Dominant firms use raw economic and political muscle to squeeze our economies and pocketbooks, in any sector you can think of: agriculture, digital technology, finance, manufacturing, media, pharmaceuticals, music, social care, publishing, sports, media, accounting, eyewear, dentists, veterinary services, funeral parlours, social care, military procurement and nuclear weapons (yes, really,) retail, and so on.
Instead of investing to produce better value goods and services, monopolists are toll keepers, sitting at chokepoints in our economies, extracting private taxes from the passing traffic, while also escaping civic obligations like paying tax or environmental or privacy laws. They use their extracted wealth to bend politics, laws, and public opinion to amass more power to control markets, in a vicious circle.
Dictionary definitions of monopoly, which refer to situations where there is a single seller in a market, lose sight of the big picture. We use the M-word, as others do, much more broadly, to refer to significant and durable economic power.
A growing body of research now shows how creeping monopolisation saps prosperity, worsens inequality, curbs innovation, damages resilience, harms the environment, empties out our high streats, undermines the media, threatens our security and fuels a rising sense of powerlessness and popular anger. Power structures embedded in our economies blocks democratic and progressive change.
In the past 40 years, the share of global income going to workers has fallen by some eight percentage points – if they had the same share of global income they had in 1980, they would collectively earn $7 trillion more each year – over $2,000 per worker, on average, worldwide – and a lot more in rich countries.
People since Adam Smith have understood the perils of monopoly power. After the Second world War, the United States pushed anti-monopoly policies into the fledgling European project, in clear recognition of the role monopoly had played in creating the conditions for fascism.
Yet from the 1970s a new, pro-monopoly ideology emerged known as “consumer welfare”. It began in Chicago and spread around the world. Under this vision, we should stop worrying about power, about the public interest, or the interests of workers, taxpayers, or citizens– and narrow our field of vision down to two things: first, the interests of consumers, and the internal efficiency of corporations. Big firms create economies of scale, they argue, and these “efficiencies” will trickle down to consumers.
These ideas spread around the world, and a rising tide of monopolisation has ensued. By the 2000s, over 80 percent of all measured global flows of foreign direct investment (FD) involved mergers (as opposed to productive “greenfield” investment) and for rich countries, the figure was near 100 percent.
“This merger tsunami is a good sign,” Europe’s Competition Commissioner gushed in 2007. Since 1990, of over 8,000 mergers notified to the European Commission since 1990, only 30 have been blocked – less than 0.5 percent. This is a scandal – and yet who noticed?
This pro-monopoly paradigm is protected inside an elite, technocratic “competition bubble”, with little access for smaller businesses or civil society groups.
Those outside the competiton bubble see competition policy as an ineffective or pro-monopoly tool, so they ignore it. Unchallenged, the ideology thrives. This is a vicious circle – which the Balanced Economy Project aims to break.
We need many tools to tackle monopolisation, from tax to financial regulation, but potentially the most powerful toolkit is competition policy – or ‘antitrust.’ With the right vision and political will, it can be our industrial policy for the we can use it to break and disperse monopoly power, and open up space for citizens and businesses to create a more balanced economy and democracy that works for all.
Please join us.
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Submission to European Commission: please democratise competition policy and enforcement