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By Paul Horton.

As concerns about a return of monopoly capitalism seem to be bubbling up in national political discussions from the progressive left and the libertarian right, in education circles a growing counter-discourse is emerging to challenge the digitalization of the education and learning. Teachers have been the canary in the mine for many of these issues for many years.

Unfortunately, Educational administrators who look for grant support from Big Tech monopolies are still all too eager to embrace digital utopian platitudes as education funding continues to decline in many, if not most states.

For example, while classroom educators have witnessed a steady deterioration of close reading skills caused by screen learning for many years, administrators, as a rule, seem to be deaf to what teachers are telling them about the incontrovertible mountain of research that supports slower book reading.

In particular, many administrators are pushing one on one laptop programs and make-space programs and promoting IT personnel into positions with high authority to create “buzz” that will lead to greater funding.

A STEM spiral is thus created within educational communities and schools that perpetuates Big Tech ideology. Educational practitioners tend to be silenced and shunted aside as hopeless Luddites or “trouble-makers.”

Teachers can undermine these ideologies by raising concerns with parents to pursue strategies that promote careful close reading to construct strong analytical skills.

Another way that teachers can begin to call Big Tech hegemony into question is to create curricula for the classroom to encourage students to think about the growing market and political power of Big Tech. Students need to be exposed, for example, to the work being done by the Open Markets Institute. Students who visit this website can access the latest news about anti-monopoly issues.

The following lesson attempts to spark discussion and analysis of some of the issues surrounding growing Big Tech market share in Tech and non-Tech sectors of the American and global economy.

Do Tech Monopolies Eliminate Competition?

Read the following excerpts from books that analyze the growing influence of  monopolies in contemporary America and be prepare to respond to the questions at the bottom of the readings.

According to a Small Business Administration report at the turn of the millennium, nearly six million new businesses were created during Bill Clinton’s eight years in office, and nonfarm proprietorships rose 34 percent between 1992 and 2000. Moreover, small business received 23 percent of all federal contracts, not to mention loan guarantees.

Still, however, this remains a precarious economic zone. The failure rate among small businesses during the period 2002-2006 (a prosperous time) was frighteningly high, especially among start-ups, whether in construction, retail, or wholesale trade, or even in the finance sector. Core corporations continue to deploy enormous power, enough to drive entrepreneurs and independent professionals under, perhaps more than they once did, thanks to the near extinction of anti-trust prosecutions. In Silicon Valley, for example, the biggest concerns vacuumed up hundreds of smaller ones. Google all by itself swallowed one hundred. But in a sign of changing times, the vanquished don’t complain nearly as much. For some defeat was sweetened by hefty buyouts.

Steve Fraser, The Age of Acquiescence: The Life and Death of American Resistance to Organized Wealth and Power (2015), 402-403.

In his 1978 book The Antitrust Paradox, [Robert] Bork, a devotee of University of Chicago economic theories, contended that the Sherman [antimonopoly] Act was merely a ‘consumer welfare” prescription, not a presumption against market power (which generally can’t exist in Chicago theory). So if a merger made the resulting business more efficient, that merger should be approved. Scale, likewise, generally enhanced efficiency. In both cases, consumers could see the benefits in lower prices. If the incumbent abused its dominant position and raised prices beyond market clearing price, competitors (by definition) would invariably rise. The power of incumbency was assumed away.The “paradox” of his book’s title was that anti-trust enforcement made consumers worse off.

Recent scholarship has shown Bork’s assumptions to be backward. John Kwoka, an economics professor at Northeastern University, collected retrospective data on 46 closely studied mergers, and found that 38 of them resulted in higher prices, with an overall average increase of 7.29 percent.

Since the Reagan Justice Department neutered antitrust enforcement, a posture substantially ratified by increasingly conservative courts, two factors reinforced the trend. The first is the rise of intensified merger and acquisition activity, driven less by economic efficiency than by the fact that M and A (mergers and acquisitions) is a huge Wall Street profit center that fits with the desire of CEOs to run bigger empires that produce fatter paydays. Mergers and acquisition activity is poised to hit a record this year, with $4.58 trillion in takeover announcements expected.

A second complicating factor is the rise of electronic commerce. In principle, this should be good for competition and consumer welfare. But here we need to introduce the lesser-known cousin of monopoly—monopsony, meaning market power exercised by a dominant seller, or in the case of the Internet, the dominant platform. A good illustration is the market power Google enjoys over our advertising income. It piggybacks on content generated by magazines, newspapers, and others in the media, and takes a large share of advertising revenues.

“Bring Back Antitrust,” The American Prospect (Fall 2015)

One of the reasons the Internet boom has not lead to the golden age of investment and prosperity in contemporary capitalism—unlike, say, what followed from the emergence of the automobile and all of its many related industries in the twentieth century—is that much of the wealth generated by the Internet has been funneled into a very small number of hands. Aside from the cartel, which was an outgrowth of the old telecommunications monopolies, the Internet has produced monopolistic titans like Google, Apple, Amazon, Facebook, eBay, Microsoft, Intel, Cisco, Oracle, and Qualcomm.

These firms take advantage first and foremost of network effects, which tend to produce “winner-take-all” markets with almost no middle class of midsized firms. In addition, patent law and traditional economies of scale contribute to insurmountable advantages over potential adversaries. Indeed, increasingly the Internet seems like a walled garden where these giants are battling with each other for domination in existing and prospective markets, and no one else has a prayer, except to get bought out by a giant.

In combination, these firms have virtually unassailable power in Washington, and the only time they face any regulatory threat is when the giants find themselves on opposite sides of an issue….These firms tend to get glowing press coverage, and their executives and largest investors are regarded as celebrities or championship athletes. The idea that these firms’ legitimacy might be challenged is preposterous to all but a few….And indeed, the technological advances are mind-blowing. But the problem is that these technological advances are all developed to advance the profitability of firms regardless of their social effects. Hence, for example, the obsession with developing amazing surveillance technology that makes the commercial internet so profitable.

Robert W. McChesney, Blowing the Roof Off The Twenty-First Century: Media, Politics, and the Struggle For Post-Capitalist Democracy (2014), 227-228.

The five largest companies in the world (in terms of market capitalization) are Apple, Google, Microsoft, Amazon, and Facebook. It is hard to grasp just how large a role these five tech giants play in our economy….

Not since the turn of the twentieth century when Theodore Roosevelt took on the monopolies of John D. Rockefeller and J.P. Morgan, has the country faced such a concentration of wealth and power. Peter Orzag and Jason Furman, economic advisers to President Obama, have argued that the fortunes created by the digital revolution may have done more to increase economic inequality than almost any other economic factor. Despite Marc Andreessen’s and Peter Thiel’s belief that outsize gains of tech billionaires are the result of a genius entrepreneur culture, inequality at this scale is a choice—the result of laws and taxes that we choose to establish. Contrary to what techno-determinists want us to believe, inequality is no the inevitable by-product of technology and globalization or even lopsided distribution of genius. It is a direct result of the fact that since the rise of the Internet, policy makers have acted as if the rules that apply to the rest of the economy do not apply to Internet monopolies. Taxes, antitrust regulation, intellectual property law—all are ignored in regulating the Internet industries. The digital monopolists have argued for free rein in pursuit of efficiency. But as Barry Lynn and Phillip Longman have written, “The evidence is close to irrefutable that adoption of this philosophy of ‘efficiency’ unleashed a process of concentration that over the last generation has remade almost the entire U.S. economy, and is now disrupting our democracy.”

Joanathan Taplan, Move Fast and Break Things: How Facebook, Google, and AmazonCornered Culture and Undermined Democracy(2017), 8-9.

Complete the following in short paragraphs and be prepared to discuss your responses in small and large groups:

1) According to Robert Bork, why is enforcing antitrust law not necessary?

2) List and explain some of the issues created by the rise of big companies and big digital companies.

3) Does Technopoly create monopoly or the other way around? Or, are the two connected at all, in your opinion?

4) View the following YouTube video. Why does Professor Luigi Zingales of the University of Chicago Economics Department think that something should be done about monopolies?

https://www.youtube.com/watch?v=EayC82C4_sg&feature=youtu.be

5) Go to the American Anti-Trust Institute website here and read the paper on constructing a National Competition Policy. List and describe the five policy proposals that would do the most to reduce the market power of companies like Amazon, Facebook, Apple, and Google so that more competition is opened up within the American economy?

6) A White Paper is written to challenge a merger of two large corporations within one industry. The authors of White Papers find evidence that such a merger will give one company too much control of a market within one industry. Read the following White Paper at this link. Why shouldn’t Comcast and Time Warner be merged into one company? What impact might this merger have on the communications industry? What impact might this merger have on the public? On prices? On customer services?

Paul Horton
 is a History Instructor
 at University High School
 — The University of Chicago Laboratory Schools.

Featured image by Marco Verch, used with Creative Commons license.

Author

Anthony Cody

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