The executive order on competition issued by the Biden Administration earlier this month gave rise to headlines suggesting it was a direct assault on corporate power. The New York Times said the administration was stepping up its “mission to rein big business in.” The Wall Street Journal said the order “targets big business.”
There is no doubt that the order lays out an ambitious agenda to address anti-competitive practices in numerous areas of the economy. Coupled with the nomination of aggressive advocates to head the Federal Trade Commission and the Justice Department’s Antitrust Division, it creates momentum in dealing with the increasing dominance of large corporations over major portions of the economy.
Yet there are risks in relying too much on the idea of competition as the way to deal with all the harmful effects of modern capitalism. There are some areas in which we need less rather than more competition. After all, for example, the basic mission of the labor movement is to take wages out of competition.
Moreover, unions have traditionally had more organizing success among larger companies than smaller ones. Union density is higher at utilities, which are often monopolies, than any other industry. Utility workers are also better paid than most other blue-collar workers.
This is not, of course, true across the board. Giant corporations such as Walmart and Amazon have adamantly resisted unions and have thus been able to suppress wages. Some smaller firms have learned to live with unions.
There are also complications when it come to areas such as consumer protection. Some large companies use their market domination to keep prices high (example: cable TV providers), while others use theirs to drive their competitors out of business by keeping prices artificially low.
And if we look at employment and consumer issues at the same time, we’re confronted with the fact that large corporations may use the lack of competition to benefit customers at the expense of workers, or vice versa.
One thing I have learned in the course of gathering data for Violation Tracker is that corporate misconduct can be found in companies of all sizes. The database now contains more than 490,000 entries with total penalties of $669 billion. Of those cases, about one-fifth involve units and subsidiaries of large corporations. That leaves several hundred thousand smaller companies that have been implicated in abuses such as wage theft, employment discrimination, government contracting fraud, predatory lending, nursing home negligence, and toxic dumping.
The larger companies pay vastly much more in total fines and settlements, but it remains unclear whether in the aggregate they or smaller firms do more harm to workers, consumers and communities.
All of this is to say that more competition, while in many respects desirable, would not necessarily address all the ills of private enterprise. What we need are not just more players in the market, but better controls on all the players, whether they are mammoth corporations or more modest-sized operations.