By Zak Mudie
"Day 7 Occupy Wall Street September 23 2011 Shankbone 5" by David_Shankbone
The Conservative Party must side with the consumer and the small business owner to enable a true free market.
The devastation of the COVID-19 pandemic has made it clear to Britain that this Conservative Party is far from conservative. The inability to act, unprepared health services, inefficient government bureaucrats and finally complete and utter disaster on private contracting has gave cause to demand for a new direction in the Conservative Party. There must be a reformed Conservative Party with new goals, new traditions, and a new image. There needs to be a new commitment to small business, anti-monopoly policy, patriotic education, and the establishment of a British identity based on the core traditions of freedom, patriotism and optimism. The ‘New Conservative’ collection is four articles exploring these ideas.
Defeating “Top Hat” corporatism
By defeating monopolies, duopolies, and oligopolies, Britain can return to the economic system of prosperity: Free-Market capitalism. The game “Monopoly” is incredibly popular. It also takes a long time to play and tears families and friends apart. It is a disturbingly accurate representation of real monopolies, as in real life monopolies destroy markets, slowly manoeuvre into power, and finally outright eradicate trickle-down economics. This reality is something both big ‘C’ and little ‘C’ conservatives need to grapple with. For the Conservative Party, fighting for Britain’s capitalist system, not the corporatist one, is the next step in party reform, which will not only better Britain’s workers and expand our free markets, but also position the Conservative Party as the party of higher wages, larger employment, and better standards in business, and consumer products.
The active goal of monopolies, duopolies, and oligopolies is to dominate and control their respective markets, either through technically legal co-operation, or outright dominance and destruction of competition to the point you are the sole producer holding all the power. Some examples of monopolies are Google, which has a monopoly on search engines. Xbox and Playstation are duopolies in the gaming console market. The US airline industry is a great example of an oligopolistic market whereby the US domestic airline market is dominated by United Airlines, American Airlines, Southwest Airlines and Delta Airlines, according to their market shares. In the spirit of continuing the ‘Monopoly’ theme, I’ve dubbed monopolies, duopolies and oligopolies ‘Top Hat’ corporations, and tackling them will be one of the greatest challenges the Conservative Party will ever face.
Oligopolies aren’t allowed to organise price rises etc. and they aren’t openly and legally allowed to rig the market in their favours. Oligopolies know that it’s cheaper to secretly cooperate with their competitors than it is to actively try and beat each other. They do this through price leaders, whereby one of the corporations is the assumed price leader and will indicate through legal methods that they’re going to raise prices, the other corporations will follow. No one loses out, and no one gains the unfair advantage. As the prices are similar, and their corporate sizes are similar, the whole group gains as there are no clear choices for consumers on which is the best option. They all gain, they all profit and the ones who lose out are the workers and the consumers. Duopolies can act in a similar way as again it is easier to cooperate rather than compete; and finally with monopolies, they needn’t ask anyone to change anything. When you are the only provider, you have the power to set prices and more importantly to set wages. As companies merge, and the job market decreases in size, worker’s choice to pick better standards and better wages also decreases, which can force them into harsher conditions.
Now of course the left are going to say: “You can’t tell a company what to do right? This is why you need more worker’s rights. Is this trickle-down economics?”; as a conservative, I don’t believe in government intervention into a free-market, but believe it or not, when the market at the top is further centralising, and business investment in expanding jobs and wages is decreasing in favour of stock buybacks, we aren’t living in trickle-down economics, this isn’t even capitalism anymore. This is corporatism. Corporatism is anti-free market, and this is something the government has an obligation to protect against.
Data gathered by Bloomberg, suggests that between 2010 and 2019 FTSE 100 companies returned £135.9 billion in share buybacks to their stockholders. In the Covid-19 pandemic, in an effort to increase cash flow for struggling companies, Russ Mould, the AJ Bell investment director, believes UK companies have got ‘the buyback bug’. This way they return cash to investors. As the lockdowns have forced companies to sustain heavy losses, stock buybacks are an effective way of receiving more money for investors. This leads to the privatisation of profits and socialisation of losses, whereby companies use stock buybacks to gain money for investors and use government bailouts to make-up for sustained losses. In short, a small group profit, the government concedes to their manipulation, and the hard-working taxpayer is once again squeezed of their money.
As previously mentioned in the first part of the ‘New Conservative Collection’, conservatives need to understand that negative liberty requires protection from the government and corporate oppression. In an effort to do so, the government should make it priority to protect Small-Medium Enterprises or competitive corporations by actively tearing apart ‘top hat’ corporations, obstructing the path to ‘top hat’ corporations and punishing those who wish to continually profit through the manipulation of the market. The opening up of a free market means better wages, as the wider array of employment opportunities means workers have more of a free choice on where they go and profits are re-invested into the company, not stock buybacks. The free market also means that businesses will compete with each other, they will strive to make better products for lower prices and expand their employment to ensure the constant supply of their improved products.
The New Conservative Party will be a party of small business and free market capitalism. The new direction which I have outlined, and will continue to outline, promotes a better image for the Conservative Party. It will be undeniable to say that the Conservatives are not the party of the people, for it will be the Conservatives standing by our workers, entrepreneurs and the average consumer for our joint prosperity.