Thin line between a free market and a monopoly

opinion April 04, 2018 01:00

By Tulsathit Taptim
The Nation

2,175 Viewed

The sight of huge corporations swallowing up small businesses is where the term “free market” takes an ironic turn. Big C’s “mobile grocery stores” are just a glimpse of the nightmares that await us in an age when monopolies hide behind “noble” claims.

The first such claim is for cheaper prices. What’s wrong with giving people what they want, at prices lower than others are charging? It’s a pretty strong argument, except that it fails to address the fact that “the others” are too small to operate the economies of scale that allow retailers to sell on the cheap, and that while “the others” are motivated merely by survival, the corporate monopoly just wants to make its already-rosy balance sheet look better.

The second claim is “convenience”. Again, what’s wrong with sending grocery trucks to villages so that poor people don’t have to travel to supermarkets downtown? What is left unsaid is that the act of “providing convenience” also heaps misery on many people. To add to that, there was really no “inconvenience” in the first place.

The third such claim is “competitiveness”.  This is basically saying that traditional food trucks will have to adjust and improve to survive, and that should make them stronger. Well, in a world of monopoly, competitiveness usually means being weakened to the point of having just enough strength left to pick up any crumbs left by the big fish. If you don’t have that kind of competitiveness, be prepared to be put out of business.

The fourth claim is that “we aren’t preventing anyone from doing the same”. A business monopoly says it only does what it’s allowed to do. Interpretation: We sneak through legal loopholes and to hell with moral principles.

Most of the time, monopolies are born of attempts to break a previous monopoly. Amazon, now a giant empire famous for swallowing its competitors, struggled to stay afloat in its early days. One of the turning points was said to be the decision to buy a worktable so its dozen original employees could pack shipments without bending and kneeling on the floor. 

Jeff Bezos, Amazon’s founder and chief, loves to tell stories about his humble beginnings. The company started life in his garage before rumbling through the retail sector like an earthquake and making him the world’s richest individual.

Bezos has been blamed for the demise of bricks-and-mortar stores, as consumers switch in their millions to Internet shopping. Having started as an online bookseller, Amazon now sells virtually everything, including food.

Now, all eyes are on the rise of Jack Ma, since nothing tests a person’s noble philosophy better than when that philosophy becomes “successful”. An advocate of small retail businesses that take advantage of fast-evolving technologies, the founder of the Alibaba Group has seen his wealth and bargaining power skyrocket. Like Bezos, he now oversees a huge business empire, something Ma himself would have frowned upon many years ago.

Called the Bezos of Asia, Ma says he is motivated by neither wealth nor glory. Those things, he explains, only bring trouble. His advice is that money must be spent for charity, power must be used to empower others, and glory must be shared with others. Instead of having his own retail fleet, he would rather help the small players upgrade theirs, so to speak.

He is opposed to monopolies, or so it seems. He has always said that the exponential growth of the Internet for business is democratising the economy, allowing poor people in poor countries to challenge the “big fish” like never before. The reality is that the growth of his business empire is eroding his optimism that an era of big business is slowly but surely being replaced by small-time entrepreneurs.

The food truck controversy in Thailand shows what stands between his “dream” and reality. Big corporations will not go away easily. They will tease and test, taking full advantage of their economies of scale and striking when the time is right. Criticism will be shrugged off: “This is a free market, so sue us.”

Any review of Internet-based monopolies is incomplete without mention of Mark Zuckerberg. His Facebook, born in a fever of idealism but now stumbling from one controversy to another, is facing a new firestorm and calls for investigation following claims that the personal data of tens of millions of users was “hijacked” by a consulting firm that helped Donald Trump win the 2016 US presidential race.

There is a thin line between a “free market” and a monopoly. The reason for this is simple: Both have basically the same goal, in other words the same definition of “success”. People want to get rich and become dominant in the free market. A monopoly is no different.

And when they tell you that there are rules in the free market to prevent a monopoly, just remember that the latter’s greatest trick is to bend those rules with its “noble” claims. The so-called free market, therefore, can ironically create business dictatorships out of some wonderful dreams. A monster with its hair combed, perhaps, but a monster all the same.