We speak with Richard John, a professor of history and communications at Columbia University, about the history of anti-monopoly sentiment in the United States. Even before the beginning of the republic, American colonists strongly objected to the “monopoly” power that British manufacturers enjoyed over American producers. The British companies were long-established and had long lists of pre-existing customers, as compared to the start-up businesses in the colonies.
The colonies wanted to impose significant tariffs on British goods, and when the U.S. declared its independence, those tariffs went into effect. American “anti-monopoly” sentiments and the tariffs that they engendered continued through the first half of the 19th century.
Through the civil war, international trade between the Southern slave-based cotton industry and British products was an economic boon to the South; but Northern Democrats still favored tariffs on British goods.
We discussed further changes in Americans’ attitudes toward monopoly power, and for those who opposed it, what remedies made sense? The industrialized US in the late 19th century fought against the economic power of the robber barons. In the 1920s and ‘30s – and again in the latter part of the 20th century – our economy evolved and so did our approach toward monopoly. Where will we go now?
Part Two:
We continue our coverage of monopolies with Matt Stoller, Director of Research at the American Economic Liberties Project. He is the author of: Goliath The 100-Year War Between Monopoly Power and Democracy, a look at how concentrated financial power and consumerism transformed American politics, resulting in the emergence of populism and authoritarianism, the fall of the Democratic Party—while also providing the steps needed to create a new democracy.
We discuss Matt’s latest article: “A Land of Monopolists: From Portable Toilets to Mixed Martial Arts.”
So how does Matt Stoller find monopoly power everywhere – even with porta- potties and the like? It’s not that there is only one company in the portable toilet industry. But lots of little companies get bought out – or financed by – one larger capitalist – who had a lot of extra cash sitting around – and that capitalist now controls most of the industry. In this case (really!), a billionaire who owns the Detroit Pistons bought up many porta-potty companies, with his “private equity” firm. This is called a “roll-up.”
Private equity financing is a significant part of our banking system now. It’s how many companies get their funding (the role that banks used to play). And of course, the private equity firm extracts its share of extra revenue from the operations.
The concentration of economic power – known as monopoly power – gives the owner the ability to control how the product is sold to consumers as well as the supply chain before the product comes to market.
These financiers are not good at the business of the companies theyre buying, but they are very good at financial manipulation. They know what to buy and sell, including how to sell off the profitable items (machines assets, cash), and then dispose of whatever is less valuable.
Separating control from responsibility can thus give rise to pillaging of productive economic firms. This kind of monopolization should, perhaps, be illegal, but apparently it is not yet.
