Capitalism has lifted billions of people across the globe out of poverty and generated untold wealth. Capitalism centres on the concept of enlightened self-interest. With other words: the idea that if we all pursue what’s best for ourselves, things will become better for everyone. It also means that decentralized individual action and competition among social, legal and economic institutions will achieve better results than attempts to coordinate these activities through centralized control and planning.
It will never be perfect but it has probably been the best we humans could do in an imperfect world.
Another central idea of capitalism is the concept of freedom. The freedom to live our lives how we want to, as well as the freedom to choose. But this freedom to choose has steadily eroded over the past decade.
America has embodied the values of capitalism more than any other major economic power. But it’s important to recognize also when we fall short of these long-held ideals. We have fallen short in the past and we are falling short again. And this big times!
It’s only by recognising this status and by embracing honest self-criticism that we can correct this path. Today, only a handful of large companies dominate the U.S. economy.
We have been there before. Today’s monopolies, duopolies and oligopolies rival those of the “Gilded Age”: In the late 19th century, J.P. Morgan dominated the banking system, Andrew Carnegie controlled the steel industry and J.D. Rockefeller the oil sector.
Today, consumers suffer from a lack of options to choose where to buy, as they did in the late 1800s. Most individuals buy from just 4, 3 or less competitors that control the entire market.
Look at these stats from the USA:
5 banks control approximately 50% of the US banking assets.
4 commercial airlines dominate the US airline industry.
80% to 90% of the health insurance market is dominated by the top 2 insurance companies, in the majority of states.
More than 75% of U.S. households have no choice in high-speed internet provider due to local monopolies.
2 beer brewing companies control 90% of the beer consumption.
The dominance of the Big Tech companies the stars of the post-COVID-19 world has only increased further:
Apple and Alphabet enjoy a duopoly in smartphone software.
Google dominates the search engine market, accounting for more than 90% of global search queries. Facebook has a 70% share of the social media market, based on total users and site visits.
the advertising duopoly of Google and Facebook has no credible competition.
Amazon dominates as a retailer, online sales platform for third-party vendors and cloud computing vendor.
It is no wonder that these tech giants are among the most valuable companies on the planet and their founders among the richest people in the world. Much like their “Gilded Age” predecessors, each works hard to appear benign. But this image is falling apart with each passing day.
Many small businesses in the U.S. are held hostage by the whims of Google, Facebook and Amazon. these organisations have the power to crush small business if they want to. Their actions are entirely unregulated.
So, can we believe in the virtue of competition anymore? I believe we can but like in Sport, we need referees! In capitalism, we need a referee to enforce the rules of fair competition.
Unfortunately, at the moment, the actions of these referees, the government and its supervising institutions, are tight to an army of Washington lobbyists.
As proof, here are some alarming facts from 2020:
Tech companies alone spent $124 million on lobbying and campaign contributions. Amazon increased this spending 30%, while Facebook’s spending increased an astonishing 56%.
94% of congressmen/women who oversee privacy and antitrust issues received money from Big Tech.
How would you feel, if a sports team would consistently wine and dine the refs and officials and overload them with nice gifts?
If we believe in capitalism, free markets and competition the oppressive power of a handful of tech companies, and the amount of monopolies, duopolies and oligopolies should be worrying us. This kind of power and little competition is always bad for consumers. With no real competition, consumers are not free to choose.
As much as we distrust governments to be able to do anything good, we all have to agree that we need more objective referees to face the power of Big Tech monopolies.
Sven Franssen