Ida Tarbell. where are you?
From the Los Angeles Review of Books, August 30, 2017:
THE AMERICAN PUBLIC spent the last century largely untroubled by the expansion of monopoly power. In his 2010 book Cornered, Barry C. Lynn marveled at how little time has been spent studying corporate consolidation and its effects, with even less publicizing the results of such study. This was not always the case. In the first decade of the 20th century, the final decade of Mark Twain’s life, antitrust legislation and enforcement was a centerpiece of US electoral politics. Lynn claims that “antimonopoly laws […] played a bigger role than any other set of laws in shaping business — and politics — in this country.”
Amazon’s acquisition of Whole Foods seems to have renewed the public’s taste for antitrust agitation. Following the merger’s announcement, Lynn, now directing the Open Markets Program for the tech-focused think tank New America, stated bluntly, “It is way past time for the American people to use our government to address the overwhelming concentration of power in the hands of Amazon.” New America has just severed ties with Open Markets, possibly at Google’s behest, due to Lynn’s criticism of its monopoly. Another Open Markets fellow, Lina Khan, argued in a New York Times op-ed that Amazon “has marched toward monopoly by exploiting the defects of contemporary antitrust law.”
As they turn their attention to Amazon, antitrust activists are being met with curiously bipartisan interest. Via a series of tweets, President Trump has fanned his feud with Amazon CEO Jeff Bezos, whom he accuses of using the Washington Post “for political purposes to save Amazon in terms of taxes and in terms of antitrust.” Thomas Frank, Douglas Rushkoff, and Franklin Foer, among others, support federal intervention, even to the point of calling for the breakup of the company. They have all pitched Amazon as the primary bogeyman of the next campaign cycle. If Frank is to be believed, factions spanning the partisan spectrum are jockeying to position themselves out front of a new antitrust movement. In the face of such consensus, Mark Twain would urge us to be very, very skeptical. The only thing that inspires uniform agreement among politicians in The Gilded Age is the lining of their own pockets. In the New Gilded Age, we may presume any show of bipartisan solidarity is tantamount to the same thing....MUCH MORE
Earlier this month, Bezos was briefly dubbed the richest man in the world. He took this dubious distinction from Bill Gates, who took it back in a matter of hours. But paired with the Whole Foods acquisition, it superficially justified the inevitable comparisons between Bezos and the most infamous monopolist in US history, John D. Rockefeller. In 1892, there was no crude estimate from Forbes to stoke the jealousy of would-be rivals, but Rockefeller was nevertheless widely regarded as the richest man on earth, and quite possibly the wealthiest private citizen in history. At 53, he was ready to distance himself from the day-to-day operations of Standard Oil. His philanthropic turn was less public than Bezos’s, but it was analogously “crowd-sourced.” The retention of professional advisors, now common practice, was a Rockefeller innovation. In due time, he would form the Rockefeller Foundation and pursue an unprecedented program of charitable giving. For the next two decades, however, he would also be continuously distracted by campaigns to dissolve the Standard Oil Trust. Those campaigns somehow aligned muckraking journalists, many of them avowed socialists, with a bipartisan coalition representing every branch of government and transparently beholden to other corporate interests.
At the turn of the century, this uneasy alliance coalesced behind a self-styled populist who many, even among his supporters, believed was too capricious, too arrogant, and too imperialistic to be electable. Mark Twain called Theodore Roosevelt’s unlikely presidency “the most formidable disaster that has befallen the country since the Civil War” and he claimed “the list of unpresidential things, things hitherto deemed impossible, wholly impossible, measurelessly impossible for a president of the United States to do — is much too long for invoicing.” He believed that Roosevelt’s sole talent was for “advertising himself.” “Mr. Roosevelt is the Tom Sawyer of the political world,” Twain wrote, “in his frenzied imagination the Great Republic is a vast Barnum circus with him for a clown and the whole world for an audience; he would go to Halifax for half a chance to show off, and he would go to hell for a whole one.”
Twain believed the antitrust suit Roosevelt’s administration brought against Rockefeller’s Standard Oil in 1905 was “a sham and a pretense,” cynically appropriating the appeal of antitrust activism in order to handicap the company most feared by the other “rich corporations” which had “bought his election” and “furnished vast sums of money to keep the Republican party in power.”
These other, less notorious robber barons, were at least as responsible for the corporate corruption and economic inequality of late 19th-century United States as Standard Oil was. While there are obviously limits when applying it anachronistically to Amazon, Twain’s defense of Standard Oil may help build a healthy skepticism as we enter a new era of antitrust agitation.
It has been evident for some time that Bezos is adapting a playbook written by Rockefeller, whose empire was built according to an ambitious program of vertical (and horizontal) integration. Standard Oil’s rise began with the control of distribution networks. Rockefeller captured superior drillers and refineries by cornering the market on tanker cars. Control of the tankers (and later pipelines) meant Rockefeller could determine the transport costs for his competitors and, when he chose, extort them until they agreed to amalgamate. Eventually railroads became so dependent on Standard freight, Rockefeller absorbed them too. Thus Standard grew, over decades, like an octopus with its arms extending into every sector of US industry: shipbuilders and ocean liners, steel and copper foundries, lampmakers and cable car companies, banks and brokerages.
It is easy to see why Amazon’s intention to, as Ben Thompson puts it, “take a cut of all economic activity” invites comparisons with the corporation that became synonymous with over-reaching monopoly. In addition to ostentatious wealth, Bezos shares with Rockefeller a reputation for being aloof and inaccessible, yet oversees marketing and messaging that is brazenly direct about Amazon’s audacious mission. Rockefeller’s express wish to “have every man a capitalist, every man, woman, and child” worried many of his contemporaries. Bezos’s demonstrable influence over the hive mind of American commerce likewise makes him the object of both paranoia and idolization.
But Amazon’s development has thus far had many positive externalities, perhaps even, by putting tremendous downward pressure on retail prices, helping to sustain the buying power of an increasingly insecure middle class. Amazon offers competitive prices on an unprecedented selection of products, which is enough to persuade many Prime customers that Amazon is a buoy to their living standards. Whether or not they are correct, their perception provokes brand loyalty that makes potential competitors, and perhaps unpopular presidents, justifiably jealous.
By the time Roosevelt mounted his suit against Standard Oil, Twain was among the few prominent commentators who could remember the chaos of the antebellum economy Rockefeller conquered. Twain had seen firsthand in western mining communities and Mississippi River ports how aspiring capitalists habitually defrauded counterparties, counterfeited products, exploited workers, overleveraged themselves, and engaged in mutually destructive price wars. Many of the operations Standard absorbed were managed by racketeers posing as business savants who arrogantly blundered into traps Rockefeller laid for them. Whatever sins Standard committed (and they were manifold), it was also a stabilizing force in this notoriously volatile marketplace.
As Amazon enters its third decade of operations, memories of the markets it has disrupted are also, at times, dimmed and distorted. Those who criticize Amazon for discouraging small business entrepreneurship forget that local retailers were bankrupted in droves by chains like Barnes & Noble, Blockbuster Video, JCPenney, and Best Buy, companies who used scale to undermine smaller competitors then viciously hiked up prices and limited selections once they secured a local monopoly. These franchises carved up suburban and small-town markets like medieval land barons and sentenced a substantial swath of US consumers to decades of overpriced brand homogeny. They set up shop in tax-subsidized malls and plazas, visible from the interstate and distant from urban centers, and indentured local labor forces to minimum wage drudgery. These are the slothful, cynical companies that hollowed out American Main Streets in the name of shareholders. Then Amazon ate their lunch. Creative destruction has rarely been more poetically just....