Chokepoint Capitalism (and what to do about it)
by J. Simpson
The first chapter of Chokepoint Capitalism, the fascinating, powerful, infuriating new book from influential tech writer Cory Doctorow with author and creative activist Rebecca Giblin, leads with some alarming facts. In the United States, three enormous conglomerates own the three main record labels and three music publishers that control most of the world’s music. One company controls 35% of the global box office. Two companies dominate the digital ad space. One massive corporation controls the lion’s share of ticket sales. One corporation owns the entirety of terrestrial radio while another controls satellite. One online platform holds a virtual monopoly on book, ebook, and audiobook sales as well as ebook and audiobook production. There are only six main book publishers and two were trying to merge, bringing it down to five, until Congress intervened.
How did we get here? Even more importantly, what are the implications of mass media being owned by so few individuals, not just for creatives but for public consumption, freedom of speech, and information?
The History of Chokepoint Capitalism
Media theorists have been warning about the dangers of the concentration of media ownership for decades. Media analyst and University of California professor Ben Bagdikian published his influential The Media Monopoly forty years ago.
Bagdikian’s book tells a cautionary tale about the potential implications of corporate-owned media, citing a case in 1979 when the publisher Simon & Schuster took issue over a book called Corporate Murder, written by journalist Mark Dowie, who broke the story about the dangers of Ford Pintos’ gas tanks, and Geoffrey Cowan, a lawyer, and author who’d previously written about the censorship of sex and violence on television in See No Evil: The Backstage Battle over Sex and Violence in Television. Despite initial enthusiasm, Simon & Schuster ended up declining the project due to it making “all corporations look bad,” as Bagdikian remembers it. There’s some controversy over whether that’s the real reason Simon & Schuster declined to publish the book, but it’s still a telling illustration of the potential risks of corporate-owned media. Even more telling is the fact that when Bagdikian wrote his cautionary tale in 1983, fifty corporations owned the majority of the newspapers or the sale of magazines. Now there are five. Collectively known as “The Big Five,” Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster collectively published 80% of the books sold in 2021.
Doctorow and Giblin identify when things started to go off the rails. It began with a shift in focus to the Chicago School and Milton Friedman, which is a neoclassical school of economic thought that originated at the University of Chicago in the 1930s. This revision in economic theory is largely responsible for our current near-worship of “free markets.” Free markets are supposed to ensure a meritocracy that results in a robust economy that favors the consumer. The reality is that they usually trend “toward monopoly, destructive extraction, and rent-seeking” as Professor Julie E. Cohen notes in her book Between Truth and Power: The Legal Constructions of Informational Capitalism.
Despite this fact, free markets continue to be revered in the United States to this day. This attitude was solidified into public policy thanks to another product of the University of Chicago, Robert Bork. Bork wrote an influential book called The Antitrust Paradox, taking the stance that anti-monopoly regulators should think about “consumer welfare” and strictly focus on the sticker price. Before this, monopolies were seen as a threat to democracy, as enormous corporations could influence policy in their interest while disempowering workers and consumers.
It turns out that this shift away from antitrust policies is only beneficial to consumers in the short term. Enormous corporations can use their much larger bankrolls to lower prices until they wipe out their competition. This brings us to today and the conditions that have led to chokepoint capitalism.
The Impact of Chokepoint Capitalism
In an interview with Time Magazine, Doctorow tells another cautionary tale using the example of a glitchy internet connection. The city where he lives in California took out a loan to lay high-speed internet cables to serve the downtown businesses. The terms of the loan forbid the city from letting residents access the high-speed cables. His taxes pay for the high-speed internet, yet he can’t use it.
Corporate interests influence nearly every aspect of modern living. The examples from the entertainment, media, and publishing industries Doctorow and Giblin delve into at length in Chokepoint Capitalism are merely a highly-visible example of a much deeper and more endemic problem. The shift away from antitrust policies allows monopolies to flourish, as evidenced by the fact that the number of publicly traded companies has dropped by half even while increasing by 50% in other developed countries.
CHART
Source: Doidge, Karolyi, and Stulz, “The U.S. Listing Gap” and Credit Suisse estimates
This shift away from antitrust policies is one of the leading causes of the skyrocketing income inequality since 1989, while the income of the 1% has grown by 650%. Wages, meanwhile, have stagnated. Between 1940 and 1980 when antitrust sentiments were prioritized, wages more-or-less paralleled productivity. Since 1989, average productivity has increased by 75% while the average pay has risen a mere 5%.
Corporate concentration results in lower wages, too. Industries with a high degree of corporate concentration have wages up to 25% lower than very competitive markets, as stated in Jonathan Tepper and Denise Hearn’s The Myth of Capitalism: Monopolies and the Death of Competition. Meanwhile, executive salaries have increased by 1,000% according to Zephyr Teachout in Break ‘Em Up: Recovering Our Freedom from Big Ag, Big Tech, and Big Money.
The antitrust sentiment has become such a distant memory that capitalists no longer even feel the need to hide their agenda. Hyper-capitalist Peter Thiel, a techno-elitist who reportedly doesn’t believe in democracy, stated in 2014 that “competition is for losers,” and advises everyone to create their own monopolies.
AMAZON
Amazon’s so-called “virtuous cycle”: credit: Beacon Press
Throughout Chokepoint Capitalism, Doctorow and Giblin refer to the “virtuous cycle,” which is based on the idea of delivering cheaper prices to the customer at all costs. Amazon is the most egregious example mentioned throughout the book, even sometimes taking a loss on products to get customers on the site and then leveraging its enormous size and wealth to create dedicated customers. This gives Amazon access to customer data while simultaneously making itself an essential marketplace for third-party sellers. If they notice a particular product is selling well, which they can because they own the marketplace, they create their version and then undersell the creator.
Doctorow and Giblin use the term “monopsony” to refer to when one corporation or conglomeration controls both the buying and the selling of a marketplace. Monopsonies were primarily responsible for the antitrust laws in the United States in the first place when farmers got tired of getting shaken down by grain elevator operators and meatpackers.
In a recent talk at SXSW 2023, where Doctorow and Giblin read excerpts from the book followed by a Q&A, they offered a more contemporary example of what happens when a monopsony remains in place. The current healthcare crisis is a result of a chain reaction of monopsonies. First Big Pharma tried to exert its power and influence on the hospitals, which refused to yield. Realizing their power and influence, hospitals squeezed insurance providers, resulting in company mergers becoming regional monopolies.
This is perhaps the purest and most alarming example of a chokepoint and the influence it has on workers and consumers alike. This consolidation of power results in drastically reduced wages and worker protection while simultaneously resulting in skyrocketing prices for poorer quality goods and services for consumers.
Of course, much of Chokepoint Capitalism focuses on the creative industries, and the SXSW panel reflected this concern. “Creative workers should also be on our radars because they’re the canaries in the coal mine,” Doctorow and Giblin note in the book’s introductory chapter. Much of the book’s first half focuses on the impact of chokepoint capitalism and monopsonies on arts and culture.
They speak at length about the disastrous consequences that music streaming has had for musicians, even while major labels are seeing record profits. Recent research shows that the three major music conglomerates are earning around $2.3 million every hour. Despite these massive earnings, only .04% of artists could potentially make a living from streaming.
That’s just one way that chokepoint capitalism is bad for the arts and culture. Media concentration allows the major labels to control artists’ sampling rights, as well, which they then use to further influence new musicians to sign to their label. The prohibitive cost and byzantine process of sample clearance have almost entirely killed the style of sample-heavy hip-hop popular in the early ’90s – largely considered a Golden Age of talent and creativity.
These are just a few of the repercussions of a small number of corporations controlling entire industries, which fill the first half of the book. Despite raising alarms, and blood pressures, Doctorow and Giblin’s in-depth exhumation of creative and technological monopolies isn’t all doom ‘n gloom but a call for solidarity and collective action.
What to Do About Chokepoint Capitalism
Throughout the reading and subsequent Q&A, Doctorow and Giblin were quick to disavow any idea of “voting with your dollars” or any such similar neoliberal bootstrapping. They were similarly wary of easy, feel-good solutions like paying artists more. Throughout the presentation, they used the metaphor of “giving a bullied kid more lunch money.” The answers need to be scoping and systemic. There are answers, though; the second half of Chokepoint Capitalism is dedicated to possible actions and measures.
Musicians can demand transparency from their labels and music publishers, for instance. Media companies routinely underpay artists what they’re owed and they’ve been increasingly caught in the act in recent years. This gives artists more leverage and, thus, more power.
Shortly before the Q&A segment, I observed firsthand at the SXSW panel, Doctorow and Giblin offered a concise call-to-action for helping to loosen the chokehold of chokepoint capitalism, “Make content companies fear their artists will take their art elsewhere. Make real the risk of legal and economic reprisals for abuse, demand meaningful rights for workers, drag corporations to the bargaining table, and make them sign union contracts that more fairly balance the interests of capital and labor.”
Then went on to add, “competition is not about making the market efficient. It’s not even about choice. It’s about self-determination, weakening the power of intermediaries who would otherwise take away our ability to lead our creative and human lives in the way of our choosing – who would and do force us to arrange our lives to benefit their shareholders, no matter how badly that works out for us.”
For many of us, this pursuit of profits over people has been the reality for the majority of our lives. I came of age when these Reaganomics policies were being implemented. I’ve been watching these policies slowly chip away at virtually every American institution until there’s next to nothing left. At the bare minimum, having a timeline of these policies and philosophies laid out, clearly and succinctly, was a galvanizing experience. It was also moving to be in a crowd of people paying attention to these problems. It was equally energizing to hear that there could be a solution, even though there were no illusions; it is a massive job with a long way to go. Sometimes you just need to hear you’re not imagining things and there is a solution.
You can listen to a full recording of Cory Doctorow and Rebecca Giblin’s reading and panel on the SXSW website.
Chokepoint Capitalism is available now from Beacon Press
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