Donna Edmunds is Director of Research at Progressive Vision.
We’re now over six months into the Leveson enquiry, and the British media still have not tired of the navel gazing exercise that is their full live coverage of events. As the giants of the media and political worlds are paraded for our delectation, the content of their contributions has often fallen short even of tipping into titillation.
So it was in many ways remarkable that Ed Milliband yesterday made statements that were truly noteworthy. He said:
“I should say we have no worries about someone owning 20% of the news market. I think there is then a question of between 20-30% where you should set a limit.” Murdoch owned News International accounts for 34% of the British Newspaper Market, which came down from 37% upon closure of the News of the World. Milliband asserted that this was “too high”.
I couldn’t agree more.
Austrian School economist F.A. Hayek, (who was so admired by Thatcher that infamously during one party policy meeting she reached into her handbag, withdrew his The Constitution of Liberty, intoned “This is what we believe!” and slammed it down on the table), argues that competition is the most effective method available to society to co-ordinate human effort to best effect, being as it is the only method that dispenses with the need to use coercion or arbitrary intervention of authority. His thesis is not a lasseiz-faire form of free market capitalism, but, as he says in The Road to Serfdom (1944) “… is based on the conviction that where effective competition can be created, it is a better way of guiding individual effort than any other.”
It is clear that monopolies have an adverse effect on the level of effective competition within a market. In principle, Hayek was against government having a role in breaking monopolies or regulating markets, particularly in his earlier works where he suggested that market forces will dispel monopolies as newcomers evolve the way in which the market operates, thus weakening the hold of a monopolistic power. However, in his later works he began to see a limited role for government, acknowledging that the holding of monopolistic power can entrench a company in a market by allowing that company to influence the market behaviour of others to prevent competition.
All of this is, of course, literally academic as we are not living in a society in which true free markets are generally allowed to function. Indeed, those of us who advocate a free market society are finding it ever harder to make our case heard against a societal background that mistakes crony capitalism for capitalism proper.
Nonetheless, we do have a Competition Commission, so the question that Leveson ought to put is: if Murdoch holds such a monopolistic position in the newspaper market, why was the Competition Commission not employed some time ago to investigate whether his holdings represent a stranglehold on that market? Indeed, if a 34% share is found through enquiry to be “too high” then undoubtedly the Competition Commission has a very good case for insisting that Mr Murdoch’s holdings are reduced to a level at which true competition can flourish.
It may be that that question hasn’t been properly addressed because in certain circles it would raise some very tricky questions for institutions rather more beloved of the Labour party, namely the BBC. The BBC enjoys the biggest market share in the television marketplace, at 31.8% (2008 figures), with ITV the next biggest player at 22.6%. That is to say nothing of the radio market, of which the BBC has a whopping 50% share, and the online news market. Does this mean that Ed Milliband considers that the BBC should scale back its own media offerings? I live in hope.