The big are getting bigger- Adam Smith

Yanis Varoufakis, the former Greek finance minister, clearly a fan of Adam Smith, gave a speech at the Edinburgh Book Festival, this week. His irritation with the rise of corporate power, oligopoly and monopoly which Smith was often concerned about.

One of his quotes “People of the same trade seldom meet together, even for merriment and diversion, but the conversation often ends in a conspiracy against the public, or in some contrivance to raise prices.” The fewer powerful player often hangs around together, and make it easier for the “conspiracy” to kick off with the determent for the ordinary person.

228 years since Smith’s death capitalism might have been refined, but sadly not so, as a recent IMF report explains the sharp rise in the “economic wealth and power” of big companies in sectors from the technology, airlines, auditing and pharmaceuticals.

The evidence rested on tracking  average mark-ups on goods and services provided by listed companies in 74 countries.

According to the IMF, the mark-ups in advanced economies have significantly increased since the 1980s by 43 per cent on average and is driven by superstar companies in each sector, as the labour share of income declines in industries where market power rises.

Concentrated markets are connected with lack of investment and innovation and because of regulation or the endless lobbying habits of big business, even Google had 120 lobby meetings with a commissioner, Cabinet minister or director-general of the EU between 2014 and 2016 according to  lobbyfacts.eu.

The big are getting bigger and small are getting smaller. This what exactly what Karl Marx said it would, as it pushes the wealth towards the few. The dedicated crony capitalist tsar wanted legislation to break up accounting firms by banning them doing both audit and corporate finance work.