The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation

March 6, 2023

Is information technology accelerating creative destruction? How are large corporations shooting the capitalist system in the foot? How do we fix it?
The New Goliaths Book cover

Is information technology accelerating creative destruction? How are large corporations counter-intuitively shooting the capitalist system in the foot? And how do we fix it? In The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation, James Bessen makes a compelling argument that competition, which has fueled innovation and progress under capitalism, is now threatened by powerful corporate giants like Walmart, Amazon, and Google.

Is technology to blame? In the digital age, software has allowed the increase of efficiency, variety, and flexibility, with far-reaching results in the economy. Yet, only the top firms and their high-level employees have access to key frontier technologies. Indeed, one can observe this trend amidst the mass purge of employees from these top firms. How did this change come about? Bessen dives into the topic of how earlier technologies leveled the competition and its benefits, and what is causing the disruption now.

One could argue that competing with big businesses is easier now than ever before with information technology becoming more affordable and more accessible; however, The New Goliaths points out that on the economic scale, it is the changing nature of how economic actors use information that makes a crucial impact.

“With great economic power came opportunities for abuse and political corruption,” Bessen writes and shows how these giants have tilted the odds in their favor by using proprietary information technologies. Over the years, these “new goliaths” have evaded regulation, slowed innovation, and increased economic inequality and social division. In turn, they have harmed workers, consumers, and citizens, and fueled politics of resentment.

How should we overcome this challenge? Some have argued that the answer would be to break up the largest companies. Instead, Bessen suggests that governments catch up to the changes and breathe new life into competition by introducing regulation that would compel these companies to share technology, data, and knowledge. This could further facilitate policymakers to organize the economy.

The genie is out of the bottle: The New Goliaths unpacks technological revolutions and their effects on innovation, productivity, and firms, as well as facilitates the reader with examples to understand the changes that are currently taking place. It is a timely read for policymakers and scholars concerned about creating a healthy economy and society, which address the inescapable challenges we face in today’s digital age and which will continue to affect the economy in the future.

James Bessen, The New Goliaths: How Corporations Use Software to Dominate Industries, Kill Innovation, and Undermine Regulation (Yale University Press 2022) ISBN: 9780300255041, 272 pages

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