HOW DO YOU SLAY A DRAGON?

There’s a law that links the various areas of social activity. It runs, if there’s a monopoly in the economy, then sooner or later you’ll have authoritarianism in politics, paternalism in social relations and some sort of totalitarianism in ideology. This happens because monopoly and all of the social and political conditions related to it are the result of certain dominating socio-cultural factors. This is particularly characteristic of Russian society. We can take away the prospect of monopoly only if we manage to change these dominating factors; otherwise we’ll simply swop one monopoly for another.

Monopoly and competition do not sit at opposite ends of the spectrum. They are not totally opposed to each other, as many simply assume. At the same time, they are doomed to be in permanent opposition to each other. But you can never completely remove monopoly, nor competition. Each is really just a way of combatting chaos. They are ways of organising social space. One has some good points; so does the other.

For example, let’s take the state’s monopoly over legalised violence. Nowadays, this is the generally recognised legal norm, but this has not always been the case. But judging by the expanding number of private armies such as the “Wagner Group”, from a historical perspective, who knows?

In a practical sense, there are two ways of fighting chaos. There’s the tough way – clamping down on it with the help of the hierarchy of power (the vertical way) – and there’s the softer way: using “the rules of the road” to find a solution.

So competition shouldn’t be confused with “a war of all against all”. Organised competition, like monopoly, is called upon to struggle against this war, but using different methods.

To a certain extent, monopolies are always natural. The consolidation of capital and the associated increase in production are caused primarily by the need to increase labour productivity. In any case, until recently, labour productivity increased as the business grew larger. This is due to a number of reasons, not least because within a large enterprise it’s easier to form work patterns and implement a system of control that allows you to correct the mistakes of the workers. Of course, such factors as the concentration of resources and the stress tolerance related to this are also significant.

Even the most progressive start-ups regard the true mark of success of what they’ve created as being bought by a transnational giant. But at the same time, from the point of view of the development of a monopoly, labour productivity begins to fall away, because there are fewer incentives to perfect the production process. Why change it if it’s not broken? As a result, sooner or later any giant company becomes less efficient.

So expanding a business is positive when it’s done in a controlled way; but negative if it becomes uncontrolled. The easiest way to establish control over a monopoly is to develop competition; in other words, to put big businesses in competition with each other, providing this is kept within the boundaries of the established rules. The responsibility for this, as the arbiter, lies with the state.

The approaches to this question are generally well-known and universal. Once a monopoly controls more than 30 per cent of the market, it should be placed under observation to ensure against abuse of the system. If it goes over 60 per cent of the market, measures have to be taken to reduce the profitability of the monopoly, by stimulating other producers of goods and services. This is rather like a constant battle against buildings icing over: you have constantly to break off the largest icicles.

Monopolisation in markets is similar to fighting herpes: you can never defeat it, but you can keep it under control if you have political and economic immunity that operates effectively. But unlike herpes, growth is not an illness but natural evolution, and this has to be utilised.

The ways in which this is done can vary. It doesn’t have to be the straight-down-the-line approach of Europe or the USA. For example, South Korea is the home of the Samsung Corporation, a monopoly company. The government keeps tabs on it. It sets Samsung rigid guidelines, such as that no less than 60 per cent of its production should go for export. Should these conditions not be met, the company faces serious sanctions. You could call it competition replacement therapy. This is a very different approach, but it solves the question of control over a monopoly.

The situation changes drastically when a private monopoly becomes a state one, and turns into a state corporation. In this case, neither market forces, nor replacement therapy will work, and any competition will be destroyed by the administration.