Last January, a 28-year-old law student named Lina Khan published a 24,000-word article in the Yale Law Journal unpicking a half-century’s shifts in anti-trust law in America, using Amazon as a poster child for how something had gone very, very wrong – and, unexpectedly, this law student’s longread on one of the most technical and abstract areas of law has become the centerpiece of a raging debate in law and economics circles.
The article is called Amazon’s Antitrust Paradox, and you should read it, because Khan is a sprightly and gifted writer with a talent for squeezing some exciting and relevant juice out of dry and abstract subjects.
At its heart is a critique of the neoliberal “Chicago School” and its new orthodoxy about when monopolies are a problem – an orthodoxy that is at odds with much of the world and hundreds of years’ worth of US lawmaking and enforcement.
The Chicago School is notorious for its emphasis on profits ahead of all else, its complicity in tens of thousands of death-squad executions in Chile, its influence on Thatcher, Reagan and their contemporaries in their belief that “there is no such thing as society” and “greed is good” – the belief that behaving as selfishly as possible will make everyone richer and happier.
It’s this school and its adherents that John Kenneth Galbraith was speaking of when he called economics “the search for a superior moral justification for selfishness.” As you might imagine, if you owe your fortune to selfishness, ruthlessness and greed, you might want to fund and elevate this kind of exercise. Nothing confers empirical respectability to manifestly immoral behavior like a lot of inscrutable mathematics that purportedly shows the self-perfecting nature of a system of greedy, “rational” actors.
The Chicago School holds that monopolies are only bad when they result in higher prices (“price theory”) and that everything else – the “structuralist” worry about rich people amassing political power, or making inferior goods, or screwing their workforce, or holding back innovation – is just a distraction.
This model rose to prominence in the 1980s with Reaganomics, and it coincided with catastrophic collapse in small business in America(especially minority-owned businesses); since Reagan, Republicans and Democrats alike have been enthusiastic proponents of the idea that the only thing a competition watchdog should keep an eye on is the prices charged to consumers, not “integration,” be it vertical (one firm owning the factory, the trucks and the stores) or horizontal (companies buying out their direct competitors).
Using Amazon as her poster-child, Khan argues that whatever problems this approach had in bricks-and-mortarland (she highlights several), the combination of networks, digital goods, data-oriented retail, and huge pools of investment capital willing to float businesses like Amazon using their profits from one area to sell goods below cost in others to the detriment of their competitors, make mincemeat out of price-theory. The digital world – where each customer might pay a different price, where retailers can use algorithms to price their competition out of existence – is one where costs of one category of goods can’t possibly capture the wider harms of monopolistic practice.
Related to this is On the Formation of Capital and Wealth, by Stanford’s Mordecai Kurz, who proposes a means by which digital commerce can drive a winner-take-all phenomenon that makes the rich much richer, at the expense of the general welfare.
The question, then, is what to do about it. Khan suggests some modest reforms in anti-trust enforcement, which, despite their modesty and the extremely unlikeliness of seeing them enacted under Trump or any future establishment Democratic administration, have provoked howls of outrage from Chicago School economists.
More radical approaches have been proposed, of course. Paul Mason’s Postcapitalism points to Amazon’s very monopolism as the reason to believe that capitalism has outserved its usefulness. If a monopolist like Amazon can use customer surveillance and algorithms to decide what to make, where to put it, and how to deliver it, why do we need imperfect markets? Just nationalize Amazon and its datasets (for the record, I think Mason was unduly optimistic about the problems of anonymizing large data-sets).
But if the internet supercharges inequality and monopolism while delivering many undeniable benefits in coordination, culture, and material production, can we simply divorce technology from the economic and social context that created it? Can we have the internet without douchey Silicon Valley jerktech and its lucrepaths, vulgarati, uberization, mom-as-a-service, and *-bait?
It’s not without precedent: the Protestant reformation gave us religion without the unified Church; the Enlightenment gave us alchemy without superstition; and Wikipedia and GNU/Linux gave us encyclopedias and operating systems without a single corporate overlord. As Leigh Phillips wrote in Austerity Ecology & the Collapse-Porn Addicts, the belief that Chicago-style sociopathic capitalism is the sole proprietor of technological change and improvement is one of the Chicago School’s most successful projects, one that convinced large swaths of the left that you either have to be pro-technology or pro-human, that being anti-corporatism meant that you had to oppose the technical feats of corporations.
Science fiction’s best move is cleaving a technology from its social and economic context, as steampunk does, when it imagines industrial-style production without the great Satanic mills where people become part of the machines, moving through scripted and constrained tasks in unison to the ticking of a huge time-clock. In steampunk, individual inventors and small groups produce things with the polish and awe-inspiring innovations of the industrial revolution, without the surrender of individual autonomy that industrialization demands of its workers. In steampunk – to quote Magpie Killjoy – we “love the machine and hate the factory.”
The problem with Amazon isn’t that it’s now really easy to get a wide variety of goods without having to shlep all over the place trying to find the right widget (or book). The problem is the effect that this has on workers, publishers, writers, drivers, warehouse workers, and competition.
GM: You’re about halfway through your watch when you notice the little boy glancing over at the leftover rabbit occasionally.
Elf Paladin, ooc: Oh, he must be hungry. I go and take some of the leftover rabbit to him.
GM: Your character is clumsy and it’s pretty dark out, so I need you to roll a d20.
Elf Paladin: *rolls* …7.
GM: You take the meat to the little slave boy, but on the way over there you trip and drop the meat on the ground.
Elf Paladin: Oh no!!
GM: The little boy bends down and picks up the rabbit and holds it out to you, since it’s your meat.
Elf Paladin: *to the little boy* No, you need it more than me. You eat it.
GM: *pauses* …So you just. Dropped this meat. In the dirt. …And now you’re telling this little boy…to eat the dirt-covered meat….
Elf Paladin, ooc: *horrified* No!!! I didn’t mean it like that!!!
GM: *gleefully* No take backs!!
-About a month later, in-game, after we’ve freed the boy from slavery and now travel with him-
GM: The boy notices that you’re hungry and goes to the kitchen. He reaches under the counter and pulls out a whole roasted rabbit. He sets it on the table in front of you. It looks delicious.
Elf Paladin: I thank him cheerfully and pick up my fork to eat.
GM: The boy holds up one finger to pause you, reaches down under the counter again and pulls something else out. He holds his hand above the rabbit and gives you a sweet smile, and then sprinkles some dirt on the rabbit.
Elf Paladin, ooc: WHAT!!! …Okay, I deserve that one….
Why is the Russian president so fixated on the Magnitsky Act?
There are two reasons, according to Browder:
* The first is purely financial. Browder believes Putin is the richest man in the world, with an assortment of assets worth what Browder estimates to be $200 billion at his disposal, but those assets are “held all over the world” including in America. When the accounts of Putin’s intermediaries are frozen because of the law, that is in effect, freezing some of Putin’s cash flow as well.
* The second is that the banking sanctions imposed by the law devalue Putin’s promises, and so decrease his power. Putin gets his intermediaries to “arrest, kidnap, torture and kill” by promising absolute impunity, Browder said. But the law’s sanctions create a tangible consequence. Not only do the sanctions affect violators vis-a-vis their U.S. dealings, but, internationally, other banks abide by a sanctions list put out by the Treasury Department that includes those found to have violated the Magnitsky Act, Browder explained to lawmakers. “As a result, you basically become a financial pariah,” he said.
“This is a war of ideology between rule of law and criminality,” Browder also told the senators. “And if we allow all the corrupt money to come here, then it’s going to corrupt us until we end up like them.”
This should be a major story with deep reporting to back it up.
The tl;dr, based on Browder’s testimony: Putin and the Oligarchy in Russia have billions in assets that are frozen in American banks, because of the Magnitsky Act. It appears quite likely that the Trump organization has been laundering a significant amount of their money through its real estate holdings for years. That may be why Cheeto Hitler is panicking so much about Mueller looking closely at his finances.
Take a moment and read the full article (it’s a quick read) so you’re ahead of the curve on what should become a major story in the coming weeks.
