Monopoly Capitalism Is the Root of All of America's Problems


By Daniela Perdomo
AlterNet
December 31, 2009.


Monopoly capitalism exemplifies everything that's gone wrong with American politics, and we need to do something about it -- soon.


Something is rotten in the state of American capitalism, and if you agree with Barry C. Lynn, almost all stinky paths lead to the monopolization of our economy. The rise of behemoths like Wal-Mart and Viacom are not only lowering the quality and safety of the products you use, but also undermining our so-called democracy.


I had a chance to speak to Lynn about just how bad things are -- and what we might be able to do about it. Lynn's new book, Cornered: The New Monopoly Capitalism and the Economics of Destruction, from Wiley Press, will be out in January.

Q: In the book you say we have no choice but to reverse the process of monopolization in our economy. How can we practically achieve that, at this stage of the game?

Barry C. Lynn: We can achieve it and there’s proof we can because we’ve done it in the past. In the late 19th century there was a really incredible process of monopolization. In the Guilded Age, you ended up with really tight concentration of control over finance in Wall Street. Think of Standard Oil, of U.S. Steel. There was some effort to break up those companies in the early 20th century but the real change took place after what people call the Second New Deal. The Roosevelt administration ended up breaking up a number of companies. What they did most successfully is stop the growth of massive companies and created space for new companies to grow.

In the middle of 20th century century, again there was a case in which we actually undid many of the powers and protected the entrepreneur. It was policy that at least three or four companies had to be competing with each other in each industry -- and preferably eight or ten. There’s the Alcoa case, for example. They had a 100 percent monopoly through the end of World War II. After the war, the government created opportunities for new companies and forced Alcoa to share its technology with new companies.

We have a lot of experience with this, we’ve done it on a whole-scale in the past, and doing so would be creating a lot of interest in these companies. There are lot of managers in Wal-Mart, for example, who won’t rise up in the ranks in such a large system, but if there’s 30 smaller Wal-Marts, lots of individuals can reach their full potential. Companies aren’t monolothic in nature. They’re made of people, and lots of these people have an interest in breaking them up.

Q: What about shareholders’ and board members’ interests? They surely wield more power and sway over these kinds of decisions than associates at a huge company like Wal-Mart.

BL: Right. Well, Alan Greenspan was one of the engineers of the roll-up of modern monopolization over the past 30 years. As a student, he studied the Standard Oil case, in which there was this argument that pretty much went: “Let’s not break up Standard Oil because it’s so much more efficient than the little pieces if they were separated.â€