In Greek mythology, the battle between Zeus and the Giants took place on Mykonos. Hercules played a key role, slaying the Giants whose petrified remains are said to be the source of the large rocks scattered across the Island.

Giant slaying has a long history, no more so than in economic theory. Sophocles’ Antigone contains the phrase which would become “whom the Gods would destroy, they first make mad.” In economic theory, for “mad” read “oligopolist”.

In its nascent state, a market is often characterised by perfect competition. This is defined as when buyers and sellers are so numerous and well informed that all elements of monopoly are absent, and the market price of the commodity traded is beyond the control of individual buyers and sellers.

Over time, the perfection of this market can be disrupted. If one, or more, competitors gains the financial ability to price more competitively in order to increase market share or to acquire other competitors, the market will trend towards an imperfect state; one in which individual participants can exert elements of monopolistic behaviour in terms of pricing.

In reality, imperfect markets tend towards oligopoly, rather than monopoly.

“Oligopoly is an imperfect monopoly. Like the despotism of the Dual Monarchy, it is saved only by its incompetence.” John Maynard Keynes

Keynes’ reference to the “Dual Monarchy” is likely a reflection of his views towards the Austro-Hungarian Empire which had been broken up by the Allies’ victory in the First World War. Keynes was most prolific in the inter-war years – he published his General Theory in 1936 – and his views of the oligopolistic tendencies of markets will have been informed by politics as much as economics.

The reference to incompetence has an economic basis, however. In Keynes’ view, an oligopoly should be only a transitional stage to a monopoly given the economic benefits of the latter to the monopolist. That each oligopolist is not able to establish a monopoly speaks to incompetence rather than structure.

Throughout the economic history of post-1945, oligopolies became more, rather than less, prevalent. They existed in car manufacturing, steel production, mineral extraction, real estate, and many more. Indeed, even in music come the 1960s, the Beatles still co-existed with the Rolling Stones.

In The New Industrial State (1967), JK Galbraith theorized that the growth of oligopolies and the large corporations which control them had rendered profit maximization obsolete. In its place, he argued, arose the need to maintain the organization and to ensure its growth. In defence of this argument, Galbraith cited the lengths to which the Ford Motor Company went to design and market the Mustang compared to efforts made for the Model T. He also used the example of a company producing a toaster which monogrammed bread as an example of product development for its own sake rather than a defined need within the economy.

The genius of the industrial system lies in its organized use of capital and technology. This is made possible, as we have duly seen, by extensively replacing the market with planning. JK Galbraith

History suggests that private oligopoly is a state of disequilibrium whose instability arises from the threat of government intervention or exogenous shock.

The break up of the Seven Sisters oil majors in the early 1970s is a case in point. In 1972, these seven companies (Anglo-Iranian Oil Company, Gulf Oil, Royal Dutch Shell, SoCal, Esso, Socony, and Texaco) controlled 85% of global oil reserves. In 1973, several oil-producing countries nationalized their reserves, creating OPEC and prompting the oil price shock of the mid-1970s. By 2012, 65% of global oil reserves was controlled by national oil companies. The Sisters responded by consolidating. Of the original seven, only four remain; BP, Shell, Chevron, and ExxonMobil.

This history may be repeating. Since 2013 when Jim Cramer coined the acronym to represent Facebook, Amazon, Apple, Netflix, and Google, the FAANGs have come to represent the rise of another oligopoly. Although each company works within different markets, the cross-over is essentially access to and use of the internet. It has been argued that their combined market capitalization (US$7 trillion in Q1 2022) accounting for almost 20% of the S&P 500, has created another “Sisters” phenomenon.

In December 2020, the US Government filed a lawsuit against Facebook citing its dominance of social media following the acquisitions of Instagram and WhatsApp as anti-competitive. The suit proceeds and coincides with further lobbying against Facebook over its influence within the 2016 US Presidential Election.

While Facebook is stalked by Government, Netflix is laid low by competition. Apple+ and Disney+ have combined to reverse the seemingly inexorable rise in Netflix subscribers. It is thought to have lost over 2 million subscribers by the end of 2022. It is not impossible that Netflix will become a casualty of consolidation. Since the end of 2021, the company has lost two-thirds of its market capitalization.

Ecosystem Economics© reflects on the disequilibrium inherent in oligopoly by highlighting the potential for co-operation rather than competition. It argues that, in a world in which digital “Davids” have regularly slain historic “Goliaths”, disequilibrium and company failure are avoided through co-operation between the two rather than the adversarial culture which persists in the FAANGs today as much as it did the “Sisters” in the 1970s.

Under Ecosystem Economics©, Facebook would have sought to invest in Instagram and WhatsApp through partnership and co-development. Elon Musk would be seeking ways of building Twitter into the Tesla offer. Netflix would be seeking partnerships with South East Asian production companies.

Astronomically, the Seven Sisters reference was drawn from the Pleiades, a group of seven women who were immortalized as stars by Zeus. These stars disappear from the Mediterranean sky around dawn in Autumn. Hesiod remarked in Works and Days that this should remind us to “work the land”. Ecosystem Economics© designs for those looking to not just work the land but share it with others to achieve that most prized of economic goals: the system-level win.