Trusts and the Bipartisan Rise of US Imperialism

The power of the large tech monopolies has led to the return of a long-dormant American institution: antitrust enforcement. The consensus of the bourgeois press is that the period of unchecked tech mergers and acquisitions is now over. Large sections of both parties of the US capitalist class, the Democrats and the Republicans, now demand regulation or a break-up of the tech sector behemoths.

This change in direction started during the Trump administration, with the CEOs of Facebook, Amazon, and Apple all questioned at a Congressional hearing last July. This resulted in a House Committee report in January of this year concluding that these firms gained a monopoly position by engaging in behaviors—including acquisitions—that now require correction. Any such modifications will occur under President Biden, whose staffing choices would appear to signal his intent to regulate the tech industry monopolies. Far from reflecting the whims of any particular politician, the shift to an antitrust stance flows from the interests of the capitalist class as a whole in the aftermath of a decade of unchecked monopoly expansion in tech after the 2008 crisis.

The shift of the ruling class toward the regulation of tech monopolies is not limited to the borders of the United States. In China, the capitalist state has also shifted its position on the technology giants, notably reigning in Alibaba head Jack Ma and initiating a new wave of antitrust efforts. However, as such litigation does not meaningfully impinge on monopoly capital’s economic basis—private property—bourgeois antitrust action cannot solve the workers’ fundamental problems.

China has initiated a new wave of antitrust efforts, which has been seen in the reigning in Alibaba head Jack Ma. / Image: World Trade Organization via Flickr

“Antitrust” law refers to the area of law that attempts to define and regulate monopolistic business practices whereby companies act to limit competition. The word “trust” refers to a large company or collection of related companies that gain a monopoly position that allows them to set prices without being influenced by competitors in the market. Concretely, antitrust actions may block certain mergers and acquisitions, break large monopolies up into smaller companies, or otherwise modify their behavior somehow.

The rise of capitalist monopolies, and the pronounced effect they had on the country’s social life, played a major role in US politics in the early 20th century. This was a period of transition in the way capitalism operated in the country, and the government responded with periods of antitrust litigation followed by periods of deregulation. While the purpose of antitrust litigation was ostensibly to reverse the process of monopolization—with appeals for a return to an idealized epoch of “competitive capitalism”—it was, in reality, an attempt to facilitate this process while minimizing the organized action of the working class in the class struggle. The development of monopoly capitalism molded the US political system into something resembling its current form, in which both major parties serve to defend and further the fundamental interests of the capitalists.

Lenin analyzed this phenomenon in his work Imperialism, the Highest Stage of Capitalism. He described the emergence of monopolies, the eventual dominance of finance capital, corresponding to a division of world markets among the most economically developed nations. This transformation, which had reached maturity in advanced capitalist countries like the US by the end of World War I, required ever greater state intervention in critical sectors of the economy while remaining entirely capitalist.

In a distorted way, this evolution of capitalism points to the potential for socialism. Solving the world’s problems on a working-class basis will require the massive harnessing of the productive forces, coordinated by a democratically run centralized state apparatus. But this potential can only be unlocked by overthrowing capitalism and replacing the capitalists with workers as the ruling class in society.

V.I. Lenin Writing
Lenin analyzed the domination of finance capital and monopolies in his work Imperialism. / Image: George Grantham Bain Collection of the Library of Congress

The rise of the trusts

For the contending classes in US society, the Civil War of the 1860s triggered a fundamental shift. The abolition of slavery did away with the core contradiction between the Northern and Southern ruling classes and their respective political parties, and the decades after the war saw a sharp escalation in the class struggle.

The war “cleared the decks” for the unfettered spread of capitalism across the continent. And although large parts of the South languished in relative backwardness, the postwar years saw the completion of a nationwide logistics network.

The first transcontinental rail line was completed in 1869, and the industrialization of this throughway required a new level of productive output. To meet the financial and technological needs at scale, trusts formed around the railroad network, with a tremendous vertical and horizontal concentration of capital. The emergence of this new type of company flowed from the logic of capitalist production itself. In short, a specific quantity of human labor-power, expended in a massively coordinated way, can generate more wealth than the same quantity of labor-power expended in a more atomized way by several smaller enterprises.

The earliest trusts included those controlled by several prominent capitalists, including Andrew Carnegie, John D. Rockefeller, JP Morgan, and Andrew Mellon, who concentrated production in a range of industries, both vertically and horizontally, often employing the tools of high finance. The resulting process of concentration led to new levels of productivity, funneling colossal profits—and influence over the state—into the hands of a few capitalists.

The earliest trusts like those controlled by JP Morgan, concentrated production in a range of industries, both vertically and horizontally, often employing the tools of high finance. / Image: Bain News Service via Picryl

Capitalist parties forced to break up certain monopolies

As they came to dominate many aspects of society, monopolies became organically unpopular across the country. The common-sense understanding among workers, as well as many capitalists, was that monopolism was harmful. The solution demanded in the popular consciousness was to break up the trusts—to “bust” them. Workers and petty capitalists believed they shared a common interest in confronting the big capitalists who controlled the largest trusts, and broad support for trust-busting led both major parties to support occasional action to break up large monopoly firms.

In this context, the Sherman Antitrust Act of 1890 made it a crime to “try to restrain trade or form a monopoly,” passed with bipartisan support. The law was drafted by Republican John Sherman, the brother of Civil War general William Tecumseh Sherman—the abolition of slavery and modern antitrust politics occurred in the same generation.

Theodore Roosevelt of the Republican Party was one of the capitalists who played a key role in the required transformation of the executive to enforce the Sherman Act. Roosevelt was a forward-looking member of his class who had achieved some success in New York politics, eventually becoming vice president and then president after William McKinley’s assassination in 1901.

The Roosevelt administration broke up several large companies, including the Northern Securities Company, the largest railroad holding company in the US. However, Roosevelt had a more far-sighted perspective. He sought to regulate monopolies to allow for state influence over their planning and direction, wielding the concentration of industry rather than simply trying to reverse it. When Roosevelt left office, his successor, William Howard Taft, a former governor in the US colonial regime in the Philippines, also broke up several large monopolies, including the Standard Oil Company of New Jersey and American Tobacco. But as this failed to resolve the many crises confronting American capitalism, there was a decline in public support for both parties.

Roosevelt’s platform called to regulate the monopolies through close relationships with state agencies. / Image: Rockwood Photo Co. via Library of Congress

The 1912 elections and the crisis of the Democrats and Republicans

Four years after leaving office, Roosevelt again ran for president, this time outside the Democrats and Republicans, riding a populist wave as the candidate of the Progressive “Bull Moose” Party in the most electorally successful third-party presidential campaign ever. Under pressure from below and from the left, the official Democratic and Republican candidates campaigned on breaking the monopolies into smaller pieces. Roosevelt, however, offered a different perspective. His platform called to regulate the monopolies through close relationships with state agencies. In a certain sense, Roosevelt had the more progressive outlook here, correctly identifying the need to plan and coordinate the economy.

Significantly, another voice in the 1912 election also put forward the need for coordinated planning—but on a working-class basis. With 6% of the vote, Eugene Debs ran the most successful socialist presidential campaign in US history. Both Debs and Roosevelt gave expression to the masses’ anger, who understood that the old ways could not continue. Along with the more than 900,000 votes for the Socialist Party, Roosevelt’s 27.4% reflected a widespread rejection of the main capitalist parties, albeit in a distorted way.

Lenin analyzed this at the time, describing Roosevelt’s Progressive Party as bourgeois-reformist, a reflection of the crisis of capitalism:

The old parties are products of an epoch whose task was to develop capitalism as speedily as possible. The struggle between the parties was over the question of how best to expedite and facilitate this development. The new party is a product of the present epoch, which raises the issue of the very existence of capitalism. In the USA, the freest and most advanced country, this issue is coming to the fore more clearly and broadly than anywhere else.

In the end, the Democrat Woodrow Wilson won, presiding over the next period of capitalist management, which saw an even greater concentration of capital, accelerated by World War I. The capitalist class in these years expanded the powers of the federal government and established the Federal Reserve. After the crisis of the Great Depression, Franklin D. Roosevelt, a distant relative of Theodore and a member of the Democratic Party, would wield these new powers in the deepest intervention into the economy yet, with the explicit goal of stabilizing capitalism and staving off a socialist revolution.

Lessons for today

In recent months, the idea that the tech giants need to be “busted,” or at the very least, regulated with a heavier governmental hand, has gained popularity. Both the US and Chinese states are now taking aggressive steps to regulate behaviors they had previously let go unchecked. The Chinese state is arguably able to intervene in a more muscular way than the state in the US, reflecting the different historical processes that brought the capitalist class to power in each country. But shifts in both countries express the same dynamics: the chaos of monopoly capitalism, caused by the decline of competition and the concentration of industrial capacity.

History shows that the social effects of monopoly and imperialism cannot be regulated out of existence from above. In Leon Trotsky’s “Transitional Program,” he describes how the rise of monopolies forever changed the orientation of each of the contending classes:

Liberal capitalism, based upon competition and free trade, has completely receded into the past. Its successor, monopolistic capitalism, not only does not mitigate the anarchy of the market but, on the contrary, imparts to it a particularly convulsive character. The necessity of “controlling” economy, of placing state “guidance” over industry and of “planning” is today recognized—at least in words—by almost all current bourgeois and petty-bourgeois tendencies, from fascist to Social Democratic.

However, under the regime of private property of the means of production, in any attempt at controlling or guiding the economy, the massive potential for global economic planning can only be wielded in a distorted and monstrous way.

The stakes are extremely high. Among many other crises humanity faces, confronting the climate catastrophe will require an unprecedented marshaling of production over the next decade. Only the working class can do this, not by breaking up the monopoly energy firms but by bringing them into public ownership under democratic workers’ control. So, too, with the tech giants.


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