“If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessaries of life…If we would not submit to an emperor, we should not submit to an autocrat of trade.” These are the words of John Sherman, a US senator in 1890 credited for the Sherman Antitrust Act.
Antitrust laws are anti-monopoly laws that seek to promote market competition by regulating anti-competitive conduct. These laws gained global prominence in 2001 when the US government filed an antitrust lawsuit against Microsoft.
Since 2010, the European Union has investigated several antitrust complaints against Google, finding it guilty in three cases and handing it fines of over 8 billion euros. There is currently an ongoing case by the US government against Facebook’s parent company Meta for accumulating monopoly power by acquiring innovative competitors and burying successful app developers.
Why are these anti-monopoly laws called ‘antitrust’? Until the 1880s, states in the US kept monopolies in check by preventing companies from extending their control over other business entities outside state boundaries. In 1882, an oil refiner named John D Rockefeller came up with a way to circumvent this restriction. He placed ownership of all his oil properties, located across different states, into one legal structure called a ‘trust’.
On paper, this legal tool gave Rockefeller’s oil companies the facade of being independently run within separate state borders. Having been consolidated in a trust however, the trust’s board of directors had the power to fix prices for all the properties across different states. With this new legal tool, Rockefeller built the largest and most powerful monopoly of the era. The legal mechanism he pioneered paved the way for other tycoons to consolidate their monopolies through trusts, becoming large enough to dictate prices, seizing control of the US economy.
That is when, in 1890, John Sherman pushed for what would become known as the Sherman Antitrust Act. The Act went after trusts and prohibited other anti-competitive agreements and unilateral conduct that monopolised or attempted to monopolise the market. The Act authorized the Department of Justice to punish companies and individuals violating the law.
The Sherman Act, and other antitrust laws that followed, allowed for free and open markets, which in turn, promoted aggressive competition among industrialists and sellers. It resulted in giving consumers – both individuals and businesses – the benefits of lower prices, higher quality products and services, more choices, and greater innovation.
With the antitrust laws keeping industry giants in check, it allowed for talented young men and women, from modest backgrounds and no links to industrialists and politicians, access to their country’s resources and markets. These youngsters drove innovation in the semiconductor industry in the US in the 1950s.
Robert Noyce started his own semiconductor company in 1957 at age 29, and later, in 1968, founded Intel, makers of the infamous Pentium series. He was the son of a church reverend who at times struggled to put food on the table for his family. His co-founder, Gordon Moore, was the son of a deputy sheriff with a very humble income.
At one conference in the 1980s, Robert spoke of how the semiconductor industry he and other youngsters from humble backgrounds had founded, had grown to become giants that added billions of dollars to the US economy from corporate taxes alone ($18 billion that decade). Today, Intel is worth $132 billion.
Another example of antitrust laws giving space to talented youngsters to shine is in IBM’s delayed entry into the personal computer market and Steve Jobs founding Apple.
In the 1960s, IBM was a dominant force in the mainframe computer market globally. It was best placed to introduce and mass produce PCs. However, it was so afraid of its monopoly being broken up by the government that it made a deliberate decision to watch from the sidelines as youngsters like 21-year-old Steve Jobs revolutionized the PC industry out of their parents’ garage. Steve was the son of a Syrian immigrant, adopted by American middle-class parents with no connections to politicians or industrialists. Today, Steve Job’s Apple is worth $2.5 trillion (that’s right, trillion).
This is the playbook for success for any developing country, especially Pakistan: divert and concentrate the country’s limited resources towards enacting and aggressively enforcing antitrust laws and policies; and, provide Pakistani graduates a level playing field to start their own research centres, farms and manufacturing industries in direct competition to those owned by the elite.
This will reduce brain drain, directly result in the improvement of production efficiency in the country’s agricultural sector and multiply the industrial base. The jobs created and the tax revenue generated from the burgeoning corporations will dwarf any short lived benefits gained from loans.
The last 75 years of economic policymaking in our country has deliberately kept us from this playbook. While the American spirit prides itself in being anti-kings and anti-autocrats in both politics and industry, we as a nation are in constant search of shortcuts in the form of saviours and messiahs in both domains.
As a result, whether civilian, military or hybrid governments, the first port of call for economic policy recommendations has stupidly always been to go to the same tycoons from whose stranglehold we need to free the country’s economy.
The collective outcome of economic policies over the last 75 years has therefore been stifling competition and ensuring whoever was on top 75 years ago in ownership of this country’s resources, has stayed on top.
Today, 64 per cent of Pakistan’s farmland is owned by five per cent of the country’s population (SCOPE, 2013). KSE-100 is dominated by direct or indirect share ownership concentrated in the hands of 31 families (PIDE, 2021). Parliament and provincial assemblies are filled with people who pay little to no tax while the hardworking middle class, on whom the burden of taxes is heaviest, are either entirely overlooked for party tickets or given token representation.
The economy, as a result, is one which should have defaulted many times over by now but shored up only through loans we have no plans of weaning ourselves off.
Pakistan’s 75 years has been a well-orchestrated economic heist by the elite who, along with their farms and industries, have monopolized economic policymaking in the country. Like all good heists, they use plenty of smokescreens to distract us as they continue committing daylight robbery.
Discussions on the economy are limited to technical metrics like balance of trade and current account deficits. Purported panaceas are limited to policy buzzwords like tax revenues, foreign investment, remittances and special economic zones. ‘Game-changers’ like Gwadar Port, Rabia Amjad and Amazon-listing are also thrown into the fray, each fizzling out to be replaced with a new ruse every five or ten years.
Shehbaz’s Charter of Economy and Miftah’s four principles of economic revival are the latest in a series of more policymaking by the elite for the elite.
Pakistan’s real economic remedies lie in enforcing competition and breaking up monopolies; upholding principles of intellectual property protection and speedy dispensation of commercial justice; land reforms; increasing share ownership of talented local graduates in their country’s agricultural, scientific and industrial resources; arresting brain drain; increasing political representation of middle-class Pakistanis in legislative houses; improving working conditions and giving share-ownership to workers and labourers – especially women.
These never feature in any charter or any revival plans touted by the elite. That’s because these concepts are poison to their interests as they fear competition and wealth-sharing and instead rely on concentration of ownership, preferential treatment, connections, collusion, price-fixing, nepotism, bribery, subsidies, amnesties and loan write-offs to survive.
The first step towards real structural reforms for economic revival is breaking the monopoly of the elite over economic policymaking in the country.