Watching the cheering of Amazon warehouse workers after being told they were getting a raise of $15/hour, it would be easy to see the wage bump as a great victory for working people. Senator Bernie Sanders thanked Amazon’s CEO, Jeff Bezos, profusely, “What Mr Bezos has done today is not only enormously important for Amazon’s hundreds of thousands of employees, it could well be a shot heard around the world.” He encouraged companies like McDonald’s and Walmart to follow Amazon’s lead.
With these expressions of gratitude, Senator Sanders made the case that the problem at play isn’t the power of Jeff Bezos, but that Bezos underpays his workers. For sure, this is a problem, but it is not the central challenge of Amazon. The real problem with Amazon is that Jeff Bezos controls essential infrastructure upon which nearly all American citizens rely, and he uses it to serve himself.
First, let’s acknowledge that wages are going up for 350,000 workers, and that is good. It’s important, however, to see the situation for what it is. Amazon is a powerful monopoly that undermines small businesses, extracts tax concessions and suppresses producers.
The harm induced by Amazon is very real. Take, for instance, its original market, books. According to the Author’s Guild, full-time authors have seen a 30% decline in income from 2009-2015, which corresponds with the introduction of the Kindle. Or take Amazon’s abuse of its marketplace. In June, the Capitol Forum, a newsletter for investors, reported on what appears to be a clearcut antitrust violation by the retailing division. Amazon eliminated third-party merchants who sell a particular kind of replacement refrigerator water filters from its marketplace, and then it became the only seller of that product. It then raised prices on those products. Amazon had data on this marketplace of how much was sold and for what prices, and it used this surveillance of possible competitors to take over a market. This is leveraging monopoly power to cut other players out of the market and increase prices.
This is happening in more than one product line. Said one merchant, Amazon is “supposed to be a fair and open marketplace, and that’s changed”. They are “constantly looking to cut you out” and “they’ve been locking the categories down”, he added. And it is happening not because Amazon is the best player in the market, but because it is the market. It sets the rules to shift the competitive landscape in its favor, and that is simply unfair coercion. Monopolization is a form of theft, and raising wages slightly for a small subset of the people affected by theft doesn’t come close to real redress.
It’s hard to convey just how much oppression Amazon is engaged in. Amazon uses cheap capital and gatekeeping power over customers and increasingly fulfillment to exploit small businesses, merchants, big businesses, white-collar workers, logistics companies, farmers and authors. It is extracting tax concessions from local governments, procurement power over government purchasing, trade favors in the new Nafta, and sole-source cloud computing contracts from the Pentagon. When placed in this context, it’s clear there’s something disturbing about honoring a lord like Bezos for raising wages in a tight labor market. This isn’t liberty, it’s subservience.
In 1913, Woodrow Wilson attacked this philosophy of pity politics by saying, “I don’t care how benevolent the master is going to be, I will not live under a master.” This was in the midst of a great attempt to break up the banks and monopolies then dominating the American economy. “That is not what America was created for. America was created in order that every man should have the same chance as every other man to exercise mastery over his own fortunes.”
What Wilson was saying goes back to a very deep strand in American history, a suspicion of concentrated financial power. This American political economy ideology was organized around protecting the citizen – worker, the engineer, the businessperson, the artist, the creator and the farmer – from the financier or monopolist. There were many different mechanisms to protect producers, like patent law, copyright law, labor law, farm supporters, bankruptcy law, pricing laws, small business lending and even the post office. This is what Bernie Sanders was drawing upon when he sought a higher minimum wage. Let us protect the worker by raising his or her wage through statute.
But there’s a far more important element of this ideology, and that is placing restraints on the capitalists’ ability to manipulate and control the citizen. These restraints took the form of antitrust law, laws against predatory pricing, financial regulation, central banking, and progressive tax structures. Producers had the power to protect themselves, and capitalists had the power to invest, but not to dominate. These restraints disappeared in the 1970s.
Recently, because of the power of institutions like Walmart and Amazon, we’ve seen calls for a return to traditional antitrust enforcement focusing on market power. Both the competition authority in Europe and Senator Elizabeth Warren have noted Amazon’s deep conflicts of interest where it controls the marketplace on which it also sells goods directly. Congressmen Ro Khanna and David Cicilline both questioned Amazon’s acquisition of Whole Foods.
Bezos is hoping that by paying a bit more to workers, he can avoid scrutiny of the massive monopoly power he exerts over the American political economy. It’s important he not be allowed to get away with it. If we want to govern ourselves, we have to stop thinking like serfs and asking masters for better treatment. We must demand liberty, and that means more than $15/hour in wages from a monopolist.