Remembering Steve Margolis: A Market Quest Like No Other

In the world of economics, where numbers often overshadow the human touch, Steve Margolis stood as a beacon of both intellectual prowess and heartfelt friendship. A revered free-market economist, Margolis left an indelible mark on the field, passing away in late August from Alzheimer’s disease. His journey began in the vibrant halls of UCLA’s economics graduate program in the 1970s, where he forged friendships and ideologies that would last a lifetime.

The Early Struggles and Triumphs

Steve’s path wasn’t always smooth. He faced hurdles, like battling for ownership of his academic work, that would have deterred a lesser soul. Yet, Margolis channeled these challenges into inspiration, eventually publishing groundbreaking work in leading journals. He was an exemplar of resilience, persisting through academic obstacles to make significant contributions to Industrial Organization in the mid-1980s.

Redefining Network Effects

Steve and I embarked on a quest to redefine what economists knew as network externalities, a term that alluded to market inefficiency. We argued that this term unfairly echoed market failure without substantial evidence. Our preferred terminology, “network effects,” now prevails in literature, encouraging analysis that’s rooted not in presumed failures but in neutral observation.

One must consider the nuanced analogy of the QWERTY keyboard layout, a story that captivated many. It was Steve’s analytical prowess that debunked the myth of an economic “lock-in,” showing that the choice between VHS and Beta or Windows and Macintosh wasn’t a failure but a reflection of real-world choices.

The Microsoft Saga and Broader Implications

In the late 20th century, these concepts were pivotal in landmark antitrust cases like that of Microsoft. Our work, encapsulated in the book Winners, Losers, and Microsoft, offered a defense strategy more persuasive than legal arguments. It illustrated Steve’s knack for marrying theory with practicality, proving that what many labeled as inefficiencies were systemic choices grounded in viable economic reasoning.

A Legacy of Market Confidence

Steve Margolis was a firm believer in markets, entrepreneurs, and the profit motive’s guiding hand. With every publication, he reiterated his trust in the organic selection processes of economies. By the time the world contentiously debated over file formats and device compatibilities, Steve was teaching us all that profits left unclaimed were improbable phenomena in our meticulously competitive markets.

A Witty, Wise Contributor Gone

Though reminiscence brings bittersweet closure, remembering Steve Margolis is an ode to intellectual honesty and friendship. As markets evolve, his insights remind us that perceived failures often unfold as orchestrations of choice and growth. According to Independent Institute, Steve was more than an economist; he was a thinker who urged us to look beyond immediate truths and inspire within us the courage to question them.

The legacy of Steve Margolis isn’t just enshrined in text; it’s a living breathing part of anyone who cherishes understanding and friendship. Let us remember him not only for what he taught us about economics but also for what he showed us in humanity.