The Re-Monopolization of America

March 28, 2010

The America that we know today was not always the way in which we see it. Despite being revolutionary in its nature from its vary inception, there was nothing particularly revolutionary about our practices down to our very isolationistic views all the way to our views that we should be managed by the idea that government had no place in its people’s daily affairs. These practices allowed big business in the 19th century to flourish. By the turn of the 20th century it was clear who was really in control of this nation and it wasn’t the people.

America may not have been the creator of capitalism, but it has, for quite some time now, been one of its greatest proponents. Our support for this system has given rise to a list of rich Americans that reads like a who’s who of the wealthiest and most influential people in all of world history. John D. Rockefeller, for example, according to many accounts, was the richest man to have ever lived. In current times we associate wealth with someone such as Bill Gates, who at his absolute peak wealth was worth an approximate $101 Billion (in 2007 dollars). This is an extraordinary amount of money. The everyday run-of-the-mill wealthy people could only dream of such opulence. However, if we were to evaluate the amount that Rockefeller had, you’d find that number to truly dwarf Bill Gates’ bank account. Some estimates have put Rockefeller’s wealth at a staggering $318 Billion (in 2007 dollars).

A master of horizontal integration, Rockefeller easily purchased any and all competition in a budding petroleum industry during the late 19th century, creating a monopoly of incomparable size. He, among many others who practiced similar tactics, helped to create plethora of monopolistic corporations in not just America, but around world. So, the America of the late 1800’s would see their nation governed not by its republic, but by an oligarchy of rich holders of trusts that would dictate how life was lead, down to every last individual who sought to make a living by working for a wage.

The power of these corporations resonated throughout the workforce of America. Writing’s such as Upton Sinclair’s novel, The Jungle, clearly portrayed a picture of gruesome working conditions that these laborers were forced to endure while working for peanuts, while the captains of industry lined their pockets time after time. There were no unions; the very thought of unifying against these business owners was terrifying. Immigration into America at the time was so prolific that every worker knew that they were all but irreplaceable due to lines of hungry people, desiring work, accruing at the very entrances of their work facilities. So, keeping your job, while maintaining minimal outspokenness, was the only way to survive. However, at that time workers were paid breadcrumbs. The practice of doing this was often referred to as “wage slavery.” These rich owners would own every aspect of their employees’ lives. After working at a factory, owned by their employer, these laborers would use the pittance that the owner gave them to purchase their groceries, and every day necessities, from a store also owned by their employer. After their transactions they would find their way to their home, which would also be owned by their employer; a place where they would use utilities, which they would have to pay their employer to use. The majority of the time the worker’s wages wouldn’t even be enough to pay for all of these things. So what were they supposed to do? They were forced to have to borrow money from the owner that owns everything. All of this would seem to be a conflict of interest to us today, but at the time it was a guarantee that the rich kept their money, and guaranteed that his workers could never leave. Wage slavery seems to be about the best terminology for the peonage system, or perhaps, legal slavery.

These times were full of great profits and great atrocities, but over time unions were able to form and workers finally got a little more rights and could finally make a living without owing their life to someone. However, these monopolies still operated without a hitch and, despite not being able to technically own people any longer, they still owned almost all resources in their respective fields. So the 19th century would bear witness to a whole slew of new ideas that would seek to combat these leviathans of industry, namely antitrust laws. These laws would help to split these companies into smaller independent corporations that would be able to practice true competition between one another. Standard Oil, for example, Rockefeller’s cash cow, was broken up by such laws in 1911. Just to give you a scope so that you can even fathom the size of this colossal entity, let’s examine a situation from today’s point of view. The other day I came to a four-way intersection with a gas station in each corner. The list reads as: Exxon, Chevron, Conoco and BP. All of which had different prices, even though they differed by pennies, as if they were actually engaging in competition to attract my business. However, if I came to that same intersection prior to 1911 with those same four gas stations, every single sign would read as “Standard Oil.” That’s right, all four of those massive companies, which rank very high on the list of the largest companies in the world, were once all one company owned by John D. Rockefeller. How’s is that for lack of options? The company was actually broken up into many more names that you would find all too familiar today, 34 independent companies to be exact. Standard Oil, at times, controlled up to 96% of the oil market in the United States. Over time, America would come to see several more massive companies all broken down into smaller units, like the 1984 breakup of “Ma Bell” into all of the regional phone companies we have all grown to despise separately.

The true question about all of this is to ask if monopolies are really that bad. We know that their existence stifles innovation, especially from entrepreneurial third parties. It removes the concept of competition and leaves everyone facing a serious lack of options. And just possibly, it leads to morally reprehensible acts that do all but enslave free people. So yes, monopolies should be dealt with in a swift and appropriate manner. Hopefully in a manner that stifles their choices in innovation that leads them to dominate, removes them from a place of power that allows them to control competition and to never again be allowed to advocate horrendous acts that enslave innocent, hard-working people. So, if monopolies have such a hugely negative outcome on our society, then why are they once again being allowed to be formed?

You may ask as to just what it is that I’m talking about. There are no more monopolies today. Au contraire, there most certainly are, though you may not recognize them in their current form. Those of us in large metropolitan areas are less likely to see such a thing, but many of us Americans that live in smaller urban areas are often given far less options with things such as utilities, the most obvious of which, electricity. Many areas have the option of only one electrical company. Even in larger cities, when offered choices, the money you pay to the electric company, even of your choice, still ends up in the hands of the company at the top of a pyramid that owns the power plant and all the electrical lines. So, all in all monopolies do exist, but what should concern us is not that some corporations, such as power companies, with which it would be highly difficult to compete with, that are maintaining a monopoly, which they have always held on to, continue to be able to maintain monopolizing endeavors, it’s the fact that sectors of industry and the economy, that we have grown very accustomed to having a very robust sense of competition, are merging with each other in a manner that will render our decision making possibilities antiquated. With lack of options comes control and with control comes power, with power comes corruption and out of corruption innate rights are infringed upon. So this brings us back to my previous question: Why are monopolies, once again, being allowed to be formed, especially when we have seen what they do with their power? If modern corporations are allowed to continually merge, maybe our freedom of choice will not be the only freedom that will be taken away from us.

Over the past couple of decades we’ve been witnessing the birth of re-monopolization. Once again, I’ll use the phone companies as an example. In 1984 “Ma Bell” was broken up into smaller independent corporations because of its monopoly it had on the nation. The interesting thing about this is after the advent of cell phones, just a few short years later, competition would flood the market. Or would it? In 1899 the phone companies named after Alexander Graham Bell, the American Bell Telephone Company, would conglomerate into a company known as the American Telephone and Telegraph Company, or AT&T. Now each and every one of us have heard of this company and more than likely have subscribed to a service of theirs at some time or another. The interesting thing about AT&T, however, is that it no longer technically exists.

As stated before, on January 1, 1984 the AT&T split became official and was separated into seven regional zones that collectively became known as “baby bells” because the company had been deemed a monopoly. The list of the new companies read as follows: Ameritech, Bell Atlantic, Bell South, NYNEX, Pacific Telesis, Southwestern Bell and US West. You may recall some of these names because for a little over a decade they operated independently of each other until they were able start absorbing each other and work towards a monopoly once again. One of the first changes was to come in 1995, just eleven years after the breakup. Southwestern Bell changed its name to SBC. This really wasn’t much of a sign to display a desire to start growing an empire, but the name of SBC became quite well known later due what it was to become, the modern AT&T. In 1996 NYNEX was purchased by Bell Atlantic and a year later SBC purchased Pacific Telesis and later merged with Ameritech, the baby bell of the Midwest. SBC now consisted of three out of the seven baby bells, which meant that it was nearly half the size of the original monopoly. So there we sat in 1997 with a company that was 3/7 of “Ma Bell” and another company that was 2/7. Everything was well on its way to remerging. In 2000 GTE, essentially the only independent phone company competing with AT&T prior to the split, was purchased by Bell Atlantic and changed its name to the very well known modern name of Verizon. That same year US West would be acquired by Qwest. Things are finally falling into place it would seem.  The government’s split of the monopoly had truly created competition, a competition to see which baby bell would outlast the others in the game of survival of the fittest. Who would consume whom?

The remainder of the story may be fresh enough on the memory to recall just what has happened since 2000. But let’s refresh that memory anyway. In 2005 SBC grew wealthy enough to actually purchase the original company from which it split, that’s right, SBC purchased the original AT&T and then changed its name to AT&T. So if you trace it all back, the modern AT&T is actually Southwestern Bell. A year later, in 2006, the new AT&T purchased Bell South. Today there are two very large phone companies, AT&T and Verizon, which consist of the merging of baby bells. The only one outside of that group is Qwest, formally US West, which has ceased to merge with any companies. It is only a matter of time before they merge or one purchases the other and Ma Bell is finally reunited. But my question is: if “Ma Bell” was considered too large and its monopoly was deemed necessary to split up, then why is that we can allow the baby bells to merge with one another? Why was SBC able to buy its mother company?

I only mention all of this as an example to thoroughly show that the re-monopolization of America is truly underway and to prove that this modern recession that we are so entangled in, since its inception in December of 2007, is but an environment that catalyzes such takeovers and is merely a beginning of a time that will help to bring to an end the freedom of choice.



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