Geo-Mutualist Management of Monopoly

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There are different senses in which we may address the concept of monopoly: We may use the natural-artificial paradigm, wherein some monopolies are designated a status of “natural” while others are considered to be “legal” or “aritifical” monopolies; we can use the term to describe the concentration of legal power internal to an institution, rather than as a participant in the market; monopoly, as a single-seller, can be distinguished from monopsony, a single-buyer; or it can be used in a general sense to refer to both monopolies-proper and monopsonies. I will address each, before discussing their management and resolution.

Natural monopolies are those monopolies that do not need help from the state to form, except through the enforcement of already-existing property laws; while artificial monopolies are created through direct interference or manipulation by the state in its own basic property laws (as by taxing, subsidizing, zoning, etc.). In other words, a natural monopoly can exist in any market in which, under existing property laws, a firm can gain economies of scale (or scope), to such a degree that they begin to have a disproportionate share in the market. Natural monopolies often exist where large scale is needed and few firms are needed to supply the market, thus having strong elements of monopoly, without help needed from the state (except for protection of their unilateral claims to property). It can be suggested that a natural monopoly is neither natural, nor a true monopoly, but an expression of the state. I mostly agree. Without protection of their interests by force, and without internal hierarchy, they would simply constitute a community bound by mutual interest. These subsidiary monopolies are considered “natural” because modes of property under capitalism are also considered “natural,” and so the obvious results of these modes of property will be considered such as well. I certainly do not consider them natural, but neither am I willing to construct an all-new language at the present moment. I will use the term “natural,” with the preceding caveat. Without proper management, natural monopolies have potential to become states. In fact, states are improperly managed natural monopolies on the use of force. The fact that states exist demonstrates that natural monopolies do. States are simultaneously natural and artificial, as they dictate their own property laws and terms of privilege.

Many anarchists like to suggest that natural monopolies do not really exist at all, treating all monopolies as legal monopolies. While this may be true to an extent, in that governments protect the property claims of the monopolies, it is not true for the same reasons as other monopolies. Not all monopolies should not be considered to be due to market privileges, as many are established through property laws. With monopolies considered to be artificial, for instance, the state has taken a direct role in their establishment, through subsidies and other privileges, and does not merely protect previously-granted claims. With natural monopolies, however, the state may maintain them through protection, but it has no fundamental role in granting privileges for their establishment. Natural monopolies are granted by an artificial amount of negative protection of property rights; while more traditional legal monopolies are creations of positive privilege-granting. For artificial monopolies to be eliminated, positively-granted privileges— such as patents, zoning, charters, licensing, etc.— must cease to be required for operation. For those monopolies considered to be natural to disappear, those privileges inherent in our current system of perpetual land tenure must be removed, and economic rent, as well as its spurious returns, must be shared in by the community. Consumer organizations must also be enabled. Rather than state-enforcement of perpetual rights to property, the release of parcels from the commons for personal use must entail public bids, and the allocation of parcels according to common consent. The state has no role to play as such; it merely must step aside. The remaining task of the people remains the proper management of resources, so as to remove the state, and to prevent the rise of the next state.

We have covered one sense of monopoly, but still more remain: Other important distinctions of the concept include matters of ownership or control, and parties to exchange. In other words, monopoly can also describe a situation wherein ownership is maintained unfairly, or to distinguish from a situation in which consumers organize a unilateral body on their end, traditionally referred to as a monopsony. Monopoly can refer to concentration of power within a shared institution; or it may refer more generally to concentrated bargaining power while more specifically being distinguished from monopsonies, which are similar institutions, but on the side of the buyer rather than the seller. This being so, when I refer to the state as a monopoly, it is so in the general sense, being both monopolistic and monopsonistic, and in the sense that it represents a concentration of power internal to a group. I will argue, further on, that it is this concentration of power that truly distinguishes the state as a monopoly, rather than a common institution of shared benefit.

A monopoly, when applied to the concept of ownership, refers to the concentration of ownership into one user among many. It is particularly obvious when everyone labors a similar amount, but do not share in a similar amount of ownership. For instance, a landlord, who receives a rent check above the amount of effort used in maintaining the land, or the employer, who receives a hefty profit above the amount of labor put forth in the business, are instances of this kind of organizational monopoly. They must not work more to gain more and maintain more ownership. While these monopolies are usually enabled by forces external to them, such as the state’s enforcement of negative property rights in land, or its granting of positives privileges to provide labor, this is not always the case, particularly in regards to the state. The state is a natural monopoly, but unlike subsidiary natural monopolies, which are granted by the state, the state has been granted legitimacy by the passivity and ignorance of the people, who refuse to understand their condition, or to labor to change it. In this case alone, the granter of the right of “natural monopoly” is the weak will of the people. It is for this reason that the primary tool against the state, at least in this time, must be education. Monopolies in the sense thus used, of concentrated power and ownership, cease to exist when ownership and management becomes a fairly distributed and/or joint affair. This takes an informed and courageous will on behalf of the people.

Further on our list of distinctions, the term monopoly can refer to the selling parties in an exchange, as distinguished from an organized body of consumers, called a monopsony. Monopolies, in this sense, refer to organized sellers who have the power of price manipulation on behalf of supply, while monopsonies refer to organized consumers, who have the power to manipulate prices on behalf of demand. An example of a monopsony would be a consumer cooperative that dictates prices to its producers, who aren’t organized into a monopoly. Were the producers to be organized in a producers’ cooperative, and the consumers in a consumers’ cooperative, however, this would constitute a bilateral monopoly. Bilateral monopolies exist when a monopoly and a monopsony exist in the same market. The distinction now being made between monopolies and monopsonies, we must also understand that the word monopoly can be used in a more general sense to refer to both monopolies-proper (on behalf of sellers) and monopsonies, or any imbalance of power. That is, monopoly has a general use, which can refer to both monopsonies and monopolies in its more specific sense, or it can be used in this more specific sense as distinguished from monopsony.

These different forms can, but do not always, overlap. A natural monopsony can be organized internally in a hierarchical, and thus monopolistic, fashion, for instance. Or an artificial monopoly may be run internally cooperatively (the absence of monopolistic ownership), but act as a price-gouging producer monopoly to its consumers.

Is it possible to have the absence of monopoly? Certainly, geo-mutualism proposes just this. Geo-mutualists propose to end natural monopolies through the enforcement of highly positive, rather than exclusively negative, rights to property; and to end artificial monopolies through the end of privilege-granting (such as subsidies, licensing, etc.). We propose to end the monopolization of ownership through cooperative models of shareholding and decision-making. We propose to end the battles between monopolies and monopsonies through combined strategy in joint-interest cooperatives and mutual firms. As such, the only remaining structure is certainly a joint venture, but cannot be considered a monopoly. If anything, on the largest scale, panopoly may be a better description of the goal of geo-mutualism. Mono-poly, after all, describes one in control among many, while pan-(o)poly describes shared control between all of the many involved, with each sharing in power while maintaining their own identity. Monopoly simply cannot exist under conditions of balanced consumer-producer interests, egalitarian firm governance, the elimination of privilege, and property-allocation by contract.

It is all good and well to suggest the conditions under which monopoly will be absent, but we must now turn to the tool that will allow for such conditions to be set into being. Currently, it is the state that primarily holds control, enforces property rights, grants privileges, usurps power, and pits consumer and seller interests against another through the creation and maintenance of imbalanced power relations. If we are to have a society in which monopolistic institutions cease to exist, we must have the proper means of getting there. The state grants property rights and allocates privileges; what can we do?

A geo-mutual bank is the best means of managing monopolies. This is best done through lending programs centered around balancing consumer and producer interests. While traditional banks lend primarily to producers, geo-mutual banks have much potential to lend also to consumers in need of monopsonies as well. Rather than deciding the viability of such an institution around income, it can be centered around the savings that such institutions can provide for their consumers. For instance, it is well known that associations for professionals provide those professionals with a great deal of benefits, as much combined effort does. Many of these benefits include keeping salaries artificially high for the professionals, either by way of lobbying or through price-collusion, leading to much profits. This being the case, consumers have much potential for savings by creating similarly-powerful consumer organizations, which may act in concert in their consumptive habits, for the purpose of price-regulation. That is, just as producer monopolies, such as professional associations, have the means to influence prices on the side of production and selling, leading to higher rates of profit, consumer monopsonies, such as buyers’ clubs, have the means to influence prices on the side of consumption and buying, leading to higher rates of savings. These savings, which can equal the otherwise profits, can be used to pay back loans for capital, either real or mental, that has been used on behalf of the consumer organization, in the same manner that income used by a producer’s firm pays back loans used to generate their business. The only matter of concern is whether or not there are savings to be had in such concerted activity as consumer price collusion. If there are profits made in monopoly, there are savings to be had in monopsony. It is also possible to lose, rather than gain, from group activities, however. Consumer and producer organizations alike are expected to be governed by rules related to ideal firm size, and can suffer from diseconomies of scale or scope.

Imagine a bank that would lend in favor of a labor union (which is a monopoly on labor; employers are monopsonies/oligopsonies on labor) strike support, based on calculated probabilities of victory and returns. If, say, workers were to gain $1/hr. after a strike, it may be worth a mutual bank to lend toward a few days worth of strike support, enough to win the battle. After the victory, the workers would pay the loan back, interest-free.

The most likely outcome of a situation of bilateral monopoly, created purposefully by a geo-mutual bank, is the combination of consumer and producer interests in a mutual firm or a joint cooperative of some fashion, whereby consumers and producers share control. They may do this by way of decision-making partition—wherein certain decisions are allocated to certain parties, such as methods of production to the producers, and the amount to be produced by the consumers—, or by way of group decisions. Some mixture of both is most likely, with decisions relating to prices being of joint concern, while quantity is probably best left a matter of demand, and method a matter of supply.

The bank prevents the monopolization of ownership and decision-making power in subsidiary institutions by not providing privileges, not protecting disputed claims to property, and ensuring that all have credit with which to buy into organizations in which they share a stake. However, the participants in the organization must also do their part to ensure that the organization remains internally egalitarian. If power is allowed to rise, unchecked, and to establish itself as an authority, and if members are not to take the action to prevent it, even the bank cannot prevent the internal monopoly of its subsidiary units. Luckily, most internal monopolization in today’s firms is actual due to unaccounted for external forces— such as property laws and privilege, which is granted to one among many, and thereby selects the leader for the firm— and not to the lack of virtue on behalf of the firm’s participants. Still, it is plausible that lack of virtue can allow for the rise of charismatic leaders, even if it is not very probable. For this reason alone it should be addressed, not because it is of near as much concern as macroeconomic forces of property and privilege.

Natural monopolies, either due to protection of artificial property claims or to economies of scale or scope, will be eliminated by the geo-mutual bank. Artificial property claims will give way to property by contract (bid and rentshare) and economies of scale or scope will be matched by equal funding on the other side. Artificial monopoles will not be prevented, but neither will they be created by way of mandatory regulations and unfair privileges.

In order for the geo-mutual bank to be established, however, it must confront the most unjust of natural monopolies, which has not just been granted by, but in fact consists of, the state. Unlike the other natural monopolies granted by the state, the state has been granted in part by its own interest, and in part by its acceptance by its people. The duty of the geo-mutual bank, if it is to challenge the power of subsidiary monopolies, is to ultimately challenge the power of their source, the state. This can only begin to be facilitated by education, which will inform action contrary to the desires of the state, thereby calling into question its legitimacy. However, the strategy must be mixed. The geo-mutual bank must simultaneously educate and challenge the power of subsidiary monopolies, and, in so doing, must challenge the grantor of those monopolies, the state. By providing better means of relation than that of the state, and by providing more material efficiency than the state, the geo-mutual bank also challenges the very principle of the state. This is an example of education by the deed, but before deeds can educate people, ideas themselves must be spread, and put into action by a particularly daring, capable, or enabled group or individual. Education-pure leads to demonstration leads to duplication.

The goal of the geo-mutualist should be to educate— especially local— people on the matters of geo-mutualism and to work with those who are like-minded to establish geo-mutual institutions, most important being the geo-mutual bank (but which may not be the best step for a group of, say, three people, among whom a small agorist business may be more appropriate). This, of course, must be kept under the radar until such a point that the bank has the potential to start enforcing its core values through defensive action. Once it gains power, however, as I have described in “The Civic Bank” and in “A Geo-Mutual Panacea,” it has the potential to enforce the interests of workers, through various programs. One such program can include the balancing of monopoly-interests. As suggested this would entail the lending of capital to markets in need of monopsonies or monopolies to balance their countervailing forces. That is, it entails the willingness of the bank to loan to consumers who are facing the oppression of producer monopolies, or producers facing vice versa.

Traditionally, banks have gained through the support of monopolies, and have been able to claim some of their profits for themselves, but such banks are also internally monopolistic, having strong hierarchies. The geo-mutual bank, being accountable to its membership through participatory decision-making processes, has no incentive to enable profiteering, as there is no class of executives to capture the profits for themselves in the form of interest. Instead, a geo-mutual bank, owned and operated by the community of its users, is incentivized to promote balance in the economy. This entails lending to countervailing economic institutions, rather than favoring one side at the expense of another, and claiming some of the loot. Capitalist banks gain in the creation of monopoly, as they can claim some of the profits in the form of interest; but mutual banks lack the hierarchical class of executives to behave as such beneficiaries of extortion and privilege-granting.

Disputes over property can likewise be taken care of by the geo-mutual bank, once it is established with enough defensive force. This can be done especially peacefully by distorting contracts. Landlords and capitalists, for instance, could be restricted from certain benefits of the bank, or debited for their privilege upon voluntarily joining as members. This would essentially redistribute economic rent in a Georgist fashion, and would incentivize occupancy and use standards of land possession. This is similar to the bank giving loans to countervailing parties in an exchange. In this case, the landed represent the supply monopoly, and the bank creates balance either by debiting the landed, or by providing advantages to those currently without title to land, as a sort of consumer monopsony on behalf of tenants.

The first step in establishing the bank is likely the most important. This involves creating a new social contract that does not enable the internal monopolization of the bank. So long as the central institution of an economy, be it a state or a bank, remains internally monopolized, those who have monopolized the institution will promote subsidiary monopolies, from which they may draw some profit. This being the case, the geo-mutual bank must be a voluntary-membership-based institution that maintains a model of participatory decision-making and provides real services to its members. Once this task is completed, the bank will cease in having the incentive to protect artificial and disputed property rights with force, will no longer have reason to provide some with privileges that others do not share in (unless they are already privileged by the state), and will issue credit in a way that more properly distributes the wealth and power in society, thereby confronting the state with a dispute of title allocation. Being more materially efficient, fair, and emotionally satisfying, the geo-mutual bank has many competitive advantages over the state. All it lacks is support and enforcement, but that, again, requires education and entrepreneurship.

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