Looking Backward to a Future of State-Administered Tech Companies

Aurelien Portuese March 25, 2021
March 25, 2021

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In 1888, a political activist and author named Edward Bellamy published a classic book titled Looking Backward 2000-1887, in which he pictured a future—our present time—when technology companies administered by a benevolent state would enable people to live in peaceful abundance. Illustrative of his populist era’s shared beliefs, Bellamy assumed that nationalization of advanced industries, or at least government administration of them, would curb corporate monopoly power and generate abundance. The Populist Party’s presidential candidate in 1892, James Weaver, would go on to adopt most of Bellamy’s recommendations. Indeed, the party’s campaign platform that year called for nationalizing railroads and telegraphs.

Today’s populists, including some top regulators, have revived Bellamy’s dystopian view, improperly labeling as “monopolies” the leading companies in some advanced industries, such as biopharmaceuticals, information technology, and telecommunications. And while those companies are not in immediate danger of being nationalized, they are under threat of being broken up and regulated as public utilities.

Populists assume technologies need to be freely accessed by everyone. Rejecting intellectual property rights and the fundamental freedom of enterprise, a growing number of legislators and enforcers wish to generate Bellamy’s abundance through populist means. One such solution is requiring mandatory licensing of value-creating technologies for the benefit of rivals and consumers. Another is micro-manage companies to ensure they never have conflicts of interest. In that scenario, certain types of companies would be regulated as platforms and prohibited from selling to end-users. Another popular idea is to mandate standardization of certain technologies to guarantee they are interoperable. Still another is to regulate prices, or even, in the case of broadband Internet service, to have the government provide the service instead of private companies.

In other words, private “monopolies” are bad, but they become desirable when they are created, administered, or regulated by the benevolent state. In Bellamy’s dystopian view, fair competition comes from having less of it, not more. That may very well be the world regulators now envisage. Washington and Brussels increasingly are moving to administer tech companies in the revived populist view toward monopolies.

Like the Progressive-era Justice Louis Brandeis a generation later, Bellamy lamented what he saw as the inevitable rise of monopolies (read: large corporations) and suggested that, rather than fighting their power, nationalization was the answer:

Early in the last century the evolution was completed by the final consolidation of the entire capital of the nation. The industry and commerce of the country, ceasing to be conducted by a set of irresponsible corporations and syndicates of private persons at their caprice and for their profit, were intrusted [sic] to a single syndicate representing the people, to be conducted in the common interest of the common profit.

The battle against trusts was fought not so much with antitrust legislation, which would only materialize at the federal level in 1890, but with the “instrusting” of companies into one single syndicate administered by the people (i.e., the state).

Bellamy envisioned “the nation, that is to say, organized as the one great business corporation in which all other corporations were absorbed; it became the one capitalist in the place of all other capitalists, the sole employer, the final monopoly in which all previous and lesser monopolies were swallowed up, a monopoly in the profits and economies of which all citizens shared.”

When today’s regulators envisage imposing common carrier antitrust duties on tech platforms, are we not coming closer to Bellamy’s populist prediction of companies administered by the state? Common carrier antitrust duties refer to the regulation of platforms as public utilities when they are subject to many prohibitions and obligations in exchange for fair rates controlled by the benevolent state. For instance, Amazon would be prohibited from selling on its own platform, and its search rankings and rates would be administered weekly, if not daily, by antitrust enforcers. Similarly, Google would be prohibited from suggesting adjacent services on its search engine. Its search results and advertising rates would be constantly checked, assessed, and altered at the regulators’ whim. And 5G wireless companies would be told that they can’t prioritize any traffic, even latency-sensitive traffic, because it violates “net neutrality.”

These regulations currently under consideration, including the antitrust and competition bills under consideration in Washington and Brussels, where the European Union is enacting a Digital Markets Act, would lead toward the “final monopoly” that Bellamy envisioned: The entrenchment effects of these regulations would create de facto sectoral monopolies, as large tech platforms would be tightly regulated but simultaneously protected by the collectivist regime from potential competition.

What about innovation? Evidently there would be no more need for it, because e-commerce, search, broadband, and social networks are all seen as mature technologies and industries only in need of regulation. Unfortunately, such an administered-monopoly economy would be unable to produce innovation in other areas, either, since the incentives to innovate will have been destroyed. And in that regard, Bellamy may have gotten it right when he predicted the future: Our time could very well be looking backward.

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Looking Backward to a Future of State-Administered Tech Companies