Democracy Journal - Imagining a Democratic Amazon
Legal Director, Sandeep Vaheesan, published an article in Democracy Journal highlighting how Amazon has built on it’s existing dominance as an online retailer during the COVID-19 pandemic through retaliation against worker’s yearning for better worker conditions.
Amazon has made clear during the pandemic that it is the infrastructure of online commerce. In the United States, Amazon controls around 45 percent of Internet retail sales (Walmart is in a distant second at 7 percent). The Seattle-based corporation has a share of 80 percent or more in certain product lines including books, cleaning supplies, and kitchen and dining. With COVID-19 forcing brick-and-mortar retailers to reduce hours of business or close temporarily, even pushing many into bankruptcy, Amazon has filled the void and built on its existing dominance. It recorded a 26 percent increase in first quarter sales and has hired hundreds of thousands of workers at a time when other firms have collectively laid off tens of millions. In the words of one commentator, “Amazon became a utility in this crisis – defensive, reliable, indispensable.”
Yet such dominance means that Amazon holds great power over its workers, suppliers, sellers, and customers that it too often wields in nefarious ways. During the crisis alone, the company has retaliated against workers for organizing to demand better conditions on the job, used coercive non-compete clauses against employees, reportedly eyed movie theater chain AMC as an acquisition, and shutdown warehouses in France to protest public safety rules.
In 1890, Senator John Sherman (of the eponymous Sherman Antitrust Act) questioned the power of then-emerging corporate titans and asked his colleagues whether it was wise for economic life “to depend upon the will of a few men sitting at their council board in the city of New York.” Extrapolating this well beyond one city, Sherman’s quote would describe Amazon and the U.S. economy in 2020. How do we structure and govern Amazon in a way that is faithful to the principles of democracy? An answer lies in anti-monopoly policies that constrain and reduce Amazon’s dominance and reallocate power to the millions of individual workers, independent firms, and members of the general public whose labor, enterprise, consumption, and support have made Amazon a trillion-dollar corporation. A publicly accountable Amazon would be built on the three-legged stool of fair dealing, structural breakups, and cooperation among the workers and firms that sustain Amazon. So, how exactly can we go about this?
Public Policy Endows Amazon with Power
Before diving into the solutions mentioned above, it is important to note a few things. First off, Amazon is not a purely private entity and is, like all corporations, a creature of public power. Presuming that public regulation of Amazon is somehow illegitimate is to ignore the extensive state action that already supports the corporation—and the government’s allocation of power to certain individuals and constituencies rather than others.
Amazon and its top brass enjoy important corporate privileges due to state-granted charters, which set out the privileges to be given to the firm. State law thus awards Amazon limited liability: Shareholders cannot be personally liable for Amazon’s potential debts and other liabilities, such as backpay to workers due to violations of wage-and-hour laws and damages for polluting the environment, and so are protected against important downside risk when they invest in the company. Also, unlike in the case of a business partnership, state law gives Amazon potential immortality as a corporate “person.”
Importantly, state charters vest power in Amazon’s board, and therefore in Jeff Bezos, to manage the company—and correspondingly deprive its workers, suppliers, and customers of governance rights in the business.
The company holds other state-delegated powers, as well. Management controls and runs warehouses as they see fit because a state government stands ready to defend the corporation’s property rights through police and judicial action. Similarly, Amazon executives exercise control over nominally independent sellers and delivery firms using contracts that the courts will enforce.
On top of these usual privileges, Amazon has special arrangements with the government that smaller companies do not. For one, it has a contract with the U.S. Postal Service that allows it to ship packages at low rates and reach rural and other less densely populated areas, which are difficult to serve profitably under normal circumstances. And during the crisis, several states awarded contracts to Amazon to upgrade outdated unemployment insurance systems to handle the surge of jobless claims.
In short, Amazon and other large corporations today enjoy a one-sided bargain with the government: private privilege in exchange for minimal public duties or limits. The crisis has shown and strengthened Amazon’s state-like power—a power that is not paired with the ordinary checks and balances we associate with state authority. Thankfully, we can change these arrangements.
Read the full article on Democracy Journal here.