Mike Konczal Response to Curbing the New Corporate Power

The economy is changing rapidly thanks to new technologies. But who will be enriched—all of us, or just a handful of owners? This is a choice we can make, and Sabeel Rahman argues for the former. His call for modified antitrust law, public obligations, and corporate compliance recovers vocabulary not often found in everyday policy discussions.

But we should be careful that the language of public utilities doesn’t distract from the moral case for regulating certain markets. As Supreme Court Justice Oliver Wendell Holmes wrote in a 1927 dissent, “The notion that a business is clothed with a public interest and has been devoted to the public use is little more than a fiction intended to beautify what is disagreeable to the sufferers”—since all property is ultimately a miniature form of public utility enforced by law for the public interest. Thus the goal is not to expand the scope of public utility regulation but to protect those vulnerable to corporate power, an effort that takes many forms.

We need diverse approaches because regulation is challenging to devise and implement. Consider the portion of the Dodd-Frank Act that subjected debit card “interchange” fees to public regulation, with the rate to be determined by the Federal Reserve as “reasonable and proportional to the cost incurred.” Even after the bill was passed, reformers had to fight not only the financial industry in Congress and the courts but also the regulators indifferent to strict enforcement.

Given how hard it is to regulate private companies, we might be best served by public options. By providing a floor of quality, efficiency, and standardization, public options can offer a better form of regulation than more complicated systems of carrots-and-sticks. This was one of the major struggles of the Progressive Era—whether to promote publicly owned and managed firms or regulate private companies. In 1905 Edward Dunne was elected mayor of Chicago on a platform of “immediate municipal ownership” of key services such as water, electricity, and transportation.

Fearing corruption, most Progressives settled on regulation of private business, but the public alternative hasn’t disappeared. Many proponents of the Affordable Care Act wanted a public option added to the bill—government-guaranteed insurance that would rely on the state’s scale and pricing power to compete with private insurance companies in the health care exchanges. Another public option now on the table is postal banking, where the Post Office would provide essential banking and payment services through their large footprint across the country.

Public options such as these sound unusual to many Americans, but we already have them. For instance, through a program called Direct Express, the government provides debit cards to elderly people receiving Social Security who can’t otherwise get a bank account. The program offers a level of access and consumer protection that regulation alone would not.

Another historical model to keep in mind is the workers’ cooperative, which arose in the United States under the banner of populism. These can help to curtail the worker abuse Rahman observes. Platforms can’t deploy market power against the workers and producers who use them if those same workers and producers directly own the platforms.

Workers’ cooperatives often fail because they do a poor job coordinating hierarchies of labor and because, in many business contexts, distributed ownership of capital is inefficient. However, in the case of many platforms—think ride sharing—work is done individually, and workers already own much of the capital (in the form of their cars, for example). Thus the old-fashioned workers’ cooperative is suddenly viable in the high-tech economy.

As Seth Ackerman has written, municipalities could adopt regulatory codes that permit ride sharing only by worker-owned firms. This allows app makers such as Uber to focus on the technology, and not on their roles as employers, which is what they insist they are doing in the first place. Again, worker ownership strikes many Americans as outlandish, but it is very much a part of the American republican tradition. As the political scientist Alex Gourevitch has argued, cooperatives ground demands for worker ownership in a republican love of liberty, a desire for democratic control of corporate assets and worker activities.

There are no silver bullets with which to address today’s corporate power. But we could learn what works by recapturing the historic sense of experimentation Rahman describes.