Adam Smith is regarded as the father of modern, laissez faire, free market economics. I believe, however, that his theories are being perverted by the modern trends we see in this country.
A free market assumes ample competition. Ideally, with many competing enterprises, the result will be a consumer-oriented, entrepreneurial and free society. In many ways, Smith’s capitalism was supposed to be the basis of the US economic (and perhaps social) system.
A monopoly, where one country or company controls the whole market place, is the opposite and counterpart to a free market. In certain cases, such as public utilities, it may be a necessity. Generally however, monopolies erode freedom, leaving people to the mercy of those in control. We the people are left with a complete lack of choice.
Oligopolies occur when a handful of companies dominate the marketplace. While not as nefarious as a monopolistic economic structure, it does invite collusion and reduces or eliminates true competition, while the consumers are bearing the consequences.
Oligopolies, which should be disintegrated by the enforcement of antitrust laws, are increasing throughout American society and this trend has been occurring for quite awhile. A prime example is the airline industry. Airline companies have merged, greatly reducing competition and creating little enthusiasm for fair pricing. While gas prices have decreased significantly, airline tickets remain high and the airlines are making historic profits.
While oil prices have dropped to below $50 a barrel, the CEO of American Airlines, one of four companies that now dominate the market, arrogantly stated, “we’re going to continue operating American as though oil was still above $100 a barrel.” In a true competitive market this arrogant display would result in a loss of business.
On a more personal note, I am concerned about the consolidation of healthcare companies, especially long-term care. Publicly traded healthcare companies may be rapidly approaching oligopolic proportions. This would be a disaster for the person-centered care movement and I think it’s time for this country to start enforcing antitrust laws or at least to be reviewing them. We need to prevent more oligopolic situations from developing.