While neoliberalism pushes its idée fixe of a – so far still unseen – free market, the reality of advanced capitalism in the 21^st century looks rather different from the overtly romantic image of an idealistic village market.

Instead of the beloved free market, what capitalism – seemingly – has created in its advanced stage are three forms of market segmentations: Firstly, there are oligarchical market structures.

These are markets that are defined by a small number of firms operating together in cahoots while holding the majority of the market share in a specific market. A good example is GAFAM’s five that are dominating the Internet: Google (Alphabet), Apple, Facebook (Meta), Amazon, and Microsoft.

Another good example of an oligarchic structure is the USA’s grain “market”. It is controlled by the so-called Big Four: ADM, Bunge, Cargill, and Louis Dreyfus. They operate up to 90% of the global grain trade.

Secondly, a more tightly organised structure is that of the duopoly. It occurs when “two” firms have dominant or exclusive control over a specific market. Most duopolies are deliberately designed to be non-competitive. If there is a little bit of competition, it occurs between the only “two” (duo) players: Airbus and Boeing, as a classic example.

Finally, there is the notorious monopoly – not totally unconnected to the board-game which is an even more tightly organised structure. A monopoly is defined by a market structure in which “one” single company produces and sells a given product or service in the absence of any competition.

In Sydney, Australia, my favourite example is the privatized monopoly of Sydney Airport. Sydney is a city with 5.3 million people and one single for-profit airport called Sydney Airport Corporation Limited (SACL) that cashes in $1bn a year. It is a bit like installing an ATM machine out in your front lawn that spits out money to shareholders – but not to the public.

Meanwhile, the public gets the ideology of trickle down economics. This is the ideology that wealth would trickle down to the poor when in reality, it smokescreens money being transferred upwards from the poor to the rich. In 2020, the Rand Corporation – not really the home of socialism – calculated this upwards movement of money to be in the vicinity of $50 trillion.  

Whether oligopolies, duopolies, or monopolies, dozens of academic studies have documented that market concentration is driving income inequality. In other words, the evil twin of market monopolisation – the driver towards monopolies – is none other than that of inequality.

Yet, things are getting even worse. Companies do not become more efficient after acquiring other companies. Despite what the overpaid, simple-minded, and crypto-academic apostles employed by business school tell us, efficiency is not a value. It is rather, a tool. And so when you ask people about their values, they hardly say “efficiency”.

The harsh reality for those believing in the magic of the free market is that whether oligopolies, duopolies or monopolies, they all make more money when “not’ competing. Cranking up profit-making in the near absence of competition is the single most important raison d’être for their existence.

This is possible because these oligopolies, duopolies, and monopolies have gained unembellished market power. Even better for these market structures – but not so much for the believers in the free market, all too often located at the receiving end – is the fact that oligopolistic, duopolistic, and particularly monopolistic corporations can (and do) get away with charging higher prices.

Simply put, profit margins go up because companies can raise prices – not because they’re more efficient. Things are getting even better for oligopolies, duopolies, and monopolies – but not for the disciples of free markets. Profits go up even more after mergers. The resulting new – and larger – companies can significantly increase prices. And its market domination becomes overwhelming.  

It was found that after mergers and acquisitions (M&A) leading to six or even fewer players, consumer prices “rose” in nearly 95% of all cases. This is good news for oligopolistic corporations. Post-M&A, consumer prices rose by 4.3% leading to increased profits.

This is neoliberal capitalism’s little secret. To justify M&A, ideologies like “the free market” and so-called “synergies” are wheeled out. These camouflage market concentration and higher corporate profits.

However, this can only be possible because state authorities do “not” enforce their own anti-trust laws. And these laws are put in place – seemingly – against monopolies and to camouflage a Houdini-like trick to allow oligopolies, duopolies, and monopolies alike to operate.

The state appears to be an enabler – rather than a disabler – of oligopolies, duopolies, and monopolies. Meanwhile, the entire market structure is camouflaged through the free market ideology. Yet, the empirical evidence on the existence of oligopolies, duopolies, and monopolies is tremendous.

Just one example explains this. The ten most expensive airports – including six so-called fortress hubs – are dominated by one (in numbers: “1”) airline. Worse, four small US cities are without much fare competition at all. The highest airfares are seen in Houston. In that city, United Airlines has almost 60% market share – not a free market.

In other industries, such as in IT, oligopolies, duopolies, and monopolies work even better. Between Google, Amazon, Apple, Facebook, and Microsoft, more than 500 companies have been swallowed up in the past decade. As a consequence, profits go up while competitors that might disrupt these five monopolies are eliminated.

Again and again, the free market ideology is bitterly needed to camouflage the fact that huge sections of our daily lives are run by oligopolies, duopolies, and monopolies. Here is another example of how the free market works its ‘magic’:

Yelp was for many years the most popular website for rating local businesses. The site was so good that Google tried to buy it. Yelp turned them down. Google then took revenge. They started scraping Yelp’s website, so the information appeared on Google without searchers ever visiting Yelp. Google took almost 386,000 images from Yelp per hour, and then used some of the photos in business listings in Google Maps. Then Google also started offering its own reviews of local businesses, competing with Yelp. The list of sites that Google has made to disappear is very long. In a similar case, Google decided that they, themselves would be the place to find images rather than Getty, and they scraped Getty’s images only to resurface them on Google Images. As a consequence, Getty’s traffic fell by 85%.

Why does all this work? One possible answer could be because of what is known as state capture. State capture is the political collusion in which corporate interests significantly influence – or better: manipulate – a state’s decision-making processes for their own advantage. In addition, state capture is not specific to an individual country.

Instead, state capture is a feature of monopoly capitalism. The advantage of state capture is that, democratic institutions and democracy itself stay – at the surface – in power. Meanwhile, corporate interests – via lobbying, pro-market think tanks, corporate media, etc. sway a state’s democratic institution towards supporting corporate interests.

The outcome of this is that, for example, the top US techno-corporations have a market capitalization that exceeds the GDP of Germany, France or Italy.

In the history of capitalism, the infamous East India Company was the first true monopoly. The corporation owned its very own army while controlling about half the world. By then, it was the biggest monopoly that capitalism had ever seen.

Today, and when one adds Facebook to Google, these two corporations control nearly 90% of online search advertising. This is how the free market works its magic – except there is no free market but a duopoly.

The magic of the free market works favourably for Amazon that controls about 75% of all e-book sales. Meanwhile, the magic of the free market also assures that many private corporations, e.g. techno-behemoths, have become more powerful than individual state entities. For example, among the top ten biggest entities on earth, nine are national state entities, with Wal-Mart being no. 10 – a corporation.

Thanks to monopoly capitalism, Wal-Mart – a single company – is bigger than Spain or Australia. It is easy to imagine that such a company has significantly more power than any local regulation could hope to offer.

Even worse for free market believers, in 2018, Amazon accounted for 53% of all incremental growth of online shopping, which means that the monopolist simply grows its dominance. Surprisingly, the magic of the free market works best when it eliminates the free market. How the free market works is shown by the following example on baby diapers:

The retailer Diapers.com once rejected Amazon’s efforts to acquire it. In response, Amazon responded by slashing its own diaper prices in a clear effort at predatory pricing. The executives at Diapers.com calculated that, based on the cost of diapers from Procter & Gamble and shipping costs, Amazon was going to lose $100 million in one quarter merely in diapers. In the end, Amazon made them an offer they could not refuse.

Under monopoly capitalism, critiquing a monopolist can be very dangerous. When think tanks and academics don’t do what Google wants, the consequences can be severe. For example, when researcher – Barry Lynn – published a critical piece on Google, the New America Foundation fired him. Thereafter, the foundation had received more than $21 million from Google. Evil heretics might ask, what happened to free speech?

As mentioned earlier, the two monopolists – Facebook (social media) and Google (online search) – are, in fact, monopolistic online gatekeepers for billions of people. To the amazement of the free market devotees, the Internet is no longer a free market when just two duopolistic corporations are controlling most of its online traffic.

The power of Google and Facebook renders governments and regulators irrelevant. Indeed, the free market ideology dictates that markets should not be regulated. Instead, markets should be further deregulated – particularly for the benefit of monopolists.

Meanwhile, the magic of the free market also works in other ways such as against competition. For example, monopolist Google is so far ahead of its – hypothetical – competitors that virtually no company has entered “Google’s market” – since 2008. This is the power of the free – actually: monopolistic – market.

The language of monopolists becomes rather telling, when monopolists say, “let’s go and knife the baby”. When managers talk about “knifing a baby”, it contradicts the much trumpeted business ethics.

Yet, even seemingly powerful and enduring monopolists can be challenged. For example, decades ago, the biggest US corporations were: General Electric, Exxon Mobil, Microsoft, Citigroup, and Bank of America. Today, all the top five companies are techno-corporations: Amazon, Facebook, Google, Apple, and Microsoft.

Even worse for the free market disciples is the fact that these techno-corporations have more power over the daily lives of many people than Western Union, Standard Oil, and AT&T when they were monopolies.

Moreover, with its 3 billion users, Facebook has more users than Islam has believers, and it has also surpassed the number of Christians in the world. Three billion people in one monopolistic corporation! Are these the wonders that free market devotees believe in?

Historically, monopolists – or better robber barons, as they were once called – aren’t new to capitalism. The word robber baron is the medieval German Raubritter – a medieval knight that robs you blind. The Raubritter were also in the “business!” of charging illegal tolls on the roads “without” providing any improved roads in exchange.

Today’s Raubritters have a powerful ally: the corporate media telling the fable of the free market while camouflaging the extra profits that monopolists make.

Even better is this. As most people go about their daily lives, they have been given the magical hallucination of having a real choice. Yet, they spend their days paying tolls to a handful of corporations lacking any real competition. Today, the ideological power of the corporate media and the well-crafted belief into the free market smokescreens the daily reality for many:

• Americans wake up each day with a choice of breakfast cereal. Yet, Kellogg’s, General Mills, and Post altogether have an 85% share of the cereal market.
• During their lunch breaks, they might want a soft drink and have a wide choice. Yet, the top three firms – Coca-Cola is the leader, followed by PepsiCo and Dr. Pepper Snapple – dominate more than 85% of the market.
• If consumers are worried about having too much sugar, they might buy bottled water. Yet, their beloved free market assures that they will find that Nestlé, Coca-Cola, and PepsiCo own 9 out of the top 10 brands.
• Drinking a beer after work, consumers have a choice between Budweiser, Corona, Stella, and Coors Light. Yet, Molson Coors and AB-InBev control around 90% of the US beer market.

Finally, and as monopoly capitalism marches on, a child’s prospects of earning more than their parents did has fallen from 90% to 50% over the past half-century. Back in 1970, 92% of 30-year-olds were making more money than their parents did at that age. However, by 2010, only 50% of 30-year-olds could still say the same.

In the end, the free market does not seem to work its magic at all. Under the cover of a well-manufactured ideology, oligopolies, duopolies, and monopolies grow and exploit their market power. Instead of the free market, what is at work is a powerful ideology. It is the ideology of the free market and free competition.

This magical faith allows oligopolies, duopolies, and monopolies to eliminate the free market and competition as much as possible. As long as enough people can be made to believe in the magic of the free market, monopoly capitalism can run its course – until the Uninhabitable Earth would have killed us all.

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