Written By:
Bunji - Date published:
1:56 pm, July 18th, 2012 - 50 comments
Categories: capitalism, workers' rights -
Tags: cartels, monopolies, tournament
There’s a great piece in Harper’s Magazine about modern day America’s monopolies and cartels.
Google, Apple, Intel, Pixar and other Silicon Valley corporations have formed a labour cartel, refusing to poach each other’s staff so that they can keep wage costs down and hours worked up. Chicken giant JBS insists on selling feed and chicks to its supplier farmers, then weighing and tallying their produce behind closed doors and setting a price they have to accept or be damned to bankruptcy on their mortgage. Anheuser-Busch InBev & MillerCoors control 90% of the beer market, and control virtually all distribution for any smaller players into bars and supermarkets. Amazon has between 70 and 80% of online book sales (both e- and physical), and largely controls what publishers (and authors) will get paid.
And we have our own versions here in New Zealand. Chorus’ engineers, many taxi and courier drivers are all contractors who cannot work for another company easily. They only have one buyer of their labour who – rather than face labour law restrictions – makes them self-employed so there is no minimum wage, or maximum hours, or holiday/sick pay or… We need to work out how to protect these workers.
Fletchers – which grew huge due to the first Labour Government’s house building programme – now largely controls our new house building supply, leaving us with much higher building costs than overseas, and a shortage of housing as people can’t fund that cost. And in the Christchurch rebuild? When they reduced the rate for each square metre of interior decorating completed (shared between contracting plasterer and painter) from $25 to $19 on Monday they claimed the new price was the market rate. When you are the market, what ever you pay is the market rate…
In the old days monopolists JD Rockefeller and JP Morgan acknowledged their power openly and defended it: Yes, they had centralized control over entire industries, and yes, they ruled as despots; but they wielded such power to organise production and trade more efficiently.
Today, our overlords not only refuse to defend the power they hold—they deny that it is even possible for any American to accumulate such power. And to make such an absurd claim stick, they (or the more politically sophisticated of the academic economists in their employ) have undermined our language itself. Their most impressive act of lexical legerdemain was the coinage of various misnomers, some so audacious as to be worthy of Orwell’s Ministry of Truth. Corporate monopoly? Let’s just call that the “free market.” The political ravages of corporate power? Those could be recast as the essentially benign workings of “market forces.”
The most important characteristic in markets
is an equality between the seller and the buyer, achieved by ensuring that there are many buyers as well as many sellers. Second is transparency. Everyone sees the quantity and quality of the product on offer, and the price at which each deal is done. A third characteristic is a tendency to deliver egalitarian outcomes. On any given day, once the supply of a product has been hauled to market and appraised, all sellers receive roughly the same price per unit. Offer a seller less than the prevailing price, and you walk away empty-handed. Demand more from buyers, and your goods sit untouched.
In tournaments, as devised and promoted by one of George W Bush’s top economic advisors Edward Lazear, the sellers of goods/services/labour have nowhere else to go, there is one buyer. Transparency is removed for sake of efficiency. And egalitarian prices are removed as we pay more (or more likely less) as “incentives”. You can deride the free market, but this isn’t even that. The political aim of tournaments is the opposite of real markets:
Citizens structure markets, first and foremost, to protect individuals from massed capital. Lazear’s tournaments are designed to maximize return to capital. They do so precisely by setting individual citizens against each other, like cocks in a pit.
And that’s where we’re left – trying to slit each other’s throats, while the monopolists grow fat.
The current rise of populism challenges the way we think about people’s relationship to the economy.We seem to be entering an era of populism, in which leadership in a democracy is based on preferences of the population which do not seem entirely rational nor serving their longer interests. ...
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is “Mr Market” the real Collectivist Central Planning Tyrant?
http://www.alternet.org/story/156311/the_new_totalitarianism:_how_american_corporations_have_made_america_like_the_soviet_union?page=entire
Great article!
ha, love the last two paragraphs:
The totalitarianism that the right fear is alive and well – and supported by them.
democracy is Palin into the distance .
Brilliant
Regarding the Fletcher monopoly deal with the government in Christchurch, where trade rates have been reduced across the board to reflect market realities, can we be assured that the rumoured $200 an hour equivalent rates charged by them are reasonable and also reflect market realities?
Just a quick comment. Chinese market gardeners used to sell their product through auctions – eg Turners and GROWERS, and had to accept what the market would pay. Now that has been shut down and supermarkets contract individually for a certain price, which may be low, and if there is scarcity where economics show the price goes up, the growers still get the contract price. Out of over 100 family growers in the Pukekohe area only under 20 remain. An interview heard recently on Radionz – Insight or Spectrum I think.
Yeah its crap. Around where I am there has been a noticeably decline in the numbers of market gardeners over the last 25 years. Much less money in it and the work is as hard as ever.
“Google, Apple, Intel, Pixar and other Silicon Valley corporations have formed a labour cartel, …”
This will pass. All of those companies came to power (mostly) by inventing products that didn’t previously exist, or by taking a product and making it by far the best. They won’t be able to keep that up forever and when they can’t, others will come in and usurp them.
The history of “protecting workers” has been pretty fraught with hurting workers.
Yeah very good Rusty. And who was doing the hurting? Why don’t you find a chart showing the divergence of US corporate profits and worker incomes over the last 20 years.
Its pretty clear that corporate shareholders have been making ripper profits at the expense of paying their workers sufficiently.
Can you put up that graph? It would be interesting. Then add in the subsidies, special treatment under the law and bail outs those firms receive.
They probably have. Those big corporates (especially the banks) are govt guaranteed after all.
Who gives a fuck about your attempt at irrelevant distraction?
The fact of the matter is that the lions share is getting bigger, and its going to shareholders not workers.
haha, you are classic.
so the firms can PLAN and combine and manipulate the market but the workers cant.
oh just another case of corporate socialism where its do as I say and not as I do.
and prism.
the contract price has led to the production of fruit and veg that is tasteless, soggy and basically crap.
Oh thats right its the invisible hand taking all the goodness for itself and leaving the used up husk for the prols.
so where is the market in the contract price?
Unions wield quite a lot of political clout in the states, if I remember correctly.
About 1/3 of what they did 50 years ago.
Today real political power rests in the investment banking sector.
Don’t disagree. Let’s cut off the power at the source.
“…the contract price has led to the production of fruit and veg that is tasteless, soggy and basically crap.”
haha? What? I missed this before. What the fuck are you talking about?
What, cut off the arm which has the boil on it, instead of lancing the boil itself?
Smart Rusty, real smart.
Who gives a fuck about your attempt at irrelevant distraction?
I saw a labour protest in New York earlier this year – a firm had shut down without paying their contracted painters and decorators (yep, the finishing touches to whatever project the firm hired the short-term staff for). The poor guys (about 10) were shunted to a corner of the footpath with signs on bits of cardboard boxes apologising to people for their presence and assuring the public that they were not targeting other firms, they just wanted their pay. All dreadfully sad and pathetically ineffective, there was no way they were going to get a cent.
Meanwhile in Christchurch trades people have formed a ‘lobby group’ to protect their interests against the earthquake recovery version of tournament capitalism
Tomatoes especially! Plus which, they’re all seedless!
well do you?
Free Market won
Humanity nil
Thats the half time score, Extinction starts playing in the second half as a super sub for the Market, only the planet gets to know the end result.
The end is nigh! Yet, life goes on.
Try to think outside of a quarterly perspective.
There have been people like you since time began. The world is always ending, and you would be 100% right. But, that doesn’t prove anything, or help anyone.
What do you care that the world is ending? There’s a lot of money to be made on the way.
excellent article thank you
there is no such thing as a free market.
if there is well then lets see it.
100% agree.
However, we have seen freer markets than others. Those that are freer are almost always more prosperous.
No, the most prosperous nations are the ones who have engineered structural wealth pumps concentrating resources and money from their peripheries, onto themselves.
haha, what the fuck does that mean?
Rusty it means you have no concept of empire despite multiple examples in the historic record.
Give an example, then.
All empires extract wealth from the vanquished territories, think Rome. It flows from periphery to centre. Think British Empire. All known empires collapse when they can no longer extract efficiently from the periphery….which will be the American experience as their version of worldwide empire (free market globalcapitalism) fails.
There is nothing free about the American version of capitalism. It’s propped up by govt owned armies and navies. Pretty much the opposite of freedom, at least for the crowd on the receiving end. Oh! And don’t forget the 20 year old kids from Kentucky and Nebraska who get thrown in the meat grinder. Not much freedom for them.
Thanks Bored.
Rusty, you say there is nothing free about US capitalism. Yet it is by far the wealthiest country in the world. And you go on to explain why. And its not because of free markets.
Yes, its because its an empire. Working in exactly the way that Bored said.
It’s a bit of a paradox, I suppose. The foundations the States are built on are pretty strong. Read that. “THE STATES”. The USA is a grouping of largely independent states whose power has been usurped by one city.
Devolve power to the states and you get freedom, like which reigned through much of the 19th century. The century in which much of the capital formation, that led to prosperity in the 20th century, was formed.
I agree that much of the American strength in the 21st century stems from empire. That doesn’t mean they can’t go back to freedom, though. I hope they do.
So the US is a prime example of how empire, including a massive foreign based military, can become extremely wealthy by sucking in resources and money from the peripheries. With plenty of talk about free markets but only very limited instances of actual free markets, the ones which suit the requirements of the centre of empire.
No its not a paradox. This is how empires behave and this is how they work, and that’s always been the case. No contradiction there whatsoever.
I haven’t disagreed with you at any point in this thread, fuckwit. I 100% agree the US has been a corporatist empire for, probably, the last 100 years. Certain businesses collude with the govt in order to hoard wealth and power. I’ve never at any point said anything less.
Without at all wanting to back up our bug killing friend Rusty, I’m not sure that the USA is the wealthiest country. Not even sure it’s even in the top ten. Guess it depends on how you define it, but I’d suggest most of the oil pumping Gulf countries would be way ahead. Still the largest economy for the next few years, but wealthy? No. Indebted up to their eyeballs? Yes!
The US is not just a corporate empire, it’s also a military empire.
The mixed model of corporate and military empire seems to be far more economically and financially successful than the neoliberal free market model.
You mean the 19thC continental US that saw wars of expansion every few decades? The 19thC that saw continental expansion and resource expoitation as practically unlimited (think buffalo, silver and gold)? The 19thC USA that also kept slavery for decades after Europe? The 19thC USA that kept former slaves disenfranchised, largely exterminated native Americans, and was fed by working class immigrants from Europe?
Your idealised 19thC USA is as close to reality as “Oliver!” was to London’s Victorian East End.
TRP: salient points.
Te Reo.
The USA is 6th largest in GDP per capita and has a much larger population than anyone in the top 5.
It has a larger share of world nominal GDP than its 4 next competitors combined.
It’s still number two in manufacturing, only just recently surpassed by China. And if you counted offshored American manufacturing in China, it would probably blow China out of the water in this category.
The USA is far and away the richest country in the world by any subjective measure.
“The USA is far and away the richest country in the world by any subjective measure.”
I prefer my measures objective, Rusty.
haha, I should stop trying to sound smart by using big words : D.
who for?