The problem with monopoly capitalism
By: Niall Glynn
Date: 2 March 2023
From the medicines we need to the food we eat, the concentration of economic power among a handful of big companies is at the heart of global injustice. It’s time to fight back, writes Niall Glynn.
What do baby milk formula, an Epipen, and the Google search engine all have in common? Although seemingly unconnected, they are all produced by highly concentrated industries. In the US, nearly 100% of baby milk formula consumed comes from three companies: Abbott, Gerber and Reckitt (Abbott alone accounts for 40%). Just one pharmaceutical company holds approximately 90% of the Epipen market, allowing it to more than quadruple its prices over the course of a decade. The technology giant Google has a share of around 84% of the global search engine market. This is monopoly capitalism.
Throughout capitalism’s relatively brief history, large corporations have always held a dominant position in the global economy. They’ve used their central position to fix the rules of the game in their favour. One of the earliest transnational corporations was the Dutch East India Company (VOC), which operated from present-day Indonesia and had a monopoly over many spices and textiles in the 17th century. It is estimated that if the VOC were around today, it would be worth $7.9 trillion – more than Apple, Microsoft, Alphabet and 17 of the other top-valued corporations of today combined.
While the early corporations were deeply entwined with colonial plunder, the tendency towards concentration of wealth and resources survived the end of formal empires. Over the past century, the concentration of industries has become widespread across the global economy, with the United States leading the way. Since the 1930s, the share of the US economy dominated by the top 1% of companies by total assets has increased from 70% to 97%. The share of the top 0.1% of companies is even more stark, rising from 47% to 88%. By sales, the top 1% today account for 80% of revenues generated, compared to 60% in 1969. Similar trends are visible in the UK, Europe and further afield. Whichever way you want to slice it, the facts are clear: this is a problem that is only growing. And we can see the consequences through two global industries which are significant in our lives: food and pharmaceuticals.
Big Agriculture blossoms
In a short time, the global food industry has become dominated by a handful of multi-billion dollar companies. As of 2018, the seed market was run by the ‘Big Six’ of Monsanto, Syngenta, Bayer, BASF, DuPont and Dow Chemical, which controlled 63% of the world’s commercial seeds and 75% of global agrochemicals. Megamergers have meant even more concentration. The Bayer and Monsanto $63 billion deal turned the Big Six into the Big Five. The megamerger of Sinochem and ChemChina in 2021 led to the creation of the third-largest seed firm and the largest chemical conglomerate in the world.
This has real consequences for the food we eat. It is estimated that around 75% of plant genetic diversity has been lost since the 1990s as farmers worldwide have been forced into cultivating genetically similar high-yielding crops. Around three-quarters of the food we consume now comes from only twelve plants and five animal species. Heavily relying on a handful of food crop varieties will be dangerous for our and our planet’s survival. One crop disease, as seen across Europe in the 1840s in potatoes, or extreme weather event, could wipe out food for many millions of people.
Coupled with large corporations’ seed control and ownership, there is another aspect of global food trade: agricultural traders. The largest agricultural traders, collectively known as ABCD, control 75% to 90% of all international grain trade. Commodity trading houses understand the benefits of being one of a few dominant firms. From 1990 to 2019, these trading houses have increasingly been acquiring those around them – the ABCD group accounted for 63% of acquisitions amongst the top ten commodity trading houses. Cargill alone accounts for 30%. Of these acquisitions, 42% happened from 2010 to 2019. It is no coincidence that commodity markets – which dictate the incomes of hundreds of millions of people across the global south – have become more volatile in this period.
Vaccines and patents
It’s a similar story in the pharmaceutical industry. There is a long tradition of pharmaceutical companies keeping the prices of drugs artificially high in order to reap huge profits. In 1958, a US government report on the antibiotics industry found that a handful of companies had cornered the market to keep the price of the antibiotic tetracycline high. The production of post-penicillin antibiotics was highly concentrated, with Pfizer and American Cyanamid controlling 50% of total antibiotics production.
In recent decades, this problem has been accelerating. Since the 1980s, global biotechnology and pharmaceutical mergers and acquisitions have steadily increased in number and value. Between 1995 and 2015, 60 pharmaceutical companies merged into ten in the United States.
The increasing concentration in the pharmaceutical industry means a smaller number of firms can control prices for often essential drugs. We have all experienced how Pfizer and Moderna jacked up the prices for Covid-19 vaccines in the midst of the devastating pandemic. But this practice is long-standing across the industry. Just three pharmaceutical giants, Sanofi, Novo Nordisk and Eli Lily, own the US patents to manufacture insulin and were able to raise their prices by 168%, 169% and 325%, respectively, in the early 2010s. With few alternatives to these big pharma giants, even wealthy governments cannot prevent them from dictating terms and prices.
All too often, governments in the global north fail to see the concentration of economic power as a problem. While there are cases of mergers being scrutinised by anti-trust bodies, the number of times they are blocked is a drop in the ocean. Monopoly capitalism is the norm, and anything good for big business is seen to be good for society. We know this is not the case.
But these corporate monopolies are at the heart of so many injustices in the global economy. As we have seen, they directly harm the way we produce and consume the basics of life – from the destabilising of small farming communities through big agriculture to enabling hikes in the price of medicines to excruciating levels. Here, we’re essentially letting private interests make decisions which should rightly be made only by workers, communities and democratic governments.
Monopolies also contribute to wage inequality as those at the top of corporations decide to pay their workers as little as possible to keep their costs low as workers have few alternatives. At the same time, monopolies make our economies more fragile – just look at how consolidated global supply chains led to disruption during the Covid-19 pandemic, with fewer points of failure, making the system less resilient.
Corporate monopolies are also a barrier to solving enormous environmental problems like climate change. Big oil companies donate millions to politicians to maintain the status quo, they have funded think tanks that publish anti-climate change propaganda and have used their power to delay the development of renewable alternatives.
To fight back against monopoly capitalism, we need to promote two key ideas: economic democracy and collective ownership.
Economic democracy is needed so communities and workers can take control of their own economic livelihoods. People need more influence over the resources available to them and the decision-making processes that affect their lives – determining the what, where, how and why of extraction, production, distribution and consumption in a democratic manner.
We must also reverse the decades-long privatisation trend of more and more of the public realm worldwide. Instead, we must re-make the case for collective ownership of the essentials of our society – from resources and land to housing, education, institutions, finance, economic planning, public utilities, infrastructure, governance bodies, and visions of the future. An ownership that is climate-focused, non-extractive and internationalist at its core, and where resources, wealth and power aren’t concentrated in the hands of a few.
Monopoly capitalism will be a vampire that keeps on draining us all if we allow it. Let us take back what is rightfully ours.
Niall Glynn is an economist, researcher and founder of The Working Class Economists Group.
This article appeared in the February 2023 issue of Ninety-Nine, the magazine for Global Justice Now members.
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Top photo: The fleet of the Dutch East India Company, one of the world’s first transnational corporations, returns from Batavia (present-day Jakarta) in 1648.
Credit: Peter Horree/Alamy Stock Photo