This system is "capitalist" in name only, in that competition is fundamental to the concept of "free market capitalism" that underlies its efficiency in production and also producing the kinds of goods that people prefer. Asymmetries, like "concentration," a euphemism for monopoly and monopsony, vitiate that and lead to asymmetries political power in addition to market power that vitiate the concept of democracy as rule of, by and for the people, as President Lincoln put it.
Is this happening? (Matt Stoller has been writing a lot on this lately.) Here is a study that suggests it may be.
Consolidation of markets at the hands of U.S. companies that are actively engaged in mergers and acquisitions raises an important question about the political ramifications of market concentration. Do mergers and acquisitions impact the lobbying clout of these acquisitive firms? A new working paper delves into this connection and finds some intriguing, if also preliminary, affirmative evidence.
“Political Power and Market Power,” by Bo Cowgill and Andrea Prat at Columbia Business School and Tommaso Valletti at the Imperial College Business School, documents a positive association between mergers and lobbying activities, and finds some evidence for a positive association of mergers with political campaign contributions. These findings and the economic model the co-authors employ in their research are not robust enough, as is, for U.S. antitrust enforcers to measure these connections between political power and market concentration quantitatively, though the findings advance conceptional frameworks for better understanding this nexus in the qualitative context of the political economy of the United States.…
New research suggests connections between market concentration and the exercise of political power in the United States
Laura Alexander
Laura Alexander
Political Power and Market Power
Bo Cowgill, Andrea Prat, Tomasso M. Valetti