5 Companies own 80% of all stock in S&P 500 listed companies

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by ShibbyHaze1

Monopolies: The Death Knell Of Capitalism – it’s described here

They demonstrate the central role played by monopoly finance capital in economic life: ‘the Big 5 institutional investors – Blackrock, Vanguard, State Street, Fidelity, and JP Morgan – now own 80% of all stock in S&P 500 listed companies’; and they argue that this situation is mirrored internationally. They give examples of monopolies dividing up the world market .

The source can be found within the article


for those that don’t get how this makes sense:

How many stocks you have in the market can be compared to a percentage out of a 100 on the market.

The more stocks you own, the more can be measured and added onto a percentage in comparison to the markets 100% value of potentially owning.

In this case, 5 companies control 80% of the market.


Monopoly: ‘the death-knell of capitalism’

Tepper and Hearn have a thesis. Capitalism is defined by competition. The modern US economy, however, is dominated by monopolies. Therefore, US Americans live under ‘fake’ capitalism, a ‘grotesque deformed version of capitalism’ which is ‘as far away from the real thing as Disney’s Pirates of the Caribbean are from real pirates’ (p.xv). Tepper and Hearn have clearly identified one of the central issues in understanding modern capitalism: monopoly. In doing so, they have collected a wealth of useful material. Socialists should read this book, which is written in a very readable and enjoyable style, and use the information in it, but reject the reactionary politics that underlie it.

The book starts by analysing the extent of concentration in many US industries. Compiling evidence from various sources, the authors discover that four corporations control 90% of American beer; four airlines completely dominate airline traffic, often enjoying complete local monopolies in their regional ‘hubs’; five banks control half of US banking assets; in many states, the top two insurance companies have 80-90% market share between them; 75% of US households can only access one monopoly provider for high-speed internet; four companies control the entire US beef market and have ‘divided up the country’; three companies control both 70% of the global pesticide market and 80% of the US corn-seed market; Google’s share of internet search traffic is 90%; and so on.

As smaller competitors have been swallowed up by monopolies, over half of public firms have disappeared over the last 20 years: ‘On this trend, by 2070 we will only have one company per industry.’ ‘The scale of mergers is so extreme,’ Tepper and Hearn write, ‘that you would almost think American capitalists were trying to prove Karl Marx right’ (p.9).

Crucially, they say, monopoly leads to the active stifling of innovation: there is little incentive to spend money on research and development in order to innovate and out-compete non-existent rivals. It is much more efficient to simply raise prices; and the more concentrated the industry, the higher the price rises. The connection between low investment and monopoly ‘should be obvious’: ‘Today firms find it is more profitable to restrict production and dampen supply than it is to invest in expanding their capacity. Think of airlines who don’t want more capacity, beer companies that don’t expand plants, cable companies that don’t upgrade infrastructure, drug companies that don’t spend money on research and development, and so on’ .

Tepper and Hearn find monopoly lurking behind ‘higher profits for firms, higher prices for consumers, fewer startups, lower productivity, lower wages, and greater inequality’. They argue that monopoly explains the unprecedented $2trn sitting in offshore accounts and the rise of precarious working conditions. They demonstrate the central role played by monopoly finance capital in economic life: ‘the Big 5 institutional investors – Blackrock, Vanguard, State Street, Fidelity, and JP Morgan – now own 80% of all stock in S&P 500 listed companies’; and they argue that this situation is mirrored internationally. They give examples of monopolies dividing up the world market .

They inform us that business schools in US universities teach their students to eliminate rivals, and that if they find themselves in possession of a small competitor they should sell it to the monopoly interest rather than try and fail to compete. The practices of monopoly, we are informed, are now the fundamentals of mainstream business education in the US.

To explain how things have gone so wrong, the authors present a simplistic, but interesting, story of US history as ‘the long American fight against monopolies’ (p.138). They recount the Boston Tea Party revolt against trading monopoly, the story of the Robber Barons of the late nineteenth century and the largely ineffectual attempts to regulate and break up their monopolies. They recount the Nazi relationship with huge cartels like IG Farben, as well as the US corporation Standard Oil’s agreements with IG Farben to carve up the world market; and then tell us how the US reconstruction of post-war Germany had as its key aim the breaking up of the German cartels. They recount the growth of the Chicago school of economics during the Reagan era, and its influence on economic policy: Reagan-era attacks on anti-monopoly legislation led to one of the greatest waves of mergers and acquisitions in US history, which has continued decade after decade since.

Reform or revolution?

Recognising the growing anger of millions around the world against the terrible effects of the system of monopoly capitalism on their lives, this book is an appeal to capitalists and to bourgeois politicians to break up monopolies before the working class turns against that system. The authors argue that the rise of ‘populism’, under which heading they lump Occupy Wall Street, the Tea Party, and the votes for Jeremy Corbyn, Bernie Sanders, Donald Trump and Brexit, is explained by the ‘Newly Poor’, the immiserated middle classes who ‘feel the system is rigged against them and the future is not as bright as the past’. This is an astute observation in a period when imperialism is proving increasingly incapable of providing privileges to the middle classes. Terrified that the vacillating and ruined middle classes might throw their lot in with the working class in revolt, the living fear of the bourgeoisie and the motivation behind Tepper and Hearn’s attacks against monopoly are captured perfectly in the following quotation from their conclusion: ‘If we do not get reform, we will get a revolution that we have not chosen’ .

What is to be done?

Tepper and Hearn are scathing in their treatment of lobbyists and the revolving door between government and industry, arguing that the mono-polies have come to control the regulatory machinery: ‘It does not matter where you look, whether it is in pharmaceuticals, genetically modified crops, financial services, or telecommunications, the government has been captured by the companies it is meant to regulate’. Tepper and Hearn’s proposed solutions are spelled out in a shopping list of regulatory changes at the end of the book, including the breaking up of monopolies, the ‘granting’ of shares to workers and so on. Leaving aside the utopian idea that the very body which has been ‘captured’ by monopolies is to carry out such a program, Tepper and Hearn’s desire is to turn back the clock: ‘We have lost our way, but the past offers a path back’ to a time before monopoly.

In his critique of Pierre-Joseph Proudhon, The Poverty of Philosophy, Marx called those who wish to keep present-day economic and material development, but turn back the clock to an earlier form of society, ‘both reactionary and utopian.’ Just as nineteenth-century ‘society with the steam-mill’ could not return to a time of hand-mills and feudal lords, a 21st century society of vast monopoly capital, just-in-time planning techniques and robotised assembly lines cannot be legislated to return to a society of telegrams and economic competition. What Tepper and Hearn refuse to understand, despite having written a book on the subject, is that monopoly necessarily develops out of competition, as the larger capitals in their drive to accumulate out-compete and swallow up their smaller rivals. Marx recognised that this tendency signals the death-knell of capitalism: ‘although [the curbs on free competition] appear to complete the mastery of capital, [they] are at the same time, by curbing free competition the heralds of its dissolution, and of the dissolution of the means of production which are based on it’.

Over a century ago, Lenin wrote that ‘Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.’  The evidence in this book, in spite of the authors’ intentions, confirms Lenin’s analysis. Capital, in its monopoly form, is no longer developing and revolutionising the productive capacity of humanity through competitive innovation: it has become a fetter. The solution is not to look to the past, but to the future; and to do away once and for all with the parasitic and decaying capitalist system which has become a fetter on human development.



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