Current Affairs

Big Business and its Bottomless Bootlickers

Some economists say that big business is good, actually. Are they correct? They are not.

A lot of us get hot under the collar about big business. When prices for life-saving insulin double in five years, when a third of Americans can’t afford a $400 emergency expense, when it turns out Facebook built its platform by allowing app writers to download our personal data by the terabyte, and when we learn the energy industry knew about climate change in the 1990s but still denied it incredibly loudly for years. For example.

But not Tyler Cowen, economics PhD and author most recently of Big Business: A Love Letter to an American Anti-Hero. We reviewed Cowen’s book Stubborn Attachments in the January-February issue of this magazine, and found it flagrantly evaded discussing the limits to endless economic growth. In this new work, Cowen has taken his purposeful ignoring of capitalism’s problems to a fresh arena, going to great lengths and new lows to avoid dealing with the incredible power of concentrated capital. As a genre, love letters are not necessarily known for their restrained argumentative rigor, but Cowen gushes over global mega-corporations with a suitor’s brainless ardor. 

Cowen styles his book as a no-bullshit, let’s-get-serious defense of big business. These young people don’t love capitalism enough, with only 42% supporting it and 51% opposing it in a survey he cites, leading him to conclude with a straight face that “Business is like the parent who tells you that you can’t have everything you want all the time.” Stupid bratty kids, throwing temper tantrums at our fine economic system! The grown ups are here with facts to overturn your feelings-based socialism.

Grasping at Straws

The first thing to recoil from is how Cowen addresses his opponents’ arguments. His book is billed as a response to business’ “critics,” and yet their appearances are cameos at best. Each chapter has an opening paragraph meant to indicate the views of the critics of business, a natural thing to include. However, most of these let-your-enemy-have-their-day-in-court moments are transparent bad-faith caricatures. His chapters begin with a single short paragraph with at most an article title or single sentence from a (usually mainstream liberal) critic, or just as often only a sentence-fragment-length caricature of a hypothetical “critic.” One chapter has a single paragraph with nothing more than the titles of critical books; another represents the left not with Jacobin articles or the speeches of Senator Sanders, but with a tweet from “Dina.” Generally, faceless “critics” aren’t cited, but “they say” all kinds of anti-business things–somehow it’s even less than a “strawman” argument where you debate a weaker version of an opponent’s ideas, here they don’t even appear.

For example, Cowen endeavors to prove that working for giant corporations is actually something people enjoy. He faces a challenge here, because when people are asked to rank the activities they enjoy, “working is next to last in terms of producing a positive mood,” and people would generally much rather be having sex, chatting with friends, relaxing outdoors, or praying (in that order). But, he says, there are different data showing that we do enjoy work: 

“The aggregate data on work hours are striking, and they show that Americans have fairly positive attitudes toward work. For instance, if we consider weekly work hours per American, that number rose from 22.34 in 1950 to 23.94 in 2000, hardly a sign of work falling out of fashion…. The reality is that preferences for work haven’t declined nearly as much as commentators had been predicting earlier in the 20th century.”

Here, for the normal human beings among our readers, who may be unacquainted with the bizarre libertarian worldview, it is worth explaining that right-wing libertarians generally treat “agreeing” to do something as synonymous with “choosing,” “wanting,” and “preferring” to do something. If you agreed to sell one of your organs to a black market organ-grinder in order to pay your child’s medical bills, it means you “wanted” to do so. There is no compulsion under capitalism, meaning that even if the only job available involves allowing Jeff Bezos to perform disfiguring medical experiments on you, you are simply a voluntary participant in a mutually beneficial transaction. 

So for Cowen, the evidence that people have “positive attitudes” toward work and “preferences” for it is that they now work more than they used to. By libertarian reasoning, Dickensian London was a place where hard labor was very much “in fashion,” as proven by the number of people who chose to spend 14 hours a day doing it. Cowen says that John Maynard Keynes’ famous prediction of a coming 15-hour work week clearly  “overestimated the value” that people place on leisure, which he attributes to Keynes being a well-to-do Cambridge academic out of touch with the soul of the working man—while Cowen, we must presume, is a blue-collar spot welder in addition to his duties as a George Mason economics professor. (Actually, while we have spoken as if the assumption that “acceptance equals preference” is fringe libertarian madness, it is worth noting that it has been a major assumption underlying bipartisan economic policy for the last 30 years, and is what leads liberals like Nicholas Kristof and Matt Yglesias to defend sweatshop labor as Actually Good.)

Cowen argues that people find fulfillment in work, that it gives them Meaning And A Sense Of Purpose, social connections to others, etc. He says that many people do jobs helping others, and many find a sense of safety at work. Yet he also introduces something of a paradox:

“Having a decent job is a major source of happiness, satisfaction and social standing. That is one reason I have moved away from the idea of a guaranteed annual income; if it is set at decently high level, too many people will use it as a reason not to work…”

Note the tension here: work is simultaneously something that makes people extremely happy and something that they’d instantly stop doing if they had enough money. Of course, if you’re a leftist, you know how to make sense of this: people like “working,” what they hate are their jobs. Cowen is right: there is intrinsic pleasure in helping other people, in creating things, in being active and useful. Why, then, do people rank their jobs dead last on the list of things in their life they enjoy doing? Cowen hypothesizes that it is because we do them for long periods of time; if we had sex for as many hours a day as we work, he says, we might be similarly weary of it. (Though this would imply that, contrary to the theory of one Tyler Cowen, people aren’t working more because they want to.) A more obvious answer would be that many jobs fucking suck.

Anthropologist David Graeber, in Bullshit Jobs, and philosopher Elizabeth Anderson, in Private Government, have given useful observations on why this is. Cowen cites both books, but gives some signs of not having cracked them open, e.g. not quoting a single passage from them. Graeber points to the large amount of needless, meaningless work generated by capitalism—for example, jobs kissing rich people’s asses or selling status-enhancing goods that nobody actually enjoys. Anderson highlights the tyrannical structure of the corporate workplace: it’s like a government you can’t vote on, that gets to tell you what to do without your having any say. If the CEO of Walmart decides that on “Smile Day” every greeter will be required to wear a terrifying smiley-face mask on penalty of termination (this is not a real thing) or that before every shift employees will need to perform a “Walmart Cheer” in unison (this is a real thing), there is nothing workers can do about it. (Unless they are unionized, which they are not.) 

Cowen doesn’t spend much time thinking about the nature of the workplace, or how employers’ power over workers affects our day-to-day experience. His only response to Anderson is that “the threat of workers leaving… can enable and enforce a lot of worker freedoms,” when her point is that it doesn’t do that at all, because if it did then the American workplace wouldn’t be run on the junta model. Such is the level of argument throughout. Cowen sets up a straw man, then doesn’t even knock it down. At best, he sort of swipes at it listlessly. 

Illustration by C.M. Duffy

Consider his chapter “Are businesses more fraudulent than the rest of us?” It’s an oddly-phrased question, because we don’t generally hear leftists saying specifically that businesses are “more fraudulent than the rest of us,” but it’s worded that way because it’s the question he finds most convenient to answer. First, Cowen concedes that “entire sectors of our corporate economy are based primarily on ripping off consumers,” which is a pretty big concession. But then he tries to show that corporations do not commit criminal fraud at a greater rate than the general population, with the implication that profit-seeking does not incentivize dishonesty. He writes: 

“Personally, I would be hard-pressed to find a big business that lies to me as much as—presumably—my friends, family and closest associates do. [note: this may say more about the quality of Cowen’s relationships than about capitalism.] Shell may send me misleading information on a few big things—say, about climate change, but in my regular interactions with them… they are telling the truth, as indeed it is usable gasoline that comes out of the pump… The posted price corresponds to the price I am actually charged.”

To prove that CEOs themselves are honest, he uses, among other things, a comically irrelevant non sequitur: 

“Critics of business suggest that the commercially minded are among the least honest people in American society. But no, the data tell a different story. The books that are most likely to be stolen from libraries are books on ethics.”

Cowen asks us to compare Shell’s record with the record of ordinary humans, citing the propensity of people to lie on their dating profiles and résumés. But notice a few things about this. First, fossil fuel companies systematically misleading the public about climate change for decades is not just “a big thing,” it’s a colossal act of civilization-threatening criminal misconduct. And if we want to know why Shell would lie about that, but doesn’t lie about the price of its gas at the pumps, there’s a fairly obvious answer: because fraud of the latter kind is illegal while fraud of the former kind is not. Why were the 19th and early 20th centuries infamous for the quantities of snake oil and quackery sold on the open market? In part because it was the era of caveat emptor, i.e. “buyer beware,” i.e. “sucks for you, buddy.” We are, thankfully, much less libertarian about outright scams these days. 

Why do Shell executives not do things that would get them sued or sent to prison? Because those things would get them sued or sent to prison. If the same consequences hung over anyone who fibbed on a dating profile, you’d probably see fewer false professions of feminism among the Nice Guys Of OkCupid. To see what capitalists are really capable of, you’d have to look at them in an environment where no profit-seeking behavior, however deceptive, was subject to legal sanction. In fact, we can predict what such a world might be like from what companies already do. Lying about climate change wasn’t illegal, so they did it, and while Shell may not post outright inaccurate prices at the pump, they come as close to it as legally permissible—we all know the 9/10-of-a-penny trick that is used to subtly make us think gas is a tiny bit cheaper than it actually is. (Don’t get us started on the way Cowen cites statistics on shoplifting to show ordinary people are frequently dishonest, without noting the tens of billions of dollars in wage theft perpetrated annually by employers.) 

Speaking Nice to Power

Cowen’s main argument, returned to frequently, is summarized at the front of the book: “All of the criticisms one might mount…pale in contrast to two straightforward and indeed essential virtues. First, business makes most of the stuff we enjoy and consume. Second, business is what gives most of us jobs.” In other words, capitalism and business are the system we have now, which indeed produces goods and employs us. It’s the “Stalin industrialized Russia” pattern of reasoning: for-profit companies have produced innovation and economic growth, therefore this growth was produced because of the for-profit structure of companies. It can be applied to any social system—doesn’t the King provide us with the security to grow our crops? Doesn’t our perfect Soviet system give us work and bread? The fact that our current social system produces goods on a basic level is not quite as ringing an endorsement as Cowen presumes. It doesn’t work logically, as the Stalinism and feudalism parallels show, but it’s also factually false: as Rob has documented at length in this magazine, the public sector’s role in innovation is frequently obscured to serve the mythology of the Great Benevolent Entrepreneur. Cowen is not wrong to give companies credit for some innovation; as he points out, “Facebook also has been a leader in the development of targeted advertising” and has  “revolutionized how companies communicate information about their products for individuals.” Innovations in invasive advertising are indeed one of the bounties capitalism has proven itself most capable of delivering. 

How much lazy reasoning is it worth going through? Cowen’s defense of pharmaceutical companies is that “pharmaceuticals are among the most effective of all medical treatments,” which is an insufficient response to the evidence that companies are incentivized to prioritize treatments over cures, charge as much as possible regardless of a drug’s cost to the company, and aggressively attempt to create as much addiction as possible. When confronted with the monstrous greed of the corporate sector and its often deadly consequences, Cowen tends to reply that this behavior is the exception rather than the rule, but what an exception! (These instances have a Pinkeresque “for every Black man the police kill, think how many they don’t kill” flavor to them.) 

The failure to engage with serious critics is borderline academic malpractice. It means that Cowen doesn’t talk about the things that critics of big business actually talk about: exploitation, inequality, preventable poverty. It means that he makes points like individuals commit more illegal tax fraud than corporations without thinking perhaps the reason that corporations don’t commit illegal tax fraud as much is that they pay a lot of money to make sure their tax avoidance schemes are legal.  It means he means that he ignores direct critics like economist William Black of the U of Missouri-Kansas City, who specifically criticized Cowen’s sunny, hands-off views of CEO-board control fraud, especially in the banking sector. 

We try harder here at Current Affairs, dear reader. Nathan’s articles begin with full step-by-step descriptions of conventional conservative positions, and with enough guts to even state them in an at least moderately favorable manner, so readers can actually have a moment in the headspace of a political opponent. Rob’s book Capitalism vs. Freedom quotes the Pinochet-advising arch-conservative economists at paragraph length. If you’re serious about debunking arguments and not just out for cheap PWNAGE, you want to go the intellectually strongest supporters of the other side and really let their words be presented, and referred to faithfully in your own retelling. That way you can not only feel confident in meeting the full force of the other side, but you know you’re arguing against the right points!

Debating imaginary idiots rather than actually existing left economists and social critics leads Cowen to clumsily put many Big Businesses into the Critics of Big Business slot. Early in the book we get this: “The media are perhaps the biggest villain when it comes it criticizing business,” simply since they have a bias toward headline-grabbing negative news. This of course is problematic because 

  1. The media are big businesses—the news networks belong to huge corporations like AT&T, Disney and News Corporation, and often operate on ad-based business models reliant on selling commercial ad time to other big companies, so it’s hard to imagine they’ll abide much shitting on themselves and their customers, even if it’s favorable for clicks.  
  2. Media-monitoring groups like FAIR have documented extensively that pro-business viewpoints hugely dominate on the news networks, which are after all corporate property, and in particular representatives of labor are almost completely unheard from.

Let’s go into a bit more detail one more of Cowen’s defenses of big business, because it’s important to understanding what he’s missing, namely the power of concentrated capital. In the chapter “How Monopolistic Is American Big Business?” Cowen wants to show that whatever big businesses are, they are not monopolies. That is, they’re big, and their bigness is good, but they are not so big as to be too powerful. 

Now, one quite conventional way to analyze any particular market or industry is with a “concentration ratio,” a  simple measurement in which the four (or alternatively eight) biggest companies in the market are added up in terms of their market shares—the proportion of the market’s total production that comes from each firm. So a very high concentration ratio for an industry means it has big companies, large even when compared to the overall market. This suggests that big business’ strategies will be based on their power within the industry, like using their huge scale to bully suppliers or to crush upstart rivals.

And yet Cowen’s monopoly chapter has almost no concentration ratios cited. Instead, we’re treated to Cowen repeatedly telling us that the widely-used metric is irrelevant, or that even though the numbers “have gone up,” or “have risen,” “you shouldn’t worry too much about rising concentration ratios.” Suddenly the hard truths of data are shoved aside, and I have to say that even a non-economist reading this text must become a little suspicious—why are these values referred to constantly only to disparage and dismiss them? By my count, Cowen refers to elevated concentration ratios nine times in this chapter, and brings himself cite only two. One is in the historically less-concentrated apparel markets, the other in manufacturing, which with its economies of scale is much more big business-prone. But even here Cowen manages to dismiss the issue, with a tool that American economists have relied upon for decades to disprove fears of market power—low prices.

Seeing Poorly

See, in the standard economic model of monopoly (or other markets with just a few big companies, called “oligopoly”), giant companies with control over a market have a classic play where they deliberately restrict supply in order to inflate the market price for their products, and therefore increase their own profits. While this is definitely one possible strategic option for giant companies, it’s clearly not essential for them—even huge powerful corporations may keep prices low for a period, in order to gain market share or to crush a weaker rival. But for years, economists have argued against any public concern about towering capitalist assholes like Jeff Bezos by pointing to low prices, and indeed even formal antitrust trials against clear corporate monopolists now end in business victories when their attorneys can point to a history of low price points. 

Don’t take our word for it—read this book (okay, maybe not this book) or conservative news sources like the Wall Street Journal, and you’ll discover that as long as some corporate giant hasn’t yet used their power to openly screw consumers with high prices, there’s no need for concern. Low prices are the ‘At least the trains ran on time” of big capitalism—a basic concession to daily stability while the power centers gather strength in the shadows. What Cowen and his classy ilk never bring up is the wide scope of market power, the ability to decide outcomes in the economy, which may or may not require hiking prices today. (In fact, to the extent that Cowen thinks monopolistic practices occur, he says we should relax. In a remarkable passage, he says that if a single company were to gain control for the market for “say, apples, movies, or ski boots,” people could just stop buying those products and “spend more time on Facebook,” the “universal substitute” for other human goods. “You call it addiction, I call it trust-busting,” he says, though he admits that the theory wouldn’t work very well if the product in question was, say, an artificial heart that you needed in order to live.)  

Crucially, other conservative sources openly discuss real market data like concentration ratios, and take them quite seriously. The Wall Street Journal, for example, cites market share information and the resulting ratios very regularly, and sometimes goes further into the actual ownership of today’s giant corporations too, like when it noted that “stock ownership is concentrated among the wealthy,” a conclusion backed up by ample research. (Cowen, like Trump, cites the rising stock market as part of the case for big business, without diving into the question of who owns the stock.) 

If you actually look at the data on market concentration today, you can see why Cowen shies away from this embarrassing data. According to the Economic Census of today’s markets, the eight largest software publishers code programs that earn half the market’s income. The four biggest snack food corporations produce over half the total, and 80% of US pet food comes from just eight firms (often misleadingly labeled as separate brands), both being classic oligopolies. And of course the new Silicon Valley tech giants are such colossal monopolists (or at best duopolists) that even the stifling reactionaries at the Economist called them “out of the box monopolies.” That should be embarrassing to Cowen, but he has some even more monumental doozies in the book. Early on, he responds to an unspecified person on Twitter making a vague complaint about eyeglass stores. “But perhaps eyeglass companies should instead be applauded for competing against each other to make this service as cheap as possible,” Cowen writes, patting himself on the back for having stood up to Dina on Twitter.

But as any economist with a passing familiarity with modern market structures will tell you, the American eyeglasses industry is in fact utterly monopolized. In a case that has become notorious among economists whose goal is not to polish the balls of Corporate America, the Italian glasses behemoth Luxottica has rolled up the entirety of the U.S. market. Let us yield the telling to Barry Lynn, the prominent pro-capitalism but anti-monopoly writer, describing in his stupendously good book Cornered a US suburban mall: 

There are four retail outlets here: LensCrafters, Knighton Optical, Sears Optical, and Sunglass Hut…I am treated to a mall tableaux that, had I not done my research beforehand, would surely have convinced me I was wandering through a well-kept garden of competition…Thanks to my research, I know that LensCrafters, Sears Optical, and Sunglass Hut are all owned by the same company, the Italian eyewear conglomerate Luxottica…Not only does Luxottica sell products under its own name and that of Ray-Ban, it also makes what is sold under such names as Dolce & Gabbana, Donna Karan, Ralph Lauren, and Tag Heuer.

(Incidentally, you may have heard of Lynn for being fired by a well-known Obama-aligned think tank, the New America Foundation, after supporting the European Union’s fine on Google for its anti-competitive practices. Google’s then-CEO, Eric Schmidt, was a major donor to the Foundation and was evidently most displeased by this mild criticism and exercised some simple market power to presumably press for his firing, carried out by Foundation president Neera Tanden. Luckily we have Cowen to reassure us, because since Google hasn’t raised any prices, nothing bad is possible!) 

Unsurprisingly, Cowen devotes a chapter to Big Tech—the giant Internet companies like Google, Amazon and Facebook. This makes sense for a defender of business, since these Goliaths have been racking up the headlines, mostly bad, like Facebook’s notorious data insecurity or Amazon’s barbaric treatment of its workforce. His chapter is titled “Are the Big Tech Companies Evil?”, avoiding again the basic question of whether the companies are powerful, for example being able to get critics fired, using the childish-sounding “evil” instead.

Cowen admits to major privacy concerns, and even suddenly concedes that companies like Google may be “natural monopolies,” and abruptly adds that this “is the way a lot of markets are supposed to work,” rather a surprise after 104 pages describing markets as fully synonymous with competition and lots of scrappy independents. And indeed, in reality the online tech giants like Google tend to be monopolies or oligopolies, due to network effects—the dynamic where some services become more valuable as more people use them. The classic example of this is a telephone—in the early days, as more people got phones and joined the telephony network, your phone gets more valuable as it has increasing numbers of people or businesses you might potentially call. 

Facebook has a semi-monopoly for the same reason—people join the network their friends are on, and when your friends join, there are more acquaintances you can communicate with and platform gets more valuable to you. Google’s search monopoly (with a market share north of 90% on mobile) owes to network effects originating in data collection—with every search since its creation, Google has kept a record of who searched for what, which links were clicked on, if the user clicked a different link instead, and so on. This means Google has an enduring advantage over its limited competitors like Microsoft’s Bing, who lack the same bottomless ocean of hoarded data Google controls—another form of network effect. But Cowen blandly repeats his earlier claim that monopolies won’t last, adding “There is no particular reason to think Google will dominate” in the future. 

But in fact, the observant reader will discover that the very concept of network effects does not appear in the entire chapter on Big Tech. Meaning, Cowen doesn’t acknowledge this important economic process and then explain why markets and business are still good, he simply omits it entirely from the discussion. Crucially, network effects and even their tendency to lead toward monopoly are acknowledged by pro-business writers and conservatives—for example, the Wall Street Journal columnist Greg Ip wrote that “Digital markets do have features that tip toward monopoly: ‘network effects,’” before trying to content his audience with mild government regulation. Or how about the pro-Tory Financial Times, which recognized a major network effect where “customers, once they have chosen a program, tend to ‘groove in’; learning to use software takes time, and information is often saved in proprietary file formats, so switching programs is painful.” This explains “the tendency of market leaders to get even further ahead…The winning firm can invest that money in developing new products, lengthening its lead.” In the end, “Monopoly power becomes pervasive.”

Cowen even adds that “the benefits of the tech companies still far outweigh their costs, as evidenced by how few Americans are trying very hard to opt out.” But of course a basic feature of networked markets is the above lock-in or groove-in dynamic—it’s a major nuisance moving all your photos off Facebook and onto another social media network, let alone switching your contacts, music, and cloud accounts from an Apple to an Android phone, plus buying new apps. This is a basic feature of markets characterized by network effects (Rob has a book on a Big Tech coming out in a few months, for those who want a more realistic treatment of the sector). Cowen is such an abject defender of established power he could use this logic to claim the old AT&T national telephone monopoly was beneficial on-balance, since so few people were cutting their cords and giving up all phone service entirely.

Perhaps what’s most remarkable about Big Business is the number of horrible things Cowen is willing to admit. Sometimes this comes in the form of statements like: “possibly the largest benefit from America’s role as global financial capital is that it helps sustain America’s larger role as world policeman and, to some extent, global hegemon.” But he also concedes that we are in many ways powerless and have our lives shaped by corporate actors that do not care about us except as revenue streams. Corporations use “powerful manipulative tools for drumming up loyalty and sympathy” and screw with our emotions and our attention in order to get us to buy things. “At least some of the freedom of contemporary consumer society is an illusion,” he says, because “we are not very much in control at all.” Yes, he says, corporations would give you a disease to make a buck, but it is best not to think about that: 

“Let’s say you walk into a Burger King. Do you really want to think they would be willing to increase your chance of listeriosis if it would boost the company’s profits a few million dollars (after adjusting for the risk of a lawsuit and bad publicity)?… You might at some level know it is true, but another part of you realizes that the risk of listeriosis is in fact quite small, and so you can go ahead and eat without being obsessed with calculating the probability of your pending illness…  You are not quite facing up to the entire truth.” 

All of this is fine. We like our corporations. They make us happy. Work is fun. We may be powerless, but we have Normalcy: 

“Most of us have turned over more and more of our lives to external, autonomous, selfish corporate agents—agents who take our wishes into account only insofar as it suits them. That sounds terrible, but in fact most people are moving ever more deeply into the corporate nexus. They love its creativity, they love its normalcy, they love the potential for fulfillment…”

This, Cowen says, is the best we can hope for. A basic income, remember, would cause us to flee the corporate jobs that we Actually Love, so we can’t try that. And lest you hope for some other economic system in which we’ll one day be free from the power plays of the one percent, Cowen has some bad news for you. On “worker-managed firms,” he claims “when workers are ostensibly in control, they can be consumed with the problem of trying to get the other workers to do the work, much as a traditional employer would be so concerned,” and indeed “many workers require some degree of external control.” Don’t hope for socialist freedom, kids, you’ll just inevitably become Mr. Burns yourself. Accept your big business overlords. Enjoy your Amazon warehouse job, your KFC Cheetos Chicken Sandwich, and your Facebook friendships, because they’re all there is in this life. You’ll accept what business gives you and, if you understand Economics, you’ll be thankful for its benevolence. Quell your hopes for autonomy, variety, and equality. Sit back and let the decisions of billionaires rule your life. There is no alternative. 

Rob Larson’s latest book, Bit Tyrants: The Political Economy of Silicon Valley, is now available from Haymarket Books.

More In: Economics

Cover of latest issue of print magazine

Announcing Our Newest Issue


A fall edition loaded with surprises and wonders! With articles on: the socialist tendencies of ants, the wretched memoirs of billionaires, the malevolence of Big Tobacco, and much, much more. Plus: nude leftists! Shapes of the month! A secret DNC memo! And a comic about Chuck Schumer meeting aliens.

The Latest From Current Affairs