Last week, Joe Biden tweeted, “Let me be clear: capitalism without competition isn’t capitalism. It’s exploitation.”
It would be too much to expect this rather dim politician to understand, much less endorse, the classic Marxist analysis of profit originating in the exploitation of workers — they produce more in value for their employer than they’re paid in wages. But the remark, in all its naiveté, does capture a spreading belief in liberal policy circles that monopoly is at the heart of our economic troubles, from crappy jobs to crappy pay and benefits. I’m not convinced.
According to the introductory economics I learned in college — which was admittedly long ago — two essential features of monopolized markets were high prices and restricted supply. Those features weren’t at all visible in the US economy until the pandemic began messing with supply chains, resulting in short supplies in some sectors in the face of pent-up demand, demand that was supercharged with stimulus checks.
Even so, the shortages and price spikes are affecting just a few sectors, like new cars and lumber. They’ve yet to spread economy-wide, and there’s no sign they’re about to. They’re not the product of some long-term monopolization. For most of the last forty years, inflation has been quite low — in no small part because the working class was crushed as the 1970s turned into the 1980s and because shortages have been rare.
The giants that people point to as proof of our monopoly problem include Amazon, Google, and Facebook. Amazon, like Walmart before it, is known for low prices that crush competitors. (Workers too.) That’s not standard monopoly behavior. Google and Facebook dominate their fields, but most of their “products” are free. Yes, that means “you’re the product,” as the saying goes, but what kind of improvement would it be if broken-up Googles and Facebooks charged for their services or maintained the same monetizing-the-user’s-identity business model as the originals?
Nor is it clear how introducing competition would improve the quality of service. One of the lures of Facebook, for those subject to the lure, close to three billion users at the most recent count, is that so many people are on it. That facilitates communication. Breaking it up into competing services would be like making an AT&T phone customer incapable of contacting a Deutsche Telekom subscriber.
Behind antitrust is a faith in competition as a positive good. As socialists we should take exception to that. We already have too much competitive individualism in this society, and we don’t need any more. We need solidarity. Stimulating the war of each against all isn’t the way to get there.
A better way to handle bigness is to regulate the behemoths and encourage the growth of unions. That would do more to improve working conditions at Amazon than turning it into four or twenty little Amazons. As political economist Sam Gindin pointed out in an interview on my radio show, the deregulation movement of the 1970s and 1980s was a war on regulated oligopolies, and it was accompanied by union busting, wage cuts, and job losses. That could be a portent of life under monopoly busting.
Why is antitrust getting the attention of liberals these days? In his book on the history of American corporate governance, law professor Mark Roe notes that Franklin Roosevelt saw it as a war against “private” socialism that could stave off “government” socialism. We may be seeing something similar now. With socialism polling decently, socialists working their way into the Democratic Party, and the business class in disrepute with much of the population — Gallup reports that 73 percent of the public is either somewhat or very dissatisfied with major corporations, compared to 48 percent in 2001 — pursuing antitrust may be a campaign to restore the prestige of capitalism itself. Fronting small business as the emblem of commerce is a classic bourgeois self-defense strategy.
There’s nothing magic about smallness. Vincent Carosso ends his huge book on the Morgan banking family by quoting an unnamed socialist refusing to curse the peak Morgan, J. P., on his death: “We grieve that he could not live longer, to further organize the productive forces of the world, because he proved in practice what we hold in theory, that competition is not essential to trade and development.” It’s a sentiment worth recovering.