Extreme corporate power: the destroyer of democratic economies

How consumers, small businesses, unions and citizens must unite to pressure governments to tame or break excessive corporate power.

Welcome to The Counterbalance, the newsletter of the Balanced Economy Project. Please check out the Balanced Economy Project website for more information about us. Look out next month for the latest news on monopolies in the Counterbalance.

Stranglehold of extreme corporate power harms us all

UK farmers recently gathered in their thousands at Westminster to protest against the government’s changes to inheritance tax. Unlike corporate landowners and farming conglomerates, ordinary farmers are facing are stark reality of having to walk away from their livelihoods. Why? 30% of farms in England failed to make a profit in 2023. Extreme weather driven by the climate crisis, price volatility and the phasing out of EU subsidies all play a role in the worsening prospects for farmers. Tackling corporate power in supply chains is where ordinary farmers across Britain could direct more of their ire to seek change that will benefit them.

Almost half of fruit and vegetable farmers expected to go out of business within 12 months, according to a 2023 survey by the Get Fair About Farming campaign. The main reason for this, said the farmers polled, was the dominance of supermarket chains. A supermarket contract for many farmers is a high risk but inevitable part of making a living. If a supplier loses the business, they are exposed to potential bankruptcy, while if they manage to keep their contracts, they have usually jumped through a myriad of hoops to meet arbitrary conditions imposed by the supermarkets.

This is the stranglehold of corporate power, and it is not unique to farming. Far from it, it is widespread from Uber drivers having to accept slashed rates due to algorithms, third-party sellers on Amazon being manipulated into paying eye-watering fees just so their products land in the “Buy Box”, to musicians being screwed by giant firms controlling the entertainment industry. UK singer/ songwriter Kate Nash stood outside the offices of Live Nation in London protesting about how she makes more from selling pictures of her bottom on OnlyFans than from touring. Entertainment consumers are also squeezed. Ticket fees for live shows have risen substantially in the past decade, with recent analysis finding fans are paying mark-ups as high as 41% over face value.

Excessive “markups,” where prices of products sold rise far above the costs of producing them, are being driven by the world’s biggest companies. These corporates have been able to get away with this price gouging for years as they have consolidated their power and used their dominance to increase prices and make more profit. The worst of the bunch are the world’s 20 largest businesses, according to a January 2024 report called Taken, not earned by the Balanced Economy Project, SOMO, LobbyControl and Global Justice Now. The research exposed how major firms are increasingly using their dominance to jack up prices for everyday products that haven’t been upgraded, even during the pandemic. Smaller businesses don’t have the clout or the access to markets to play this trick on consumers.

The report shows how a handful of the world’s richest men control the world’s top companies. Top among them is Elon Musk: the world’s wealthiest individual, owner of Tesla and SpaceX CEO, and soon-to-be at the top table of the world’s most powerful government as Trump’s ‘deregulation’ Tsar. Musk is positioned to decide the direction of technical change, disrupt geopolitics, and in influencing politics to change the rules of the game in not just the US, but the whole world. Has Musk reached the point of “peak power” or will he and the billionaire club continue their march to global dominance?

The shift of power away from citizens and governments into the hands of monopolists is stripping us of our ability to make democratic decisions and restructure our economies in ways that meet the public interest, around the world.

How do we protect democracy from monopolists?

The good news is we still have options. We can build power from below, as trade unions or social movements have done for decades, and we can get governments to tame or break them. If designed right, wealth taxes, labour laws, and privacy regulations can go a long way to addressing the symptoms of monopolised economies, but do not strike at the root of these problems – excessive concentrations of power and capital. Antitrust, or competition policy, is potentially one of the most powerful tools a government possesses to level the playing in big business. Yet this policy and legislative framework has been heavily influenced, even captured, by vested interests into support of a “system of monopoly”. Enforcement so far has been weak: of nearly 6,500 corporate mergers notified to the European Commission since 2005, only 14 were blocked, which is 0.2 percent.

What’s next?

There is good news. Forced breakups are back on trend. The US has proposed a break up of Google to fix the search monopoly. The EU is in a position to support the US and break the tech giant’s monopoly over digital advertising. We wait to see whether the new Commission will go beyond ineffectual fines and stern warnings.

With the new Trump administration, the new Commission, and shifting political sands in many parts of the world, it’s an opportune moment for tackling billionaire monopoly power to create democratic economies.

This is an issue that can find wide appeal across the political spectrum and which can bring innovative new alliances, such as between labour unions and small businesses, and the 99% of us who are consumers and citizens.

It is well within the reach of governments around the world to reclaim, break, and redistribute monopoly power for the benefit of society and future generations.

Endnotes

Microsoft faces £1bn class action case in UK over software prices

Maria Luisa Stasi, Head of Law and Policy for digital markets at ARTICLE 19 – colleague and ally of the Balanced Economy Project - has filed a billion-pound UK legal claim against Microsoft for its anti-competitive practices in the cloud computing industry.

Microsoft is punishing UK businesses and organisations for using Google, Amazon and Alibaba for cloud computing by forcing them to pay more money for the Windows Server.

By doing so, they are seeking to strong-arm customers into using its cloud computing service Azure and restricting competition in the sector.

Stasi aims to challenge Microsoft’s anti-competitive behaviour, push it to reveal exactly how much businesses and organisations in the UK have been illegally penalised, and return the money to those that have been unfairly overcharged. Good luck Maria Luisa and the team at Scott+Scott !

Changes at Balanced Economy Project - Message from Claire Godfrey, Executive Director, Balanced Economy Project

Nicholas Shaxson, Balanced Economy Project co-founder, has left the Balanced Economy Project to concentrate on new writing and research projects. We are excited to hear about Nick’s future projects as they develop, and wish him well.

A farewell message from Nicholas Shaxson,

“I am stepping back from work at BEP to focus on research and writing, including on a new book, on our favourite subject. I will continue to contribute to the Counterbalance, and to the anti-monopoly movement more broadly. It has been a wonderful, wild ride setting up the Balanced Economy Project and investigating this world, and although I’m moving sideways now, I’ll be as active as ever in pursuit of more balanced economies. This is a unique and special organisation and team that I’m deeply proud to have co-founded and been a part of, and I wish the Balanced Economy Project the greatest success from here on. I’ll be back in touch, soon enough.”

Towards the beginning of the year, co-founder Michelle Meagher left the Balanced Economy Project to continue to build out the space for anti-monopoly work globally. She took the decision to step away from the Balanced Economy Project to allow for the right leadership team to take the organisation into its next growth phase. In addition to Claire Godfrey being appointed as Executive Director, we welcome to the Board Audrey Gaughran and Meghna Abraham who bring with them decades of experience. I am delighted that Audrey has taken on the role of Board chair, succeeding John Christensen who steps down after serving three terms. I would like to thank John, the founding chair of the Board, for his expert leadership and guidance over that period, and for agreeing to remain on the Board.