Market forces got you down? Try more market forces
Big companies are pulling the rip-off of the century. Coles and Woollies, Qantas and Virgin, AGL and Origin Energy, and the Big Four banks are passing on inflated prices and interest rates to consumers, cutting workers’ real purchasing power and boosting company profits to record highs.
Last month, Coles and Woolworths were put in the spotlight. A Four Corners report exposed how the grocery duopoly, which controls two-thirds of the supermarket sector, is driving up the cost of the weekly shop. They have been doing so by means of things such as “shrinkflation”—when products get imperceptibly smaller for the same or greater price—and “was/now pricing”, a trick played with the “discount specials”: for example, when goods are advertised as “50 percent off” a price they were never sold for.
The anger is palpable. The federal Labor government is under pressure to do something, and a parliamentary inquiry is now under way. Woolworths CEO Brad Banducci’s resignation after a train wreck interview was a delicious interlude, but predatory pricing will carry on as usual.
The most obvious and immediate fix—government-mandated price caps on essential goods—is also the most popular, supported by 70 percent of the population, according to a 2022 Guardian Essential poll. But the very idea draws gasps from economists and journalists. Sydney Morning Herald business columnist Elizabeth Knight described a maximum price on a loaf of bread as “draconian”, “extreme” and “beyond the pale”. Labor for its part refuses to make any encroachment on corporate power.
The only solution offered by commentators and “experts” is to introduce more competitors against corporations with too much market power. Even an Inquiry into Price Gouging and Unfair Pricing Practices commissioned by the Australian Council of Trade Unions identifies the problem as “Australia’s less than fully competitive economy”.
Why would more competition help to lower prices? Economists argue that when customers have more options, each retailer feels more pressure to offer goods that are cheaper, better quality or both.
The same argument is used to justify the selling of public utilities and services (often “natural monopolies”). Qantas, for example, was once government-owned and run with fully unionised workforces. When it was sold, thousands of workers were sacked, and their benchmark pay and safety standards were torn to shreds. Last year, the airline was revealed to be selling tickets to overbooked or cancelled flights. Now the experts say Qantas, already opened to competition, just needs to “open up to competition”. What did Albert Einstein say about insanity?
Economists cannot get their story straight about monopolies. Big corporations are just as often accused of “flooding” the market with cheap goods (such as when Coles introduced $1-a-litre milk in 2010) as of artificially inflating prices. Well-unionised monopolies such as Sydney Trains are accused of providing workers with “cushy” pay and conditions, while non-unionised ones such as Amazon are condemned (rightly, and by very different people) for the most aggressive forms of exploitation and management despotism.
The problem is not monopoly, but the profit motive. Every company, big or small, is allowed to produce what our society needs entirely for its own selfish gain, in ruthless competition with each other. As a class, the capitalists enjoy a collective monopoly over everything we need to function and survive.
When workers collectively organise and strike against this state of affairs, things can improve. When they don’t, businesses always take the shortest path to profit: cutting wages, worsening services or raising prices.
Spreading capitalist power across several companies gives us no more control over the prices and distribution of goods and services. It can even make things worse.
Streaming is a good example. The free and easy age of torrenting whatever you liked was monopolised by Netflix. That was bad. When Netflix was “opened up to competition”, we got Binge, Stan, Hulu, Disney, Amazon Prime and Apple TV, each with a separate subscription fee and a separate slice of the popular shows.
Capitalist competition inevitably gives rise to its “opposite”, monopoly. Telephone monopoly AT&T Company (founded by Alexander Graham Bell) was forced by US courts in 1984 to break up into many “baby Bells”. By the 2000s, the babies had merged back to form AT&T Inc. and two other giants that still dominate US telecommunications.
In fact, the freer the competition, the faster the concentration of capital. Microsoft, Amazon, Google, Apple and Facebook each began as one of many start-ups battling in a deregulated, globalised free-for-all. Within a generation they were some of the largest corporations ever to roam the Earth.
Adding five or six more competitors is a pro-capitalist diversion from a cost-of-living crisis fuelled by competition. Let’s take “too much market power” to its logical conclusion: let’s just have one food distribution system in the same way we have one road system.
The whole food supply chain—from farms to warehouses to supermarkets—should operate according to a single, democratic plan. The population can decide collectively on what goods should be produced and for what price—if any. The workers at each stage of the process should plan together how to carry out their part of the work. The concentrated wealth, technology and organisation of modern-day monopolies make this a far more realistic proposal than breaking them up.
Under democratic planning, however, there’ll be no place for profit and exploitation. So for defenders of capitalism, “beyond the pale” doesn’t begin to describe it.
