Book Review | THE MYTH OF CAPITALISM

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THE MYTH OF CAPITALISM | Jonathan Tepper, John Wiley & Sons (2023), 304p

Jonathan Tepper's ‘The Myth of Capitalism’ critiques modern economic systems, challenging the free market principles traditionally championed by classical liberalism. Tepper argues against what he sees as a marketplace increasingly dominated by monopolies and oligopolies, which he believes stifle competition and innovation. While his observations are sharp and his concerns valid, his historical analysis is fraught with inaccuracies driven by an ideological bias.

Tepper's central thesis—that capitalism, as currently practiced, often devolves into anti-competitive monopolies—merits discussion. However, his interpretation seems to conflate the outcomes of market processes with the influence of regulatory frameworks that disrupt them. The market is an effective information-processing mechanism that inherently corrects monopolistic tendencies through creative destruction unless impeded by regulatory capture or government intervention.  Government empowerment of rent-seeking protections fuels the corruption of the markets he aptly describes.

The author attributes the rise of monopolistic practices to deregulation policies implemented in the late 20th century. When genuinely applied, deregulation increases market entry and competition; it does not diminish them. It is not deregulation per se, but selective deregulation coupled with regulatory protections for established firms that contributes to the economic concentration Tepper criticizes. True free-market policies involve reducing barriers for all, not creating selective advantages for the few.

While Tepper highlights valid concerns regarding the dominance of firms like Google and Facebook, it is crucial to differentiate between temporary monopolies driven by innovation and those entrenched by government privilege. A temporary monopoly earned through innovation differs in nature and effect from one cemented through lobbying for favorable regulations. The former is often dynamic and transient in a healthy, competitive market, where new entrants can displace incumbents with superior innovation or alternative solutions.

Tepper's call for stricter antitrust enforcement and regulatory reforms aligns with a common approach to handling government-created economic failures. However, increasing government oversight concentrates power - rather than diffuses it - and produces the common outcome wrought of a fatal conceit as understood in the paradox of the knowledge problem.

The focus should be on ensuring the market is free from undue, distorting influences that inhibit competition. Simplifying regulations to make market entry easier and reducing the ability of powerful entities to leverage government power for competitive advantage would be a lower-risk, better first step.

Jonathan Tepper's ‘The Myth of Capitalism’ is a crucial catalyst for reevaluating fundamental economic freedom in our present context.  Yet his lens is bent towards the collectivization of power rather than its dispersion.  Nonetheless, his diagnosis of the government-enabled development of monopolies and their restrictive impact on the choice or control of the custom merits robust engagement.  He is right.  The current state schematic has allowed companies to concentrate power in a fashion that a free market would not - absent government distortions - allow.

In our collective experience, the first part of “The Myth of Capitalism” can be added to every other work demonstrating that big is bad:  Big government, Big Business, Big Tech, Big Education, and Big Unions.

KEY QUOTES:

• "Capitalism is not just about competition; it is also about creative destruction—the process where new industries replace old ones." (Page xxvi)
• "Monopolists and oligarchs want stability, but progress requires change... Monopolies stifle innovation because they don’t need to innovate to survive." (Page 8)
• "Markets do best when governments ensure four things: property rights, rule of law, competitive conditions, and transparency." (Page 35)
• "Economic freedom means allowing people to pursue their own interests while respecting the rights of others, but it does not mean unregulated laissez-faire capitalism." (Page 44)
• "Concentration leads to higher prices, lower productivity growth, fewer startups, and less wage growth." (Page 59)
• "Antitrust laws were created to protect consumers, workers, entrepreneurs, and democracy itself." (Page 76)
• "Crony capitalism turns government into the partner, protector, and supplier of favors to business." (Page 108)
• "Big businesses use lobbying, campaign contributions, and influence peddling to shape regulations in ways that benefit themselves at everyone else’s expense." (Page 127)
• "When companies become too powerful, they begin to treat labor as a cost to minimize instead of an asset to invest in." (Page 163)
• "Inequality matters because extreme concentrations of wealth lead to political inequality, creating a vicious cycle where those with money buy more power and then use that power to make even more money." (Page 177)
• "Free trade should always come with safeguards and checks, including measures that prevent environmental degradation, child labor, forced labor, unsafe working conditions, and currency manipulation." (Page 224)
• "Competition isn’t something that happens naturally. It must be actively maintained through antimonopoly policies and institutions." (Page 248)
• "A truly free market depends on competitive conditions, which can only exist when there are many buyers and sellers who all have access to roughly equal information." (Page 266)
• "Reforming our economy so that it once again works for everyone—not just the wealthy few—will require reinvigorating antitrust enforcement, promoting worker ownership, encouraging entrepreneurship, and increasing taxes on extreme wealth." (Page 291)
• "There is no inherent contradiction between having a vibrant private sector and ensuring fair treatment for workers, customers, communities, and the environment." (Page 295)
• "True prosperity comes from widely shared economic opportunities, not narrowly held riches." (Page 303)

OUTLINE:

• I. Introduction
  • Definition of true capitalism
  • Evolution of capitalism into mythological form
  • Purpose of examining the current state of capitalism
• II. Origins of Concentrated Power
  • Emergence of monopolies and oligopolies
  • Role of mergers and acquisitions
  • Impact on innovation and consumer welfare
• III. Antitrust Laws and Their Decline
  • History of Antitrust Legislation
  • Factors contributing to weakened enforcement
  • Effects of diminished antitrust efforts
• IV. Market Manipulations and Barriers to Entry
  • Predatory pricing strategies
  • Intellectual property abuse
  • Regulatory capture
• V. Crony Capitalism and Its Discontents
  • The interplay between big business and politics
  • Influence of lobbying and campaign finance
  • Deterioration of public trust
• VI. Labor Under Siege
  • Shift from employee to independent contractor status
  • Stagnant wages and eroding benefits
  • Erosion of collective bargaining rights
• VII. Wealth Inequality and Political Power
  • Correlation between wealth concentration and political influence
  • Implications for democratic institutions
  • Call for progressive taxation policies
• VIII. Reviving Competition and Restoring Trust
  • Recommendations for stronger antitrust enforcement
  • Promoting worker ownership models
  • Encouraging entrepreneurship and small business growth
• IX. Conclusion
  • Recap of findings
  • Urgent call for reforms
  • Vision for a revitalized capitalist society based on equality, opportunity, and sustainability