In the US, the problem of monopolies is known. Using anti-trust legislation, like the Sherman Anti-Trust Act, the government broke-up Standard Oil into smaller companies. In 1945, the US government failed in breaking up the Alcoa aluminum monopoly. However, it forced Alcoa “to license its patents on a royalty-free basis to competitors.” The government also provided financing to Alcoa’s competitors “that resulted in the emergence of Reynolds and Kaiser as aluminum powers.”
Fast forward to today, and we see that monopolies take a cut of almost everything we do daily.
As noted in this post, the tech monopolies dominate our lives:
Google dominates search at 90% of the market.
Facebook has over 70% of the social media market.
Microsoft has over 75% of desktop OSes.
Amazon controls 60% to 80% of the e-book market and 64% of regular books.
Not surprisingly, “the proportion of "notifiable" mergers reported to the U.S. Department of Justice and investigated for antitrust dropped from 13.6% in 1978 to 2.4% in 2018.”
What happened?
We can see the decline in anti-trust as a combination of things.
#1 Anti-trust lost to the Freedom of Ownership
The ultimate challenge of any regulation, such as anti-trust laws, is that it goes against freedom. When Phil Gramm repealed the Glass-Steagall Act, he did so in the name of freedom: "...we have learned that government is not the answer. We have learned that freedom and competition are the answers".
In a society that is built on freedom, any regulation of the elite is temporary. When you think about monopolies, they represent the winners of Capitalism. Monopolists were able to figure out the rules and win. They got to the top of the pyramid. But this results in non-competitive markets that they control. That’s not their problem. They ultimately believe in freedom. Consequently, the Capitalist elite will always strike back and deregulate themselves in order to be free. Consequently, without addressing replacing the collectively held belief of freedom, there’s no way to “fetter Capitalism.”
#2 How about anti-trust legislation? Was it also a bribe against adopting Socialism?
According to the right-wing CATO institute, it was:
“The anti-monopolist Sen. Estes Kefauver (D, TN) warned that the consequence of further industrial concentration would be government takeover, and that could lead either to fascism on the one hand or socialism or communism on the other. Other proponents of the act argued that the antitrust laws were “one of the greatest bulwarks against communism” and that the rising tide of industrial concentration was driving the country toward “collectivism.” It is no coincidence that the most anti-consolidationist [sic] statute in American history was passed during the period of the Red Scare.”
Activists should never underestimate the ability of Capitalism to offer such carrots to win the battle of hearts and minds against any ideology that doesn’t believe in the freedom ownership
#3 Rise of the Right
With the decline of Communism, the Capitalists no longer had to play nice. This coincided with the rise of Milton Friedman and the “Chicago School of Economics,” who started to dominate the intellectual sphere. However, when it comes to monopolies, it was Robert Bork who redefined the way that courts ruled on anti-trust cases. This was summarized as follows in Foreign Affairs:
“Robert Bork, who was solicitor general in the mid-1970s, emerged as a towering scholar who argued that antitrust law should have one and only one goal: the maximization of consumer welfare. The reason some companies were growing so large, he argued, was that they were more efficient than their competitors, and so any attempts to break up these firms were merely punishing them for their success. This camp of scholars was informed by the laissez-faire approach of the so-called Chicago school of economics, led by the Nobel laureates Milton Friedman and George Stigler, which viewed economic regulation with skepticism. The Chicago School argued that if antitrust law should be structured to maximize economic welfare, then it ought to be highly restrained. By any standard, this school of thought was an astounding success, influencing generations of judges and lawyers and coming to dominate the Supreme Court. The Reagan administration’s Department of Justice embraced and codified many tenets of the Chicago school, and U.S. antitrust policy has largely settled on a lax approach ever since.”
Consequently, “adoption of consumer welfare under the Reagan administration in the 1980s radically shifted antitrust into a technocratic debate among economists, who corporations could always supply to assert massive efficiencies from any merger” – regardless if this was achieved or not. More importantly, the “negative impacts on worker wages (as shown in a compelling new research paper), squeezing of suppliers, fragility in the supply chain, reduction in innovation…” could be ignored. [original links maintained; see here for the link to the original article]
How does Islam protect society from monopolies?
When looking at the decline of anti-trust laws, we are faced with the arbitrariness of secularism. There are no objective standards in Capitalism. Antitrust was fine to stave off Communism, but now the rich can monopolize the economy.
Islam has a permanent prohibition of monopolies. Prophet Muhammad (saw) informed us that raising prices is a serious crime regardless of the reason:
"Whoever strives to increase the cost (of products) for Muslims, Allah, the Exalted, will seat him in the center of the Fire on the Day of Resurrection." [Ahmad and al-Hakim]
The issue of monopolies in Capitalism is not an issue of law, but an issue of taking its belief, the freedom of ownership, to its logical conclusion. There is no honour amongst Capitalists. Why shouldn’t he bludgeon the competition to death; wouldn’t the competitors do the same if the roles were reversed? The problem goes to the belief that they both share: humans can do whatever they want.
More importantly, freedom is the abdication of responsibility. Who is responsible for the Great Pacific Garbage Patch that’s 3 times the size of France? Certainly not the Capitalists, who pocket billions off an economic system that thrives on the throwaway culture. If they don’t care about poisoning the waterways they drink from, will they really care about competing fairly? Not a chance.
Islam, in contrast, recognizes that the universe was here before us. That’s a fact. Therefore, the wealth truly belongs to the Creator, Allah (swt). Islam begins with this starting point and puts humans as a “khaleefah” or caretakers – who will be held accountable for managing this wealth that we inherited. Only through the Islamic system can we create this culture of responsibility and accountability to our fellow human beings and the planet.
Why?
Because it is based on the idea that we should all submit to the reality that Allah (swt) Knows Best.
In the next post, we will look at the link between lobbying and monopolies.