All sectors Combatting chokepoint capitalism
With our economic system and rapidly advancing technologies now separating creative workers from the value they create at every possible point, REBECCA GIBLIN and CORY DOCTOROW want to build a movement for a more equitable future.
Competition is supposed to be central to capitalism, but for many billionaires, competition is a dirty word. The richest people on the planet came by their fortunes not by competing, but by suppressing competition. And they don’t hide this fact! Peter Thiel says ‘competition is for losers’. Warren Buffett has an unslakable, faintly embarrassing lust for companies that have “wide, sustainable moats” (‘moat’ is Buffettspeak for “barriers that make it hard for new entrants to enter a market, stopping them from competing away market advantages that were supposed to be temporary”).
The world’s ‘best’ business schools teach students that if you want to make serious coin, you shouldn’t be making things or providing essential services – you should be positioning yourself to capture value from those who do. We’ve entered an era of ‘chokepoint capitalism’: a world of hourglass-shaped markets that have customers at one end, workers and suppliers at the other, and predatory corporations squatting at the neck, extracting ever-greater rents from other people’s labour.
While the specifics of this hourglass capture differ from company to company and industry to industry, the playbook is the same. First: lock in customers, using whatever it takes, including discounting products to unsustainable levels. The money to finance that comes from capital markets, which rain cash on anyone who plausibly promises to capture a market. Then, lock in suppliers: you might offer them more attractive terms than the current market leader (at first) or hold yourself out as a counterbalance to reigning abusive giants (Amazon did this with publishers, who were then suffering under the rule of mega bookstores like Borders). Next, use that sweet capital to eliminate competition so there’s nowhere else to go. Finally – begin turning the screws.
This play can result in monopoly, which is where you’ve got a seller with excessive power over buyers – like Amazon’s Audible has over audiobook listeners. Even more dangerously, however, it can result in its inverse, ‘monopsony’ – which is what you get when a buyer has excessive power over sellers, like that of Amazon over publishers and authors.
Creative workers are just the canaries in the coal mine. In this era of corporatism and its demands for growth at any cost, excessive buyer power hurts all of us.
Monopsony isn’t a pretty word, but the concept is one of the important phenomena you’ve (probably) never heard of, and one of the biggest threats to worker interests in this moment. The term was coined by economist Joan Robinson back in the 1930s, and even then she warned about its threat to workers. It’s corporations in their capacity as employers – buyers of labour – who are most likely to accrue and wield such muscle, which is a key reason why unions’ provision of countervailing worker power is so critical.
Unfortunately, competition regulators paid little heed to Robinson’s warning. For the last 40 odd years, they’ve instead been strongly influenced by Chicago School economic theory arguing that a lack of competition is not problematic unless it harms ‘consumer welfare’ – something that has come to be equated with raising consumer prices. If raising consumer prices in the short term is the only thing likely to attract unwanted attention from regulators, where will a corporation find the value necessary to satisfy rapacious shareholders and their constant demand for growth?
By capturing markets and then using their monopsony power to shake down workers and suppliers, of course! But it takes just a moment of thought to see that the end result is exactly the same as if prices had been raised: sustained downward pressure on incomes means the people who actually do the work are less and less able to buy the goods and services they need.
Nowhere is chokepoint capitalism clearer than in the creative industries, where Big Tech and Big Content have followed this playbook to corner the markets in everything from books (digital, physical and audio), music (recorded and live), TV and movies (scripts and scores), games (mobile and desktop), online video, and of course the digital ads that should be supporting the news industry. In these markets and many more, creative workers and producers have been shaken down to a point where it’s becoming almost impossible to make a living by making the art and culture that explains and brightens the human condition.
Creative workers are just the canaries in the coal mine. In this era of corporatism and its demands for growth at any cost, excessive buyer power hurts all of us. Downward pressure on private sector wages impact on the wages of public sector workers such as teachers and nurses. The regulatory influence those monopsony profits buy is used to not only make conditions worse for all workers but to delay the actions critical to ensure the continued inhabitability of our planet.
The good news is that, once we understand the problem, there are things we can do to wind it back. Our book focuses on the kinds of interventions that work to bring monopsonists to heel. To do so, however, we need to understand the nature of the threat, and build a movement to combat it.
Rebecca Giblin is an ARC Future Fellow and Professor at Melbourne Law School, and the Director of the Intellectual Property Research Institute of Australia. Cory Doctorow is a British-Canadian blogger, journalist, and science fiction author. They are the authors of CHOKEPOINT CAPITALISM: How big tech and big content captured creative labour markets, and how we’ll win them back (Scribe, 2022).
