Airlines Merger: Competition vs. the Great Trusts

Reuters reports that “AMR Corp and US Airways Group on Thursday unveiled an $11 billion merger deal after months of negotiations.” With American Airlines currently entangled in bankruptcy proceedings, the deal must be approved not only by American and European regulators, but also by a judge.

The new American Airlines resulting from the deal would boast revenues of close to $40 billion and offer nearly 7,000 flights per day. The CEO of AMR, parent company of American Airlines, told Neil Cavuto on Thursday that he “think[s] this will actually enhance competition.” Clearly the corporate chieftain class either thinks we’re not paying attention, or regards our understanding of competition as very limited at best.

Interested observers should ask what makes such mergers possible and whether they are the results of legitimate, free market competition, or something else entirely. Market anarchists contend that global capitalism, exploiting labor and monopolizing natural wealth, is a phenomenon quite distinct from free and open competition, embracing all kinds of invasions and hindrances that a real free market system would not brook.

Airlines epitomize a system of big business cartelization that grows up out of huge cost barriers to potential market challengers created by legal and regulatory requirements. Politicians and CEOs would have us believe that many if not most of these cost barriers to market entry are inherent in certain businesses — the air travel industry among them.

Contrary to the rhetoric of “unbridled” markets, however, airlines are among the corporations most entangled in federal regulatory structures — and that’s just the way they like it. Even in such a restricted and regulated environment, economist Robert J. Carbaugh says, “Passengers flying at dominated airports typically pay about 40 percent more than do their counterparts flying at airports where competition is strong.” In air travel as in every other area of commerce and industry, full-blown competition, with all of that messy down-bidding for consumers, is the great enemy of ruling class dominance.

The competition advocated and envisioned by anarchists will see not only more firms competing against one another, but also competing against the kind of self-sufficiency and independence that results from equal access to capital. In contradistinction to capitalism, a system of monopolization made possible by the state, market anarchists hold that a freed market would be the deliverer of labor and of consumers.

Where today’s corporate leviathans like American Airlines (the largest airline in the world, assuming the merger’s success) can merge and acquire their way out of competition, a system that wasn’t rigged by the state would invariably find enterprising companies ready to undercut. Anarchists such as Benjamin Tucker predict that in the absence of state plutocratic maneuverings, competition would indeed be so fierce as to completely eliminate profit, price and cost meeting in a system of equal exchange.

However far-reaching the changes furnished by real competition, it is surely preferably to the present system of business-government collusion as represented by the airlines. Government doesn’t protect us from monopolists; it empowers them to eat us alive.

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory