I have been blogging about things I learned from listening to Scott Galloway on a couple of television shows. I have not read his book. As a cheap Mennonite I must wait for the paperback.
I always want to remind people, that Galloway was talking as a big fan of capitalism. He wants to improve capitalism. But he does not like the current version of capitalism which he considers a degenerate form of capital. Many of modern capitalists rely on monopolies. They love nothing better than to squeeze out competition. That is not capitalism. Galloway called it cronyism. This is what he said:
“I am a full-throated capitalist. I don’t like this weird form of socialism we are in now which I describe as cronyism. Part of capitalism is that you want to oxygenate the marketplace. When we look back at breakups, not only typically has everybody done better but the companies themselves are worth a whole lot more than the original company. So I think this is an exercise in capitalism. We have to have a robust ecosystem. We have to have opportunities for other companies to get a seat at the table. And we also find that innovation is buried inside these companies. When we broke up AT&T we found out that cell, data, wireless, optics were all lying dormant. This is the capitalist handbook. Break companies up when they become so powerful that they are performing infanticide on small companies and prematurely euthanizing big companies which tend to be great employers and great taxpayers. We don’t break them up because they’re bad people. We don’t break them up because we’re angry. We break them up because we’re capitalists. It’s absolutely a capitalist thing to do.”
When companies get too big to fail, we must break them up before their breakdown creates problems for the economy. That is classic liberalism.
Monopolies are the worst thing for capitalism. The problem with corporate giants is that they don’t have to compete anymore. They get fat and lazy. They do that because they have it too easy.
So the first rule is that market concentration of power has to be kept in check. To do that we need regulations. Smart regulations. We are not doing that now.