The story of the US economy over the past 40 years has been one of rapid technological change, growing corporate monopoly power, and deepening despair for a rising share of workers. There will be no happy ending unless the US radically changes its approach to managing the impact of innovation.
STANFORD – Have we entered a new Gilded Age, in which tech monopolies wield enormous political and economic power in the same way that Standard Oil did at the end of the nineteenth century? The scale of wealth being produced for a select few, along with the mounting despair of workers who are left behind by technology-driven economic change, certainly suggests that growing monopoly power is strangling parts of our economy. But the monopolies of the Gilded Age were very different corporate creatures from the technology driven monopolies that have arisen in recent decades.
The Gilded Age monopolies were created via collusion, intimidation and bribery by corporate bosses. They were eventually rendered illegal by antitrust laws. Today’s monopolies, however, are legal and were created by true innovators who received various forms of legal protection as their firms rose to dominance. John D Rockefeller, J. P. Morgan, Andrew Carnegie or Cornelius Vanderbilt were corporate bosses, not innovators like Jeff Bezos, Sergey Brin, Steve Jobs and Mark Zuckerberg. So, in contrast to the antitrust policy of the past, what is needed today is an approach to monopoly power that relies on policy which is both subtle and complex. And this requires that we reconsider many of our prior biases and preconceptions about what a “free market” truly means, and about the role of government in that market.
Whereas the US government, in 1911, broke up Standard Oil into 34 companies for its violations of the 1890 Sherman Antitrust Act, an effective policy toward contemporary monopolies will require legal adaptation to the new reality: a new approach to taxation, regulation, patent laws and labor markets. Here, I focus on the labor market, and the need to establish a principle of “required compensation” for workers whose lives have been damaged by today’s new monopoly power. Such compensation should – indeed, must – be the basis of a strategy to correct the negative consequences of today’s misguided policies, which have allowed the increasing concentration of enormous wealth, accompanied by the despair of many millions of ordinary American workers who see the future foreclosed to them.
STANFORD – Have we entered a new Gilded Age, in which tech monopolies wield enormous political and economic power in the same way that Standard Oil did at the end of the nineteenth century? The scale of wealth being produced for a select few, along with the mounting despair of workers who are left behind by technology-driven economic change, certainly suggests that growing monopoly power is strangling parts of our economy. But the monopolies of the Gilded Age were very different corporate creatures from the technology driven monopolies that have arisen in recent decades.
The Gilded Age monopolies were created via collusion, intimidation and bribery by corporate bosses. They were eventually rendered illegal by antitrust laws. Today’s monopolies, however, are legal and were created by true innovators who received various forms of legal protection as their firms rose to dominance. John D Rockefeller, J. P. Morgan, Andrew Carnegie or Cornelius Vanderbilt were corporate bosses, not innovators like Jeff Bezos, Sergey Brin, Steve Jobs and Mark Zuckerberg. So, in contrast to the antitrust policy of the past, what is needed today is an approach to monopoly power that relies on policy which is both subtle and complex. And this requires that we reconsider many of our prior biases and preconceptions about what a “free market” truly means, and about the role of government in that market.
Whereas the US government, in 1911, broke up Standard Oil into 34 companies for its violations of the 1890 Sherman Antitrust Act, an effective policy toward contemporary monopolies will require legal adaptation to the new reality: a new approach to taxation, regulation, patent laws and labor markets. Here, I focus on the labor market, and the need to establish a principle of “required compensation” for workers whose lives have been damaged by today’s new monopoly power. Such compensation should – indeed, must – be the basis of a strategy to correct the negative consequences of today’s misguided policies, which have allowed the increasing concentration of enormous wealth, accompanied by the despair of many millions of ordinary American workers who see the future foreclosed to them.