is all still there, but the advantage of the megacorp over the medium one doesn't even exist because then to make ten billion units they need ten thousand machines.

Which is even before we get to diseconomies of scale: The larger an entity is, the more efficiency you lose to bureaucracy, coordination costs, principal-agent problems, internal politics, etc.

There is a reason industries with low barriers to entry tend not to monopolize. Why is there no monopolist who grows all of the coffee or weaves all of the clothing? Shouldn't "economies of scale" allow a single huge company to out-compete all of these little ones in the absence of anyone having a way of excluding competitors?

Conversely, find a consolidated industry and you'll generally find some kind of government-backed monopoly or regulatory capture.

You completely missed the point.

AnthonyMouse gave you a overly lengthy rebuttal without getting to the point but the cost structure of IP is as follows: the marginal cost of making a copy is low enough to be negligible compared to the fixed cost of creating it.

This means the theoretical marginal cost is equal to the development cost divided by the number of paying customers. Where the development cost can either be a one time expense or an ongoing expense.

Companies make the fixed investment (or take someone else's fixed investment like an open source project) and they charge market rate pricing. The difference between the marginal cost (which is dropping with scale) and the market rate is economic rent or producer surplus. Competing companies pop up and work on their own product because they see the producer surplus and want a piece for themselves. This is how you get many companies wast the producer surplus on reinventing the same software over and over again.

Now with open source software you have the opposite problem. The marginal cost is zero, but the fixed cost still has to be paid. This means that the customer gets something that they would otherwise have to pay market rate pricing for free, this is consumer surplus. The marginal cost that the consumer would have to pay to keep the project alive becomes irrelevant the more consumers there are, which makes open source a financial tragedy because it fixed the cost structure problem at the expense of self sacrifice.

No it's fine, we don't have to require anyone to buy a house built by people who are "just trying to get a paycheck".

As long as nobody is stopping them from building houses for the people who do want them.

FWIW, they were right. Society may have ended up better off in the end, but the Luddites - the actual individuals affected by the transition, and their families and their children - were absolutely screwed for life.

You may want to read past the headline when it comes to luddites. That's exactly what I'm talking about.

Luddites = Angry unemployed people who got proven wrong by being brutally murdered.

> Capitalism has historically been proven to work with 90% unemployment

What an extraordinary claim. Elaborate.

> Of course that would represent an enormous loss compared to today but it would not be enough to collapse it.

Betting against a revolution in such a scenario is bold.

> Talk to someone from China

China is capitalist, not communist.

> If you truly believe communism is better, why not just join one of those instead of dragging everyone along with you

Where did I say that? That's a nonsense argument for various reasons but it's not the point of this discussion so I'll skip it.

The Great depression saw 25% unemployment and that was just a temporary upset, try 50% and rising over time. How long are you willing to go hungry supporting capitalism in that environment, and why?

The food is right there, fully automated, the only reason you're not getting it is because you refuse to work in the mines 14 hours a day to get it. Capitalism will survive for a while but people will eventually revolt.