Chokepoint Capitalism

Created: 2023-01-28
Status: #soil
Last Edited: 2023-01-28
Topic: capitalism

What is Chokepoint Capitalism

Chokepoint capitalism is an economic system in which the control of resources and access to markets is concentrated in the hands of a few powerful companies.

These companies, often referred to as chokepoints, are able to control the flow of goods and services through their networks, allowing them to extract rent from other businesses and consumers.

Chokepoint capitalism has become increasingly prevalent in recent years due to globalization, technological advances, and consolidation within industries. As a result, it has become increasingly difficult for small businesses and startups to compete with larger established firms that have access to these chokepoints.

How do companies gain such control under chokepoint capitalism?

Chokepoint companies gain control by making it initially easy to become dependent on their networks and then, once that dependency is established, extracting higher levels of value from those trapped dependencies.

For example, Amazon is a chokepoint company that has created a network of relationships with retailers, manufacturers, consumers, and logistics companies. If their offer is no longer appealing, you have few other places to turn that can reach your customer base.

YouTube is another example. There are few other video hosting networks out there so if you no longer find their offer favourable, there are few other options to choose from and none of which come with the same level of viewership.

In short, a Chokepoint company offers you the best deal available until there are so few competitors left in the market that you have no choice but to stick with them. At that point, you become the target of their exploitation.

Links

What Is Chokepoint Capitalism With Authors Cory Doctorow and Rebecca Giblin