The Rise of Oligarchies and Monopolies and What this Means for Businesses

The Rise of Oligarchies and its Effect on Consumers

A noticeable phenomenon in the business world ever since the 1970s has been the rise of large corporations whose turnover sometimes exceeds that of the budgets of entire nations. These conglomerates or oligarchies are the direct result of neoliberal policies pursued in the West starting from the 1970s and in the other parts of the world starting from the late 1980s and early 1990s. These monopolies and oligarchies have become so powerful that their operations and size resemble that of entire nations and hence, there are several implications for business and society.

First among those are the consequences that consumers must pay because of these oligarchies.

For instance, if we take the case of Microsoft and its operations in the United States and the European Union, we find that by bundling its operating system along with the browsers and other software, Microsoft in effect is asking consumers to buy everything from them and only what they make.

The result was the severe penalties imposed on the company in the EU because of anti-trust legislation and court rulings.

Anti-trust refers to that aspect of the legislative actions that prohibits companies from forming monopolies where consumers are bereft of choice.

Some Downsides of Oligarchies

Talking about choices, it is clear that these oligarchies and monopolies force the consumers to buy their products since they dominate the market.

Apart from this, the fact those monopolies create situations where consumers cannot fight back because of the immense clout that these companies have. Of course, this has been prevalent ever since the modern economy was founded in the early decades of the 20th century.

For instance, the pioneer of the Assembly Line manufacturing method, Henry Ford, famously proclaimed that you can have any color of the car as long as it is black. This shows the immense sway that oligarchies have on the markets in which they operate.

Further, oligarchies contribute to high prices, as they know that consumers would not have much of an option but to buy from them. Though efforts have been made all over the world to curb the power of the oligarchies, most nations have been unable to make headway simply because these oligarchies are too huge.

For instance, in the US, the breaking up of the telecom behemoth, Bell Labs, into what has been called the splitting of Ma-Bell into baby Bells was one such action that contributed to the consumers’ and their rights. However, it was soon found that each of these split companies was by itself a mini monopoly. This shows the fact that as long as there exists a market system where free run is given to the corporations, monopolies and oligarchies would continue to flourish.

It is not all bad! Some Positive Effects of Oligarchies

Of course, this does not mean that there are only bad things about oligarchies.

Among the positives is the fact that by having predominant position in the market, oligarchies can ensure that they reap the benefits of economies of scale and consequently are in a position to pass the benefits to the consumers. However, whether this happens in practice or not is left to the regulators and the governments concerned as they have an important role to play in not only forcing the oligarchies to conform to free and fair competition, but also to regulate them so that the negative aspects are not allowed to flourish.

Further, oligarchies also contribute to the economy through their corporate social responsibility efforts and this can be seen in the example of the TATA group in India that is known as much for its products as for its good work done in the regions in which it operates.