lighted incandescent bulb
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The Lightbulb ConspiracyFACT 

December, 1924. A month among thousands in history, yet fundamentally significant to the development of world events over the next several decades. Astronomer Edwin Hubble will prove that the Milky Way is simply one of many galaxies within our universe; revolutionising humanity’s perspective on its own cosmic significance. Adolf Hitler will be released from Landsberg Prison and his ideological zealotry; now sharpened by political caution, will lead him to power and dozens of nations into the unimaginable horrors of the Second World War. Yet there is an overlooked moment, the creation of a cartel between companies and individuals of extraordinary influence; that fundamentally influenced the development of an entire marketplace. This moment was the formation of the Phoebus Cartel, on the 23rd December, 1924.

A meeting between the representatives of every major light bulb manufacturer in the world: General Electric, Osram, Compagnie des Lampes, Philips, etc. while a notable industry event; seems at first glance to be of little significance to those outside of it. Yet the Phoebus Cartel’s impact had profound consequences to its industry and represents one of the earliest; most chilling examples of global economic dominance of an industry though its largest corporate examples.

The Phoebus Cartel was born out of understandable motivations: In the early 20th century, the manufacture of lightbulbs by any; from the independent entrepreneur to the largest multinational corporations, had become a wildly unstable trade. Due to the rapidly developing industrial world, the spread of electrification; as well as many new forms of lighting such as streetlights, had led to a market where no-one was able to guarantee stable sales in a market so volatile. Indeed, the German company Osram experienced a drop in sales in 1922-1923 from 63 million light bulbs; to 28 million, the following financial year. Something had to be done.

Many smaller corporate alliances had existed between light bulb companies; some being made obsolete by rival competitors, others being de-stabilised by the geo-politics of the First World War. However, the meeting that day in Geneva was different: It established a supervisory body for the entire industry, as well as a standardised agreed time for light bulbs to fail. Whereas previously, their lifetimes could be in excess of 2,500 hours, after the formation of the Phoebus Cartel, years of research and development led to the creation of lightbulbs designed to fail after 1,000 hours of use. This ensured far higher stability within the market and greater profit margins; however massively short-changed the consumers, who were now cheated out of higher quality products and an organically free-market by the Phoebus Cartel’s manipulation.

Evidence of the quality of lightbulbs prior to this intervention can be seen in the famous Centennial Light; the longest-running light bulb in the world. Located in Livermore; California, this single example has only been turned off a handful of times since its activation in 1901 and has survived over a century due to the product’s hardiness; something later lightbulbs had sacrificed as part of corporate greed.

Throughout the mid-1920’s and into the early 1930’s, the Phoebus Cartel’s standardisation efforts led to the global decline of lightbulb life standards to a shocking degree. Factories belonging to companies that were members of the cartel had to send their lightbulbs to be tested in a central laboratory in Switzerland, where if lightbulbs were found to exceed their target; the members could receive heavy fines.

Records from the Municipal Archive of Berlin exposes this decline, as in 1926, the global average light bulb lifetime for household bulbs was 1,800 hours. This has dropped to 1205 hours by 1933-1934 and serves as one of the earliest known examples of the economic tactic known as “Planned Obsolesce”.

Planned Obsolesce is the deliberate design of a product/s to break down, lower in quality or otherwise fail after a set period of time; requiring replacement, necessitating a new purchase and therefore likely higher profits for the original company that sold the deliberately flawed product. Former European Commissioner and Italian Economist Mario Monti described the practices of modern corporate cartels as: “Cancers on the open market economy” and “In cartel cases, the positive side of the equation is zero”.

Unlike a standard venture between competitors, a cartel does not incentivise economic benefits such as product innovation, scale of development or job-growth; all factors which counter-balance the potential negatives of restricted competitiveness in a traditional corporate alliance. They are fundamentally restrictive and limiting by design, which has led to modern examples; which can find their origins in the early successes of the Phoebus Cartel, being hit with huge punishments.

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In July 2016, the European Commission issued a fine that totalled €2.93 billion; between multiple vehicle companies, including: Volvo, Daimler, Renault and several others. This was in response to over 14 years of price-collusion for trucks produced by their companies, that between them accounted for roughly 90% of all medium and heavy trucks produced in Europe. Some of the most successful corporations in the world have been caught indulging in these kinds of alliances and they are influential in every industry sector, such as when last year, Barclays, RBS, JP Morgan and a number of other banks were fined collectively over €1 billion for manipulation of the Spot Foreign Exchange Market in eleven currencies.

The name Phoebus is the Latinised version of the Greek name “Phoibos”, which can mean “Bright”, “Shining” and “Pure”; evoking connotations of the Sun god Apollo in both Ancient Greek and Roman mythology. By taking this name, the Phoebus Cartel had quite literally declared themselves: “Gods of Light” and for a time, their influence would have seemed near-as-powerful.

Their manipulation of prices: Where the production costs lowered, yet their prices remained stable; leading initially to higher profit margins and up until the beginning of 1931, the cartel members controlled the vast majority of the light bulb market. But their power was not absolute. One of the earliest threats to their power was Japan. Though Tokyo Electric; the largest regional lightbulb manufacturer, was a member of the cartel, this could not stop a golden opportunity that was seized upon by dozens of smaller businesses in the region. By producing cheaper, inferior light bulbs and exporting them, these bulbs; though still a rotten deal for the consumer, began to seriously undermine Phoebus Cartel control. In 1933, Japan’s production of incandescent bulbs had reached a staggering 300 million; an increase of 250 million from a decade prior, which were largely being sold in the US, Europe and elsewhere abroad.

Several other smaller factors played into the Phoebus Cartel’s eventual downfall, however the killing blow was struck by the very man who had emerged from prison in the same month as the cartel’s establishment. When WW2 broke out, on September 1st, 1939; the geo-political situation caused communications between the corporations; as well as trade itself in many cases, to become impossible. The Phoebus Cartel’s thirty-year agreement; designed to give them dominant industry control until 1955, was ended in 1940.

The Gods had fallen

The legacy of the Phoebus Cartel; though their power is broken, casts a shadow over today’s economic world. The practices they engaged in, the power they wielded; much and more has been emulated by those consumed by greed, uninterested in the principles of economic quality and fair-play. Nevertheless, LED Bulbs have now largely usurped the Phoebus Cartel’s designs, with far greater lifespans, energy efficiency and environmental friendliness.   

However, this cartel’s success as well as the machinations of those who have followed in their wake must constantly be watched for; a vigilant eye kept on those who have power, be it in light bulbs, currency or any industry sector. For we; as consumers, are vulnerable to the manipulations of the powerful. There is much we can and should do to protect ourselves against this, however it will always require the moral bravery and integrity of individuals and institutions; willing to fight these cartels, as well as all forms of corruption, so that our markets may remain free and we can avoid the conspiracies of failure.

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I’m Darren, founder and an investigative journalist for The Shocking Truth. I am eager to report on issues that matter the most; whilst separating fact from fiction.

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