Why net neutrality opens the door to the free market capitalism debate

The future of the internet in the balance
The future of the internet in the balance

In a free market, prices are set by consent between sellers and consumers, driven by the forces of supply and demand without government intervention, price-setting monopolies or other external controls. A free market typically entails support for highly competitive markets and private ownership of productive enterprises.

By contrast, in a controlled or regulated market, government artificially influences supply and demand through tactics such as laws that create barriers to market entry or directly setting prices.

In a capitalist economy such as ours, controlled markets can also be created through "crony capitalism," where businesses depend on their close relationships with government to succeed. They may be shown favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.

Crony capitalism

Crony capitalism arises when business cronyism and related self-serving behavior by businesses or business people spills over into politics and government. It can also occur when self-serving friendships and family ties between business people and the government influence the economy and society to the extent that it corrupts public-serving economic and political ideals.

President Obama recently invigorated debate by calling on the Federal Communications Commission (FCC) to impose "the strongest possible rules" to protect net neutrality – prohibiting internet service providers from favoring some lawful content over others.

While a few bloggers, journalists and media professionals support net neutrality, there are many who oppose the president's decision and government intervention in these matters.

Added control

In January 2014, the U.S. Court of Appeals, the nation's second highest court, knocked down the FCC's longstanding regulation requiring "network neutrality," arguing that the commission had overstepped its regulatory authority. In this way, the internet monopoly, which includes network providers (major telecom and cable companies), is lobbying policymakers and seeking to change the rules of the game and secure control of information exchanged over the internet for commercial gain.

That control would allow them to charge different prices for access to specific information, to prioritize transmissions by putting time-sensitive packets at the front of the line for a higher price, to charge application fees, or to block specific applications from their networks in favor of others, again based on exacting discriminatory payments.

This goes against the principles of the free-market system, which helped transform small start-up companies like Google, Facebook, and Twitter into the successful businesses they are today. This shows how growing monopoly capitalism in the Internet of Things (IoT) market is threatening the very existence of a free-market system, due to net neutrality, which led to an exponential growth in this industry.

The politics

Today, Americans' view of President Barack Obama's economic leadership stands at the lowest level of his presidency. While the president's popularity hits rock bottom, Congress' approval rating, less than 10%, is at its all-time low. In recent mid-term elections, while Congress' approval rating was less than 10 percent, more than 90 percent of these politicians got re-elected in November, demonstrating a failure of U.S. political democracy. The total corporate spending on mid-term elections was close to $4 billion.

With big businesses spending such a large amount of money to influence elections' outcomes, a natural result is that the elected politicians work in the best interests of those who paid to help put them in office rather than the electorate who vote for them. This is crony capitalism.

With both the House and Senate controlled by Republican politicians, can any elected president having no majority in either chamber expect any cooperation? This is truly a failure of democracy because of political corruption. Major reforms are an absolute necessity to eliminate political corruption, and it is equally important to ensure that while these reforms take place, the economic growth engine does not get stalled.

Crony capitalists have been unjustly justifying their crony capitalism under the guise of free-market capitalism to satiate their greed for quite awhile. These crony capitalists have control over the government, stock market, mass media and communications with their big-money influence. Growing income inequality and economic disparity have been perpetuated by the requirement that candidates for public office raise money to finance their campaigns.

Since the United States does not have free-market capitalism any more, government intervention in the economy offers one way to stop the growth of corporate monopolies. Hence, President Obama is absolutely correct in calling on the FCC to impose "the strongest possible rules" to protect net neutrality and prevent the creation of internet industry monopolies that would stagnate economic growth.