For the past two decades, digitalisation and automation have led to a handful of companies growing at an alarming rate. Most of them are IT companies benefiting from the "network effect", a concept describing that the value a user derives from a digital service depends on the number of users utilizing that same service. For example, no one will be interested in a small messenger that none of their friends use or shop at an online retailer that has only a very limited assortment if they can connect with millions of people on Facebook or choose from an unlimited supply of products on Amazon. A second reason for the extreme growth of a few companies is that in today’s economy, due to the vast costs of achieving economies of scale, the importance of massive capital is ever increasing, favoring big conglomerates and forcing smaller businesses out of the market. Due to these characteristics of modern tech companies, they tend to form large monopolies with virtually no competition.
These developments cause a vast variety of issues that will only become worse in the future.
One great problem is the overwhelming direct lobbying power that these companies have. Giant corporations have the liquidity to drastically influence politics and the public debate by funding news outlets and think tanks advocating for their ideas or by donating large amounts of money to political parties who, in return, stand up for their interests.
Secondly, most single nations are unable to regulate these giant tech companies, since imposing strong regulation would just cause them to move somewhere else, thus severely damaging the economy. Because the nations are competing for these corporations and want them to establish facilities in their territories, they lower their standards, try to undercut competing nations by offering the lowest taxes and turn a blind eye when the businesses violate laws or conditions, a situation known as the "race to the bottom". Moreover, some companies grow to an extent where they are deemed "too big to fail", meaning that the countries they operate in could not afford to let them go bankrupt without causing a major economic crisis. This basically grants these corporations a carte blanche, making them immune to consequences for unlawful activity because they will be bailed out in case of heavy losses.
The third concern is that these giant companies crush their competition by either competing with rivals on their own platforms, which gives them an absurd advantage, or by simply buying up startups that might become competitors in the future.
And lastly, such large enterprises have the power to seek and exploit every single loophole in the global, heterogenous tax system, allowing them to legally but illegitimately avoid billions in taxes every year.
These four issues boil down to two major threats: the subverting of fundamental principles of our economic system and the undermining of our democracy.
If the multinational megacorporations can crush all rivals and can always rely on being bailed out in case of heavy losses, they have virtually eliminated the underlying principles of our current economic system - competition and the free market. The market is not free if the consumer has no choice but to use the services of a small group of companies, and there is no competition if the largest corporations are saved time and time again when they are on the brink of bankruptcy.
If single nations do not have the power to regulate multinational companies or to hold them accountable for their actions, and if these enterprises do only pay marginal taxes and spend millions on funding lobby groups and misinformation campaigns, they erode democracy all around the world.
In the face of the fact that most single nations do not have the power to regulate multinational megacorporations anymore and even large unions of states like the European Union are struggling to do so, a global, federal democracy is needed that reestablishes democratic control over these enterprises.
Global laws must be enacted in order to prevent businesses from becoming too large and powerful, and global courts must be established which have the power to hold companies accountable for their actions. Labour and environmental standards around the world need to be homogenized and taxes must be shared globally, ensuring that the race to the bottom ends. Anti-corruption laws and lobby registers as well as scrutiny of campaign fundings will prevent enterprises from manipulating politics and the public opinion. We will recognize the press as the fourth branch of government, ensuring its independence and diminishing the power of private companies over the public opinion. A strict global antitrust law will guarantee that companies do not undermine the basis of the economic system.
If we are to prevent a future where private corporations possess the monopoly of power, this is the bare minimum of measures we must take.
In the long-term, Terra will enable us to reform our economic system even further. We will shift the focus of our economy from increasing profit margins and generating shareholder value to actually advancing the common good of our society. Large companies will be democratized and instead of the gross domestic product we will use the gross domestic happiness as a means of measuring the well-being of our society. In doing so, we will move from national competition to global cooperation and forge an economy that serves not only a few wealthy individuals but all human beings.