Monopoly Power and Geopolitics

U.S. politics this decade has been marked by the tenuous revival of two previously dormant paradigms: the anti-monopoly tradition and developmentalism centered on industrial policy. Interest in the former arises from concern over market concentration and Big Tech’s outsized role in shaping and controlling markets, which has enabled new forms of rent-seeking and predation, particularly by oligopolistic firms that wield price-making power. The latter paradigm is a response to lost domestic capacity in key sectors and vulnerable overseas supply chains—long-festering problems that the Covid-19 pandemic cast into sharp relief.

In different but occasionally complementary ways, these policy frameworks are largely about restructuring markets to strengthen the country’s economic resilience and reduce the inequalities that followed in the wake of globalization. All else being equal, antitrust enforcement and fair competition should foster market entry by new firms, local dynamism, and inclusive development, while targeted industrial policies should stoke investment that likewise rehabilitates fading production hubs and helps broaden economic opportunity.

Following waves of populist frustration with the economic status quo, it would thus seem propitious to combine these two frameworks, much as Joe Biden’s top policy advisors intended. Indeed, a cohort of House Democrats led by Representatives Ro Khanna, Pat Ryan, and Chris Deluzio has tried to do exactly this in order to reconnect their flailing party with the working class. A key challenge for reformers who want to advance the still-indeterminate “post-neoliberal” transition in American political economy, however, is figuring out the right mix of populism and economic patriotism in a society characterized by disgust with establishment politics but also broadly fearful of new forms of economic disruption and dislocation.

This dilemma is encapsulated by the electorate’s complex (and sometimes contradictory) attitudes toward globalization. While the multifarious backlash to it has landed us in the age of Trump, many Americans fear changes to global trade that threaten to upend their current modes of consumption. They are also worried about whether efforts to re-shore industry will inflame tensions with China and drive away allies that had expected (perhaps naively) the post-1989 international system to continue in perpetuity.

A corresponding challenge is the extent to which monopoly power is bound up with geopolitics and China’s ascent. Notably, it is the generation of politicians who came of age during the high tide of globalization that seems most alert to the national economic vulnerabilities that resulted from anti-competitive practices and overseas production. On the Democratic side, Reps. like Deluzio have forthrightly made a connection between offshoring, lost industrial capacity, forced labor overseas, the rise of unaccountable multinationals, and being at the mercy of China’s export dominance. On the Republican side, Senator Josh Hawley has similarly assailed corporate America for building up China’s advanced industries while abetting the use of “slave labor” in its factory cities. As far as the rhetoric goes, both sides are trying to establish a niche that combines reining in monopoly power and boosting economic patriotism.

Still, there are pitfalls and obstacles to making the conflict between monopoly power and inclusive economic nationalism the main axis in American politics. Powerful factions in both parties are resistant to a comprehensive program of national redevelopment that puts workers first. Globalization, too, has unavoidably bred complacency in an electorate that, while still hungry for economic change, is extremely fickle about how said change is brought about. Intrepid progressives who are determined to mobilize voters will have to elucidate the stakes around monopoly power in a way that eluded Biden and his team.

---

Rhetoric about the existential competition with China has understandably rattled many observers. Indeed, fears of a new Cold War or a more disastrous confrontation are well-founded. But those on the left and right who are critical of the nature of our relationship with China are also not wrong about the long-term threats to America’s economic sovereignty. Never before has the American way of life been so contingent on the industrial capacity and global market share of a formidable economic rival. Nor has charting a new path to shared prosperity based on new industries and the adaptation of legacy ones proved so elusive. The traditional pillars of middle-class existence—home ownership and job security—are increasingly unobtainable. That void has pushed many Americans to maximize what they can ostensibly pay for: imports that provide some semblance of routine needs and fashionable desires being met.

This highlights a paradox of the “free market” ideology that reigned between the 1980s and late 2010s. In the midst of being promised unprecedented choice, a broad swath of Americans, from the low-income to the upper-middle-class, became overwhelmingly dependent on what one country exports; whether it’s children’s clothes and school supplies, the latest smartphones and smart TVs, or machine tools and construction materials, China is integral to how the modern American economy runs. And Americans are equally reliant on a relatively small number of multinationals that have taken advantage of trade integration with China in order to realize economies of scale and profit margins incomparable to any previous stage of American capitalism. That same dependency often characterizes the position of “Main Street” businesses that have managed to survive globalization, as well as mid-size manufacturers that source critical inputs from abroad in order to stay remotely competitive with foreign rivals.

In short, China’s gravitational pull has made it harder to (1) crack down substantially on monopoly power and (2) direct smaller businesses and consumers to domestic suppliers. This conundrum is something even the most perceptive and thoughtful proponents of “strategic decoupling” elide. The process of actually executing some meaningful measure of strategic decoupling from China is such a minefield precisely because the trend toward greater market concentration has left countless sectors vulnerable to sudden shocks and barriers to trade. Indeed, since so many supply chains are overseen by Chinese firms and the multinationals they partner with, the destabilizing effects of attempting to dramatically change the geography of production and shipment are likely to be widespread.

There is also the matter of corporate resistance to “de-globalization.” From retail goliaths with “in-house” brands like Amazon and Walmart to personal tech giants like Apple, whole business models have been based on outsourcing production to China and other, lower-wage countries and reaping the benefits thereof. That creates a mighty obstacle to enlisting the dominant players of the private sector in any project to restore the government-regulated competition and diversified domestic production of midcentury America. Even if major multinationals were amenable to arguments about putting the national interest first—as well as the importance of pre-distribution and high-wage jobs to social cohesion—the merits of reinvesting in the American workforce and domestic suppliers seem to be perpetually dwarfed by the advantages of preserving the status quo or merely tinkering around the edges.

The companies that exercise wide control over our typical household wants and needs have also been extraordinarily successful at convincing millions that they are essential to “optimizing” one’s lifestyle. The spread of internet technology has been central to such conditioning. Online shopping, despite connecting consumers with niche vendors from all corners of the world, has tended to amplify the consumption patterns that originated with big box stores. Even as Americans are increasingly uneasy about how corporate power operates, particularly through methods like data-mined “dynamic pricing,” consumer habits ingrained from an early age tend to lower awareness of the trade-offs inherent to counting on multinationals for all manner of goods. Alongside relentless offshoring, innovations that cater to ease and comfort have quickly dimmed memories of how the economy worked for previous generations, leaving the not-so-old sepia-toned in the mind of the young, 21^st-century consumer.

This leads to a certain paralysis when it comes to building political support for fair, competitive markets rooted more in domestic production. Despite, say, the fees that Amazon charges third-party vendors or Walmart’s decimation of small-town brick-and-mortars and regional manufacturers, it is hard for many consumers to conceive of alternatives that could replicate the services the giants provide but on more ethical terms or otherwise supplant them. This is true even of Americans attracted to “socially responsible” consumption or helping out “the little guy.” In a world where a high premium has been put on a very narrow definition of economic liberty, occasionally shopping local and supporting artisanship is seen as more of an aesthetic or “values-based” decision than one with real implications for the distribution of economic power in society.

---

Until financial security and life chances improve for millions of struggling Americans, economic populism will continue to animate and strain the U.S. party system. But the difficulties of translating populist sentiment into effective, pre-distributive policies that circumvent the logic of globalization shouldn’t be underestimated. Simply put, scaling back our entanglements with China is immensely complicated; doing so requires a political master frame that goes beyond a program of carrots and sticks for the most decisive players in the private sector.

On this score both left-populism and right-populism have evident shortcomings. Although Bidenism and the more recent debate over “abundance” have provoked the post-Bernie left into thinking more concretely about development and enablement, progressives tend to revert back to a vague vision of redistribution. In some ways this vision is much less radical than their rhetoric at times suggests. For example, new taxes on extreme wealth and financial speculation could certainly be invested in social goods like municipal infrastructure, public schools, hospitals, youth centers, and even government-funded medical research—all worthy goals in and of themselves. But progressive tax rates are less effective at shaping and structuring markets and stimulating development in places that are in desperate need of good jobs. This is what the anti-monopoly tradition and industrial policies are for—though again, globalization has made it staggeringly difficult to alter the flow of investment and consumer habits, raising the question of what other sticks are needed to get businesses to reinvest in left-behind Americans.

Progressives, moreover, are torn over the desirability of restoring domestic manufacturing. After propounding the idea of nurturing domestic renewables, many climate activists appear to be wondering whether it would be better to simply let China dominate the future of clean tech, as it appears primed to do. Worse, it is now common among members of the Brahmin left to reflexively link all manufacturing and construction to a host of negative externalities, despite the urgent need to build more housing and energy capacity. The depth of progressive enthusiasm for the anti-monopoly paradigm is also a bit of an open question. Consumer welfare advocates are rightly enraged by junk fees, surprise medical bills, soaring credit card interest rates, and the like. But despite the growing influence of “neo-Brandeisian” intellectuals, anti-monopoly politics has yet to congeal into a movement for egalitarian development the way it did in the Progressive Era.

On the right, meanwhile, the knee-jerk zeal for Trump’s tariffs betrays a paucity of imagination—as well as a lack of sensitivity to the economic challenges at hand. Mainstream economists have likened Trump’s agenda for reindustrialization to Peronism, their alarm so great it almost seems as if Trump’s tariffs are more threatening to “free markets” than a global wealth tax. But although the tariffs may pressure and induce some subsectors to reinvest in America, it is doubtful they are enough on their own to reverse forty years of rampant offshoring. For one thing, tariffs, even at rates not seen in decades, won’t necessarily precipitate an exodus from China of multinationals that have spent decades refining their value chains and international logistics. Relatedly, tariffs don’t address corporate governance or strengthen the rules of the market. As anti-monopolists like Barry Lynn have made clear, it’s no small detail that antitrust enforcement grew slack and timid in the same period that trade liberalization and corporate consolidation reached new heights—a problem that neither tariffs nor more sophisticated industrial policies are meant to solve.

Unsurprisingly, of course, Trump’s GOP has largely refused to confront the ways in which market concentration has contributed to the crisis of development enveloping small-town America. When denouncing “slave labor” in China or malfeasance at Boeing and Meta, a populist like Sen. Hawley can nearly sound like the old, anti-globalization left—an opponent of the “race to the bottom” and business practices that endanger the public. Yet the GOP’s budget and regulatory priorities continue to flagrantly betray working-class voters who had hoped for a more populist economic agenda. In its place, voters are served up belligerent rhetoric about foreign “trade cheats” that obfuscates how monopoly power has collapsed the economic pillars of countless towns and small cities while exacerbating America’s geopolitical headaches.

---

It is certainly easy to despair over the odds of reimagining American political economy, even in an era of supposed “de-globalization.” For all its penetrating critiques of Wall Street and the corrupting influence of major business lobbies, the contemporary left is more divided than ever over how to create opportunities that accord with Americans’ traditional desire to balance self-reliance with community belonging. The New Right, despite “absorbing” (or co-opting) older left-wing arguments against globalization, remains extremely docile when it comes to actually challenging monopoly power. In the middle, meanwhile, are prominent voices who are still in disbelief over the discontent and predation eroding the fabric of American life.

It may yet take another crisis, one much harsher than the Great Recession, to force a reckoning. But as American consumers and businesses warily navigate Trump’s tariff regime, forward-looking reformers can and should lay out their vision for what a healthy mixed economy ought to provide its citizens and the norms it must enforce. The reality is that indefinite access to cheap goods from China or anywhere else was never a panacea for the insecurity and lost status that fills so many Americans with dread. Ultimately, a politics that once again elevates the common good—and which regenerates trust in it—is one that has any hope of prevailing over the narrow self-interest that has ruled the day.