Those who dislike these companies don’t like to hear it, but this is the reality: Google, MLB, Facebook, et al. are powerful companies not simply because they are big and enjoy some regulatory advantages. They’re winning mostly because the general public either actively likes them or at least can’t be bothered with finding alternatives.
https://mises.org/wire/how-facebook-turned-its-market-success-culture-war-america
Ryan McMaken
In twenty-first-century America, millions of Americans—Christians and social conservatives especially—are finding that the nation’s most influential institutions appear to be implacably hostile toward them.
These institutions include universities, public schools, the news media, and government bureaucracies. Moreover, corporate America has increasingly embraced a posture of hostility toward groups considered to be “right wing” or conservative.
Recent examples are numerous, to say the least. Major League Baseball, for instance, recently moved its all-star game out of the state of Georgia with the explicit purpose of punishing voters and policymakers who supported policies MLB didn’t like. These “objectionable” policies were mostly supported by conservatives. Meanwhile, YouTube—owned by Google—bans content creators who express opinions Google’s employees and leaders disagree with. These opinions are usually ones we would consider to be “conservative” or at least “anti-Leftist.” Twitter and Facebook employ a similar bias when actively intervening to ban users and opinions deemed unacceptable by corporate personnel.
In other words, corporate power is being used to wage ideological battles far beyond the usual issues of minimizing the firm’s tax burden or avoiding regulatory compliance costs. Corporate America has chosen a side in the culture war.
This evolution from market entrepreneur to exploitive plutocrat illustrates a problem with the interventionist state in a mixed economy: economic power tends to be converted into political power. Moreover, so long as consumers continue to pour resources into powerful firms through the marketplace, these firms’ exploitation of competitors, taxpayers, and ideological adversaries is likely to continue.
Market Democracy: How Firms Get Rich in the Marketplace
Ludwig von Mises understood that in a market economy, the firms that are most successful are those that succeed in the “democracy” of the marketplace. Mises describes this “consumers’ democracy” in Socialism:
When we call a capitalist society a consumers’ democracy we mean that the power to dispose of the means of production, which belongs to the entrepreneurs and capitalists, can only be acquired by means of the consumers’ ballot, held daily in the marketplace.
In other words, the money goes where the consumers want it to go, as directed in their daily spending decisions in the marketplace. Those business owners who convince consumers to willingly hand over their money are the business owners who end up controlling the most resources.
This is a frequent theme in Mises’s writing. If we imagine the market economy as an immense seafaring ship, Mises notes, the capitalists are only the “steersmen” of the ship. If they wish to succeed, the capitalists must ultimately take orders from the consumers, who are the real captains of the ship.
This is generally the case with most of the firms which we today find are increasingly and openly political and ideological. Firms like Google, Facebook, Twitter, and the like became megacompanies by delivering a product or service that a large number of people freely chose to use.
This doesn’t make these firms superior on a moral or philosophical level, of course. Just because a firm is good at delivering what the consumers want doesn’t mean it is spiritually edifying, or morally upright. These firms’ success merely means people like to use their products. The end. That’s it.
After all, we can point to plenty of successful enterprises that aren’t exactly laying the foundation for a virtuous and prosperous commonwealth. Pornographers, for instance, make boatloads of money. They’re very popular with consumers. At least with male ones. This doesn’t make pornographers national treasures.
Corporate Welfare Is Only Part of the Picture
But it is hard to deny that firms like Google and Facebook got to where they are by winning “votes” in the “consumers’ democracy.” Nonetheless, some critics of today’s corporate jihad against ideological adversaries insist that these firms are only successful because they are “monopolies” or that they only gained so much market share by dirty tricks and corporate welfare schemes.
These claims are generally unconvincing. Certainly, these firms are today able to gain some advantages by manipulating the policy environment through lobbying and other political efforts. Yes, these firms have likely managed to increase profits and diminish competition through intellectual property laws, through tax breaks, and through regulations that favor large firms over small firms. These are bad things, and these firms increase the profitability of their companies at the expense of both competitors and taxpayers.
[Read More: “The Plutocrats of Wall Street and Silicon Valley Are Scamming America“ by Ryan McMaken]
But the primary and most fundamental reasons that these firms became large and powerful in the first place is the fact they were skilled at the game of market democracy. Direct competitors to Google, Facebook, and Twitter exist. Few people choose to use them. There are plenty of things to watch on television other than Major League Baseball—many of which are a lot less boring than baseball. Yet countless consumers continue to watch MLB games anyway.
Those who dislike these companies don’t like to hear it, but this is the reality: Google, MLB, Facebook, et al. are powerful companies not simply because they are big and enjoy some regulatory advantages. They’re winning mostly because the general public either actively likes them or at least can’t be bothered with finding alternatives.
If we are upset with the fact that these companies command immense amounts of resources and can use these resources for political purposes, it’s easy to find who is most to blame: the American consumer.
The Losing Side of Market Democracy
In a system of market democracy, the consumers chose the winners. But since we live in a mixed economy and under an interventionist regime, those winners are now using their resources to crush their ideological opponents.
This is very frustrating to those on the receiving end of this corporate political aggression, of course. Perhaps even more discouraging is the fact that everywhere they look, conservatives and Christians see relatives and neighbors continue to voluntarily pour their own money and resources into the firms that are avowed enemies of anyone skeptical of today’s corporate ideological zeitgeist. No matter how hostile or condescending these firms and their leaders get, hundreds of millions of consumers of all ideological bents just keep slavishly logging in to Facebook and watching many hours of videos on YouTube.
What Can Be Done?
For those who keep losing to their ideological opponents in the marketplace, this raises a question: If a large number of consumers insist on supporting firms and CEOs who are openly hostile to a certain segment of the population, what can be done?
There are three possibilities:
- Use the regime’s coercive power punitively against one’s ideological opponents.
- Use regime power to strip opponents of any advantages they may enjoy in terms of monopoly power, regulatory favors, tax advantages, and political influence.
- Deprive these ideological opponents of resources by successfully competing against them in the democracy of the marketplace.
The first option is the most attractive to the average American playing a shortsighted game. It’s the usual political “solution”: I see a problem, so let’s pass new government regulations to “fix” things! In this case, we might envision laws designed to make social media companies be “fair.” Of course, we’ve seen attempts at making media be “fair” before. Federal regulators spent much of the twentieth century regulating “fairness” in media. To see the success of that effort, we need only look at most TV news. Regulation fails again and again. Moreover, it only paves the way for larger amounts of bureaucratic control over the lives of ordinary Americans. When the other side again gains control of the regime, these regulatory powers are then used against those who naïvely thought the regulations would fix anything.
The second option is more promising. It is always a good idea to seek out and destroy any regulations, statutes, or taxes that favor large firms over smaller firms and potential competitors. This means abolishing any tax “incentives” that can be accessed by large firms, but not by smaller firms. It means slashing the duration of patents and other forms of intellectual property. It means ending any special legal protections enjoyed by these firms—such as those in so-called Section 230.
But even with all those legal advantages and tricks removed, these firms may continue to be successful and influential firms for many years to come. So long as these firms enjoy the votes of consumers in the “consumers’ democracy” the firms are likely to be profitable. The firms will consequently have access to immense amounts of resources, with which they can buy political influence and promote their own vision for American society.
Only when these firms face real competition from successful competitors—or when consumers change their buying habits in other ways—will the situation change. That’s bound to happen eventually. But for those who fear the political clout of these corporate behemoths, it’s imperative to speed up the process. Author:
Contact Ryan McMaken
Ryan McMaken (@ryanmcmaken) is a senior editor at the Mises Institute. Send him your article submissions for the Mises Wire and Power&Market, but read article guidelines first. Ryan has degrees in economics and political science from the University of Colorado and was a housing economist for the State of Colorado. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.
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