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As Lynn and Carty explain, the "rapid rise in monopolization has increased inequality in all sorts of ways."

To Address Inequality, Let’s Take on Monopolies

When a few firms dominate the market, they have the power to charge consumers more and pay workers less.

Barry LynnKevin Carty

 by Inequality.org

Most Americans know that our country has become extremely unequal. They may not know that the richest 0.1% of Americans own as much wealth as the bottom 90%, or that the richest one percent took more than half of all income growth since 1979. But they know that the rich benefit more and more nowadays, while middle and working class families take home less and less.

Our team at the Open Markets Institute is dedicated to investigating and publicizing the radical concentrations of wealth — and of power — that are responsible for creating much of this extreme inequality. Through investigative journalism and historical and legal research we have shown that monopoly power is at the root of many of the most pressing injustices in America today—including degraded jobs, depressed entrepreneurship, financial instability, and the weakening of the economic and social fabric of communities all across the country.

Last month, our team of ten people was forced to leave our long-time home at a well-known Washington think tank. We were pushed out for expressing support for an antitrust decision against Google, a tech monopoly that is also one of that think tank’s largest funders. Since then, we have re-established ourselves as an independent, non-profit organization that does not accept funding from any for-profit corporation. We are fully committed to continuing, and expanding, the groundbreaking reporting and research we have done for years.

"Monopoly power is very often brought to bear against the least advantaged in an already unequal society."

The origins of America’s monopoly problem today trace to the early 1980s, when an odd alliance of legal scholars and economists from the Right and Left pushed through a radical rethinking of America’s traditional antimonopoly philosophy. In stead of using antimonopoly law to protect our democratic institutions from concentrated power, they said we should aim only at making economic systems more “efficient,” in order to better promote our “welfare” as “consumers.”

In the decades since, every administration has embraced the tenets of this new “Chicago School” thinking, in the process abandoning the anti-monopoly policies which had helped underwrite the democracy and broad-based prosperity established during the New Deal era.

America’s current economy bears the effects of that radical transformation. Four airlines control eighty percent of their market, two drug store chains dominate the pharmacy industry, and Google, Facebook, and Amazon each control nearly all of search, social media, and e-commerce online. The list goes on and on, with almost every industry in America — from agriculture to retail — having become highly concentrated.

This rapid rise in monopolization has increased inequality in all sorts of ways. Monopolistic businesses can charge people more for basic goods like healthcare, transportation, and food. As Lina Khan, the Open Markets’ Director of Legal Policy, and Sandeep Vaheesan explained recently in the Harvard Law and Policy Review, “monopoly pricing on goods and services…  turns the disposable income of the many into capital gains, dividends, and executive compensation for the few.”

Those same businesses also have more power to exploit their workers, because in a monopolized economy, there is less competition for the labor of the worker. In fact, one study from the University of Chicago found that individual wages today would be $14,000 higher per year (yes, $14,000!) if the economy had the same levels of competition as it had 30 years ago. It is no accident that Wal-Mart — the nation’s biggest private employer — pays its workers less than a living wage, and crushes their unions when they try to organize. In many communities, workers have few places other than Wal-mart to sell their labor.

Monopoly power is very often brought to bear against the least advantaged in an already unequal society. Monopolistic meatpackers and farm operators subject their slaughterhouse workers, who are predominantly people of color, and their farm workers, who are predominantly immigrants, to exploitative labor conditions and stop them from forming unions to achieve better treatment. Monopoly, like the inequality it spurs, aggravates existing disparities.

Worse this inequality of economic power also promotes greater inequality in our political system. The same big businesses and big investors that raise prices, lower wages, and exploit the disadvantaged are also some of the most powerful actors in America’s politics. Not only do they use their wealth to lobby lawmakers, fund academic researchers, and influence think tanks and policy experts, they also use their market power to pressure elected leaders, as when Aetna threatened to pull out of the Affordable Care Act exchanges unless the Obama administration approved its massive merger with Humana.

Our team looks forward to working with a broad coalition of allies to take on America’s monopoly challenge, and put power back where it belongs — into the hands of workers, creators, families, and communities all across our great nation. This battle won’t be easy, but the American people have taken on such concentrations of power before, and won. At Open Markets, we are confident that, working together, we will do it again.


This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

Barry Lynn

Barry Lynn is the executive director at the Open Markets Institute.

Kevin Carty

Kevin Carty is a reporter and researcher for the New Markets Institute.

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