posted Mar. 27, 2010
Who Rules America?
Corporate conglomeration is leading to neofeudalism
by Don Monkerud
cartoon by John Jonik
lthough some Americans worry about the growing power of the government, few understand the real power that controls their everyday lives.
Private monopolies determine the brand of breakfast cereal we eat, the type of car we drive, where we bank, the medical treatment we receive, the fashion of our clothes, and the kind of toothbrush we use, in addition to the beer we drink, the health insurance we buy, and what we feed our pets.
Under the guise of "the free market," conglomerates merged and bought up smaller companies, until, today, they dominate their respective markets in every commodity offered for sale in the U.S.
In this race to consolidate, companies "rationalized" their offerings, in many cases dropping up to 40 percent of what they formerly produced. They buy from the same suppliers, use interchangeable parts and common ingredients, and re-name similar brands, essentially placing the same product in different packages. For example, one company produces all of the pet food under 150 different brands.
"People say we have an uncontrolled free market but we have the opposite," says Barry C. Lynn, senior fellow at the New American Foundation. "What we have today is a laissez faire American version of feudalism; a private government in the form of private corporations run by private individuals who consolidated power to govern entire activities within our political economy."
In a new book, "Cornered: The New Monopoly Capitalism and The Economics of Destruction," Lynn describes the many past struggles in America between small elite oligarchies and democratic government. Throughout our history, Americans have beaten back the attempts of monopolies to control various industries.
The Boston Tea Party fought to overturn monopolization of commerce by the private British East India Company. Alexander Hamilton's attempt to help his friends out with the whiskey tax, led to the Whiskey Rebellion. People acting through government prevented a small elite from controlling our railroads, steel mills, the oil industry and other concentrations of power.
In the case of railroads, "People realized [railroads] could consolidate power discriminating against some companies by charging them higher rates and stripping them of cash," says Lynn. "The American people then decided that if you had a monopoly hauling goods, you have to charge everyone the same rate. We used our government to keep them from consolidating political and economic power."
According to Lynn's research, early Americans made decisions to balance power between farmers, consumers and the market itself. This is why we created "open and public markets." Labor, managers, engineers, shareholders, and local communities ran our corporations, which are social institutions.
The ultimate function of a well-regulated open-market system is not to ensure an efficient distribution of resources, but "to reveal, harness, and direct power within a society in order to ensure the widest possible distribution of political freedom and the greatest possible degree of political and economic stability," says Lynn.
With the election of Ronald Reagan, Conservatives redefined "free enterprise" to mean the unfettered power of an individual to amass as much wealth as possible, while liberals sought to use planning and efficiency to lower costs, even if it resulted in the loss of some economic freedom. Using theories developed by Chicago School of Economics leaders such as Milton Friedman and Alan Greenspan, Reagan directed the Justice Department to base anti-trust decisions on a vision of efficiency as measured solely by lowered costs.
"Before Ronald Reagan we accepted inefficiencies to protect a free political system," says Lynn. "In 1981, we changed laws to a consumer welfare test, measured by price and economies of scale; hence, any consolidation can appear to promote the welfare of the consumer. Unlimited growth was made acceptable. This was a revolutionary overthrow of our antimonopoly laws."
Today libertarian think tanks such as the CATO Institute, serve as "the vanguard of a neofeudalist movement" to attack democratic government. They and other conservative propagandists have spent $30 billion in the past 30 years to promote their agenda and convince people that massive layoffs, foreign competition, and higher prices are the result of "natural free-market forces." Squeezed from all sides, some Americans react by becoming corporate shock troops attacking their own government.
"Those who control our corporations managed an Orwellian achievement to redefine the use of brute corporate force as 'market forces,'" says Lynn. "We still believe in a consumer utopia, but we have an illusion of choice. Corporate powers manipulate our decision-making and direct us to buy certain goods at certain prices."
Institutional power shifted to Wall Street and large financial institutions. Today a small elite runs corporations to serve themselves as they concentrate their power. Some Americans are waking up to the reality of their situation, but Congress lacks the will to regulate corporate power.
"If we choose to protect our republican way of government—which depends on the separation of powers within our economy and our political system—then we have only one choice," says Lynn. "We must restore antitrust law to its central role in protecting our economic rights and breaking up dangerous concentrations of power."
Copyright 2010 Don Monkerud.
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