The Curse of Bigness (2018) Book Summary and Insights

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Book Title: The Curse of Bigness

Subtitle: Antitrust in the New Gilded Age

Publication Date: 2018

Author Name: Tim Wu

Book Summary

This book gives a history of anti-trust laws in the United States. It looks at global economic concentration or the industrial concentration and the economic and political dangers it creates. It looks at how the growth of corporate wealth and power might pose a problem for democracy. The foundation of this book is based on the Brandeis philosophy. The author’s idea bothers on the government curbing those corporations which he believes are more powerful than them. His idea gives a much broader view on monopoly. To find out more, please read the following insights.     

Who Is This Book For?

This book is for those who want to grow their understanding of corporate wealth and power. It is for those interested in politics, lawyers, economists, historians.

About The Author 

Tim Wu is a policy advocate, a professor at Columbia Law School and a contributing opinion writer for The New York Times. He is best known for coining the phrase “net neutrality”. He worked on competition policy in the Obama White House and the Federal Trade Commission, served as senior enforcement counsel at the New York Office of the Attorney General, and worked at the Supreme Court for Justice Stephen Breyer. His previous books are The Master Switch: The Rise and Fall of Information Empires and The Attention Merchants: The Epic Scramble to Get Inside our Heads.

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Book Insights

Economic Concentration and Monopoly in The Gilded Age

The Gilded Age is the era after Reconstruction where the American economy experienced unprecedented growth in its economy. Although this Era refers to a time of great wealth, it was also a period of questionable business tactics, corruption, and poor ethics. The Gilded Age of 1850 to 1900 ushered in a new Era of wealth and economic power for the United States because of the Second Industrial Revolution. The wealth of business tycoons such as Henry Ford, Cornelius Vanderbilt, John D. Rockefeller were made as a result of hostile corporate takeovers and the merger of smaller companies into big business conglomerates. The concentration of industries into a few hands led to the creation of a monopolist economy where a few companies controlled over 70% of the market share of their industries. Some industries controlled by monopolies included Standard Oil by John D. Rockefeller and Carnegie Steel Company owned by Andrew Carnegie. Although the Gilded Age was a period of tremendous economic wealth and power, the dearth of financial regulations and firm business practices allowed for questionable methods to destroy rival companies, hostile takeovers, and little regard for the welfare of their employees. Although the business tycoons of the Gilded Age used anti-competitive business practices to increase their wealth, their philanthropy to society was unquestionable. In fact, J.P. Morgan was so wealthy, he was able to bail out the United States Government on two occasions during the economic crisis of 1895 and 1907.

Monopolies As The Next Step In The Evolution of Big Business

Competition has always been identified as one index of a healthy industry. It allows for companies to sit up and look for means to increase the quality of their products and services and, lower prices for the final consumer. That is to say that, competition stimulates innovation. More efficient means of production are devised to lower cost and increase quality which benefits an economy on a larger scale. But the proponents of monopolies did not see competition in this light. They viewed monopolies as the next level of corporate capitalism. To them, competition creates volatility and caused the economic depression in the 1800s. Excessive competition put many companies out of business without a regulation in the pricing of a product or service. Monopolies provided stability to an otherwise chaotic market in industries where they are in control. They believed that economies of scale are easily achievable by monopolies thus ensuring that cost is brought down to the barest minimum while creating a better product or service. This allows monopolies to be the pioneers and last outcome in the evolution of corporate warfare.

Monopolies as the Natural Order in the Evolution of Competition

Proponents of monopolies believe the outcome is inevitable regardless of whether there is competition. In fact, they are of the opinion competition is the catalyst for the creation of a monopolist economy. And since competition is seen as healthy, therefore monopolies must be seen as healthy. For every industry, a multitude of companies fight for domination. The winners increase their market share while the losers park up or get bought out by the more successful companies. The continuous process of competition therefore creates an environment where there is only one winner in that industry who then establishes a monopoly. Monopolies are the next step in evolution not only from an organizational perspective but from a competitive perspective. The proponents of monopolies, also known as ‘the trust movement’, therefore believed that by being the last company standing, the monopoly has proven itself to be the most efficient, resourceful, and thus most resilient in their industry. They buttress their point with Darwin’s theory of biological evolution where only the fittest survive. From an economic perspective, companies compete for survival in a market. If others fold up because of competition, the one left standing is the fittest. This means that monopolies are a sign of a progressive economy and should therefore be left alone to dictate an industry. The trust movement fought against all forms of government interference, including interventions against poor wages, child labor, and poor work hours.

Monopolies as a Double-edged Sword

Although the trust movement argued in favor of monopolies, believing it to result from a progressive capitalist economy, these huge conglomerates had faults the government could not ignore. The size of the monopolies allowed them to maximize the benefits of an industrialized age through mass production of goods and services. However, the economies of scale which allow them to survive and thrive becomes the instrument for their downfall through diseconomies of scale. Bigger is not always better because the bigger the company, the more complex its organizational structure. This makes such companies less reactive to change in the economy unlike smaller companies. But the bigger problem was the amount of power under their control. Monopolies had tremendous power not just over the market, but with the workers and consumers. Since they were the only ones in their industries, they could hire and fire at will. The lack of competition allowed them to impose poor working conditions without considering the welfare of their workers. The workers had no choice but to accept these conditions because there was no other competition to go to for employment. There was also a reduction in the quality of goods which the consumer could do little about because there was no alternative product. Although this environment may seem favorable for a new competitor to take over market share, it was not practically possible. This is because monopolies control not only market share or dictate prices, they also control the raw materials. Many monopolies have such a huge advantage that they make it almost impossible for new competitors to compete. They not only used their powers to dictate economic policies, they used their wealth to dictate political will which increases their economic advantage. A good example of this is the business tycoon J.P. Morgan who connived with other industrialists of his time to put down huge amounts of money to ensure their candidate William McKinley got into the White House in 1896. Today it is not unheard of to see big companies spending hundreds of millions of dollars to lobby governments. The huge influence asserted by these monopolies on the economy as well as government policy became the backdrop for the antitrust movement.

Government Resistance against Economic Concentration

As monopolies consolidated their power in their industries and in politics, there arose dissatisfaction amongst citizens and government. This dissatisfaction led to the civil unrest of the late 1800s spilling into the early1900s. Many workers went on strike in the US with communism on the rise. Fearing a civil revolution, the government of the day enacted the first antitrust law also known as the Sherman Act. They passed this law in 1890 and it criminalized monopolies, making them a felony and restricting the formation of trusts. Despite the formation of the law, it took quite some time before action was taken against the monopolies. Not until the assassination of McKinley in 1901 was there any noticeable change. Unlike McKinley who supported a laissez-faire economy, Theodore Roosevelt believed monopolies were a danger to democracy because they created a huge disparity between the rich and the poor. This makes the poor desperate and more likely to institute a communist revolution. The power of the monopolies almost rivaled the government. That J.P. Morgan was able to single-handedly save the government from recession did not help matters and pointed to a bleak future of private power reigning supreme. Thus the Roosevelt administration spearheaded the antitrust revolution by filing 45 actions against monopolies owned by John D. Rockefeller and J.P. Morgan. President Taft built on the legacy of the Roosevelt administration by filing a further 75 antitrust lawsuits. The result was the breaking of up huge conglomerates including Standard Oil and US Steel. Some broken up companies remain powerful today.

Antitrust in the 20th Century

The government onslaught against monopolies went right on through the 20th century because of the effect of monopolies in World War II. Despite repenting during the Great Depression, the US government passed the Anti-Merger Act of 1950 to forestall the formation of monopolies from inception. The Act gave the government the power to control, dictate, and even reverse mergers that could cause a monopoly. A major factor of the government’s drive to fight monopolies was the damage these companies could do when left to themselves. Monopolies in other countries like Germany financed the war effort and most times aided the Nazi government in committing war crimes against humanity. Another unfavorable possibility was the creation of a communist state which results from government intervention to take back power from the monopolies. To preserve its democracy, trust-busting by the government continued throughout the 20th century. Landmark judgments were given against ‘super monopolies’ like AT&T which paved the way for competition and creating the environment for the formation of the Internet. Although many monopolies were broken up by the antitrust movement, the breaking up of AT&T remains their last major achievement. Since the turn of the 21st century, monopolies have emerged from the shadows once again. One of the key players for the resurgence of monopolies was a scholar named Robert Bork.

Bork’s Theory and the Resurgence of a Monopolist Economy

Robert Bork, a legal scholar of the University of Chicago, wrote a paper titled “Legislative Intent and The Policy of the Sherman Act”. The paper provided a simple litmus test as to whether a monopoly went against the Sherman Act. This test was whether or not a monopoly hiked the cost of goods or services. If it did not, then there was no need for such a monopoly to be disbanded. Bork’s interpretation was accepted wholly by the legal society including the Supreme Court. His theory also made it difficult for antitrust suits to succeed in the courts. And although the Clinton administration brought an antitrust action against Microsoft, it was never to reach a legal conclusion. The Bush administration did not file a single antitrust suit or prevent a merger throughout its tenure. The result was the re-emergence of monopolies. The previously broken up AT&T was allowed to reform into Verizon and AT&T. Today cable bills have risen by over 600%. Airline companies were left unrestricted until only three monopolies were left allowing them to control ticket pricing and raking astronomic profits. In the pharmaceutical sector over fifty companies were allowed to merge. Drug prices are the highest today than they have ever been. The alcohol industry has a conglomerate that oversees two thousand brands of beer and over 65% of the sales in the industry. Technology companies like Microsoft, Facebook, Google, Amazon, and Apple are in a competition to out-buy their competition. In the media sector, Disney wields its power with an iron hand. It owns 20th Century Fox, ABC, ESPN, and Marvel, amongst many others. Smaller companies are acquired on a daily basis by these giants, it is no longer news to hear of a sale or merger each day. Fortunately for us, there is a way out.

Reigniting the Fight against Economic Concentration

It is time the government took up the baton against economic concentration. Rather than a litmus test based on pricing, the government should focus on a policy that protects the integrity of a competitive market. All mergers that allows power to be kept in the hands of a few should be banned. The government should be courageous enough to go after big companies today to prevent the wealth disparity of the Gilded Age from repeating itself. If the big monopolies of today are left without government intervention, they may become a law and government unto themselves in the near future. And a bleak and dark future that will be for all of us.

Key Quotes

Here are some key quotes from the book:


The necessity of Anti-trust is not far-fetched. It is a very important tool to curb the concentration of wealth and power.

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