A Monopoly’s Morals

The day before starting Tim Wu’s book, The Master Switch (2010), I engaged in healthy debate with a good friend of mine on issues surrounding modern tech companies in regards to innovation, privacy, and capitalism. I argued CEOs such as Elon Musk, Mark Zuckerberg, and Jeff Bezos were positively contributing to society through their respective breakthroughs in engineering, communications, and the digital economy. All the work they’ve done has and continues to move humanity forward by raising the standard of living for people who use their services. My friend however, argues that these companies are gaining too much power and that they’re driven by a selfish desire for greater wealth. Furthermore, some of these companies do unethical things like data-mine consumers to analyze their browsing history or, with the case of Facebook, putting up a “free internet” drone over rural India to provide them with free internet even though it was opposed by the locals (Taplin 143). While we had to agree to disagree in order to move on with our lives, we both recognized that the key discrepancy in our beliefs is the issue of morality. Even if these companies are guided by a selfish desire for greater capital, does it really matter if they are still providing the public with valuable services?

Much like my debate from the other night, the issue of morality intertwined with capitalism is a recurring theme throughout the first half of Wu’s book; particularly, in regards to the formation of America’s first telecommunications network and film enterprise. The future AT&T was founded by a curious inventor and a lawyer bent on bringing down Western Union’s communications empire through the invention of a disruptive technology: the telephony. Similarly, Hollywood began as a motley crue of minority and “insurgent” producers who wanted to take on the established “Trust” patent conglomerate and create a new form of filmmaking. AT&T and Hollywood were both successful David and Goliath stories, but they themselves became the massive enterprises they once sought to overcome. As the famous The Dark Knight quote goes…

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So with AT&T controlling America’s telecommunications network under the helm of Theodore Vail and Hollywood conglomerating into growing companies like Universal, Fox, and Paramount (among others), how have these monopolies proved to consumers that their goals are selfless?

In the case of the Bell Company, Vail “sought to control communications for the greater good” (Wu 8). Under a single corporate entity, the industry had the best chance of being regulated and developing smoothly without the presence of competition. Adam Smith, who is considered the father of free market economics, believed “individual selfish motives could produce collective goods for humanity” (8). However, Vail found that competition meant “stryfe” and industrial warfare.

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He further wrote “‘vicious acts associated with aggressive competition are responsible for much, if not all, of the present antagonism in the public mind to business…'” (8). And this can be illustrated by the scorched earth tactics used by both Bell and their present and future rivals. This is why Vail was a believer in the idea that every industry should have its own “monopolists” who, when working closely with the government, can be “trusted to do what was best for the nation” (9). Vail appeared to follow up on this idea of working with government when, years after winning the fight against Western Union and bringing them into the Bell Company as a subsidiary, he willingly broke up part of his conglomerate in the midst of anti-trust litigations. Whereas other industries were getting hit hard by anti-trust movements, Vail actually initiated negotiations with the government and therefore on his own terms. As such, he was able to walk away still retaining a powerful company. 

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In Bell’s fight against the “Independents” who began to construct their own lines across the country, Bell was again using scorched earth policies to ensure their company’s own hegemony. Again, Bell is showing that competition breeds industrial warfare. Sound Waves, the Independent’s magazine, wrote “those who have watched the peculiar and heathen ways of the Bell monopoly know that it is, without doubt or question, the most conscienceless organization in the United States…” (49). The Independents were eventually eliminated under Vail’s doctrine of purchase or perish, and both him and his new investor, J.P. Morgan, both thought of monopoly as the “optimal business model” (52). Through integration and consolidation, rivals were allowed to join him and walk out of the ordeal richer rather than having to lose everything. Despite the Bell Company’s history of fighting off different rivals during the company’s growth, Wu writes:

“There is no evidence that he [Vail] ever put AT&T’s profitability ahead of its obligation to serve” (60).

Yes, Bell had done some aggressive things in its advancement, but all of it was to ensure a monopoly over the industry because Vail truly felt that it was the best way to serve the public. In the film industry, the fight between Hollywood and “The Trust” ended with Hollywood’s own triumph against the larger New York conglomerate, but they themselves would go on to make their own massive entertainment companies. Even though people like Adolph Zucker and studious like MGM and Paramount had “hunted down and destroyed most of the independent theaters, producers, and distribution companies” (98), it appears that Hollywood still advanced film as an art form under their stewardship whereas the previous Trust conglomerate wasn’t as progressive. 

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While I don’t believe monopolies are necessarily a good thing, I am convinced that companies can still contribute to the greater good of human development while still acting selfishly for the sake of profit. Just because the underlying goal of any enterprise is to increase their bottom line, I think Wu proves that even history’s largest businesses can still make positive contributions to society and thus, act morally. Ultimately, the issue comes down to whether a company’s positive contributions outweigh their selfish acts. With the case of AT&T and Hollywood, I think they did.

Trackbacks

  1. […] of morality and whether it can be present in the context of a business monopoly on this very blog in a previous post. I write this because I’d like you, the reader, to know that I do understand the importance […]

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