How Should We Fight Monopoly Capitalism?

 The global economy is dominated by huge corporations. These huge businesses wield enormous power, crossing borders, avoiding laws and taxes, compelling governments to compete with each other for investment. The biggest corporations have captured eye-watering wealth, which far outweighs the economic power of most countries on earth. And that wealth and power is only growing.

As the world is battered by a cost of living crisis, still recovering from the worst pandemic in a century, and struggling to cope with the effects of disastrous climate change, the profits of the biggest 500 firms on the planet nearly doubled, exceeding $3 trillion in 2021. Their combined income amounted to an almost unimaginable $38 trillion – equivalent to nearly 40% of the entire world economy. That’s more than the GDP of all but the very richest countries in the world combined.

The combined income of just the five biggest corporations in the world was more than the income of the poorest 2 billion people put together – one-quarter of the world’s population. One single corporation – Walmart – earned more than half a trillion dollars. That’s more than $1.5 billion every day, exceeding the GDP of even wealthy countries like Austria or Norway. Meanwhile, Apple, the most profitable private corporation in the world, saw its profits rocket by 65% to $95 billion.

These riches aren’t accidental. These gigantic corporations have captured the economy, giving them the power to set prices, in sectors including food and energy. So while food and energy costs rise dramatically for ordinary people, corporations in those sectors are under no pressure to lower prices even as their profits spiral into the stratosphere.

Corporate concentration is growing, with those at the very top acquiring rivals. Just in the world of Big Tech – one of the richest sectors of the economy – the five biggest firms, Google, Amazon, Facebook, Apple, Microsoft, have bought out over 1,000 companies over two decades, and until 2022 no regulator, anywhere, stopped even one of them.

The problem is particularly acute in the US, where recent research finds that the top 1% of corporations account for a truly astonishing 81% of business sales and 97% of business assets. More worrying still, the top 0.1% alone accounts for 88% of corporate assets and 66% of sales. But the same trend can be seen across Europe and much of the world. And here too, the growth in corporate power has been met, at least until recently, with little action. Of 8,000 proposed business mergers the European Commission was notified of since 1990, only 30 (less than 0.4%) were blocked.

Part of the problem lies with the rules of the global economy – rules often designed by the very corporations who benefit from them. This in turn hand more power to these same corporations in a vicious circle. Some of these rules, have allowed and even encouraged corporations to put profiteering and speculation ahead of their supposed purpose, whether that’s making medicines or producing food. Far from encouraging creativity and innovation, monopoly power has stifled it.

So monopoly capitalism doesn’t simply drive higher prices, it shifts wealth far more fundamentally from the 99% to the 1%. And from poorer to rich nations, driving huge inequality. It is shifting power – undermining democracy and making it harder to achieve policies needed to deal with, for instance, climate change. Indeed, monopoly capitalism entails the capture of decision-making by and for elite private interests. Only by reclaiming, breaking, decentralising and dispersing this power can we hope to make democratic decisions which meet the public interest.

That gravitation to a single company in an industry not unique to the U.S., Europe, China or India but also for us in Malaysia. For example, power generation is now in the hands of TNB. This was the situation before privatization. For all the rhetoric, TNB has got its way on power generation. We, as consumers, are at their mercy! The Government will have to increase tariff at the behest of TNB, since there are no substantive alternative provider of power. And this is despite TNB having profits of RM4 billion or more each year. The same is true for sugar, flour, rice or airports. Failed monopolies like LRTs or MRTs are Government-owned. That’s because its social pricing strategy or a failed business model. If we believe in good governance then business monopolies have to be divested or new licenses are issued. More competition is always good for the industry and the consumer.

Reference:

Monopoly capitalism – what is it and how do we fight it? Global Justice Now, 21 March 2023