A Real Monopoly Moment

August 30, 2017

The news that Barry Lynn’s Open Markets group has been evicted from its DC think tank home, New America, for crossing the interests of its major funder, Google, is a legitimately shocking development. This development crystalizes the concerns about monopoly power that we at Roosevelt have been pointing out these past few years—along with our like-minded colleagues who have set up shop at the new Citizens Against Monopoly. Evidence is mounting that market power is causing economic problems: stagnant growth, rising inequality, slack labor markets, and vacant storefronts and factories. It should surprise no one that this excess power now threatens intellectual freedom and inquiry. Concentrated power does not appreciate being called out.

Lynn and his colleagues have done crucial work to point the spotlight of public debate on the ways that large fortunes are made by taking a strategic position athwart commerce and milking that advantage for all it’s worth. Nowhere is this more threatening than in the tech sector, where powerful platforms leverage their position to extend their tendrils upstream and across markets, charging anyone else who wants to make a living a toll for the privilege. Last month, the New York Times reported that it, along with other independent journalism outlets, were seeking an antitrust exemption for themselves to try to team up to counter the power over advertising and, potentially, subscription revenue exercised by Google and Facebook. Exempting certain corporations from antitrust scrutiny because their counterparts on the other side of the market already enjoy a de facto exemption is not an acceptable competition policy. But that only highlights the degree to which companies like Google are able to exert market power, and the threat that it poses to everyone else.

Google’s business model isn’t “innovation” that grows the economy and makes it work for the rest of us. It is parasitism, and the way that we once purged these sorts of actors was through an active antitrust policy that confronted market power wherever in the economy it was to be found. But in the 1970s and 80s, antitrust policy was redirected from that mission toward a much narrower one, on the theory that the real threat to competition was over-aggressive antitrust enforcement. And so we have an economy that not only gives powerful corporations and their shareholders a larger and larger share of total output, but one that empowers them to shut down anyone who points it out. If no one is allowed to point out the problem, it is only going to get worse.

Inequality and market power have always threatened intellectual freedom. Last time they were as out of control as they are now, wealthy robber barons founded new universities dedicated to research, a new concept in the United States. And during the same period, every state availed itself of the federal support for public “land grant” colleges, when it was made available following the Morrill Act. These new universities were great civilizational achievements, and they benefited from the intellectual elite’s turn away from the clergy as a profession following the publication of On the Origin of Species. That elite turned instead toward professional social science.

But when some members of that elite , motivated by the social gospel taught to them by their clergymen fathers, spoke up about monopolization and labor exploitation, the sources of their funders’ wealth and power, in some cases indirectly through the robber barons’ control of state legislatures, their institutions made short work of them. In response, a crucial component of the Progressive agenda became the protection of academic freedom and inquiry, to follow the evidence to wherever it might lead, regardless of political considerations. Regulation of the endowments those robber barons left to family foundations, once their private fortunes became subject to the income and inheritance tax, became a component of the progressive agenda as well—the unregulated, accumulated private power represented by those endowments was seen as an intolerable threat to the body politic and to democratic control of society’s stock of knowledge.

The assault on all things public, and in particular on public higher education and knowledge production, that has taken place over the past several decades has returned us to the era in which what you were allowed to say was circumscribed by the interests of whoever funded your work, which was emphatically not the public interest. As public funding for research dwindles, private funding takes its place, and private funding comes with strings attached. This is a severe problem in the whole United States, but especially in Washington, where the elimination of funding for expert Congressional staff pushed important policy work to think tanks, where it could be bought. What we’ve just seen is evidence of how rotten the system has become.

The most important lesson to take from this is that the eviction of the Open Markets group is itself evidence that the argument they’ve been making for a decade is correct: corporations have attained power over the economy and over our society, and we will not be healthy, economically, democratically, or socially, until that threat is confronted and dealt with. That requires a robust antitrust policy, and it also requires a robust “knowledge policy”: a return to the principles of the public good that once powered our national conversation and policy debate.