Last spring, during my final semester at Oxford, a cousin wrote to tell me that she was planning to work for an American company in Iraq over the summer. She suggested I join her. The company was called Iraqex, and it claimed on its website to have "expertise in collecting and exploiting information; structuring transactions; and mitigating risks through due diligence, legal strategies and security." Iraqex was also looking for summer media interns, my cousin pointed out, who would "interact with the local media" in Baghdad and "pitch story ideas." This was almost too good to be true.

I have wanted to be a reporter, and particularly a foreign correspondent, ever since I was given a copy of John Simpson's Strange Places, Questionable People as a teenager. In this memoir, Simpson recounts his many adventures as a BBC reporter: lying in a gutter at Tiananmen Square in 1989, his camera rolling as bullets zipped by; being arrested during the revolution in Romania; and broadcasting from Baghdad in 1991, with U.S. bombs exploding around him. Inspired, I began writing for my high school paper, eventually becoming its editor, and at Oxford, where I majored in Classics, I joined the staff of a campus weekly. (Simpson had edited a quarterly at Cambridge.) By the time I heard from my cousin, I was already slated to begin journalism school in the fall, but I was yearning for some John Simpson-type real-world experience. In fact, Simpson had actually spent years toiling in the BBC's London office before being sent overseas. And here I might be able to get a break right out of college.

I submitted my internship application within days. (Yet by then my cousin's parents had decided she couldn't go to Baghdad and Iraqex had changed its name to Lincoln Group.) After an anxious wait, I was called by one of the company's employees. He was young, himself just out of school, and he ended our short interview by asking whether I would be able to stay focused on work "with mortar fire at the end of the street." I was honest about my credentials. I had been to the Middle East, having vacationed in Egypt and Syria a couple of years before. During a spring break, friends and I had cycled some two thousand miles from Geneva to Damascus. And at university I had handled the pressures of translating Cicero and Polybius. But, I admitted, I couldn't say for sure about the mortar fire. He seemed to think this would be fine.

I soon received phone calls from both of Lincoln Group's founders, Paige Craig and Christian Bailey. Craig, a former Marine, told me that he had spent a great deal of time in Iraq and spoke very generally about the company's important work there. When I asked about security, he assured me that for them this was not a problem. Other foreign companies drove around the country in massive 4 x 4 armored vehicles, basically advertising themselves as targets. But Lincoln Group, he said, operated "under the radar," with employees dressed as locals and Iraqis manning the front offices.

Christian Bailey, like me, was an Oxford man. Yet whereas I had whiled away my time in pubs, he had set up an expensive Bloomberg computer terminal in his dorm room and successfully played the stock market. Although Bailey initially described the media internship as the perfect launch pad for my journalism career, he later offered me a position working on private equity projects in Washington. It was not my dream to become a financial analyst, I had to tell him. I wanted to spend the summer in Baghdad working with real Iraqi reporters. Bailey said he understood but would have to get back to me. A month later, in June, I was told the media internship was mine.

I was flown across the Atlantic to meet my new employers. In downtown Washington, I was surprised by the ubiquity of fresh-faced young men, their blue short-sleeved buttondowns tucked neatly into khakis. Lincoln Group had its headquarters above an Indian grocery on K Street; a small placard in the building's foyer read: visitors to lincoln group/iraqex, 10th floor, should be announced in advance. On the tenth floor, electricians wired lights in some rooms while in others suited men conferenced behind glass walls. The company's head of human resources, who had only just been hired herself, told me with a weary smile that things had been crazy lately.

Paige Craig popped in to see me as I filled out work papers in a tiny waiting room. Shaking my hand with a mighty grip, he uttered something to the effect of "welcome aboard." He was very well built, with short, tidy hair and the tight khaki trousers and shirt of a military man. As he strode away, he seemed purposeful. Bailey, by contrast, was baby-faced and slight, his sandy-brown hair cut in a Bill Gates bob. In his corner office, we chatted about Oxford. He had studied economics and management at Lincoln College. When I asked whether his college had inspired the company's new name, he shrugged. "Partly," he said cryptically. He did say that Lincoln Group was rapidly expanding and that it offered incredible opportunities for bright young people like me: stock options were available to employees after just three months, and I might consider staying on after the summer. Christian Bailey hadn't yet been to Iraq himself. Although he had planned numerous trips, he said, something always came up that kept him in D.C.

There was still one remaining formality before I was set to go. I had to travel to Fort Belvoir, Virginia, to pick up a Common Access Card, a kind of passepartout for military facilities all over the world. The women running the office where I was given immunizations and completed more paperwork said they had a young friend back in the District who would love my British accent. They were going to call her this very instant, they teased, and then I'd have a companion for the evening. They also talked in more solemn tones about all the brave men and women who came through the base and then shipped off to Iraq. In another room a chatty African-American nurse, contracted by the Halliburton subsidiary Kellogg, Brown & Root (KBR), took my vitals and drew blood. She joked as well about the way I spoke and wanted to know about England. Yet when I asked why she needed to make copies of my dental X rays, she suddenly was speechless. "It's for our files," she finally said, shooting me a quick glance and then turning away. In the long silence that followed, I understood. With a body charred beyond recognition or exploded into irretrievable parts, a dental match might be all that remained to identify me.

Only then did I really consider that I would be risking my life for men I had just met and for a company I knew very little about. My pay, I had recently learned, would be a measly $1,000 a month, meaning I would likely lose money over the summer. When I had begged out of eight days of Stateside military training so I could get to Baghdad sooner, the company was only too willing to oblige. "It makes more financial sense for us," I was told. "We'll get more work out of you."

I might have aborted the venture then had I not been envisioning my burgeoning career. I had come to see myself braving the dangers of Iraq for the sake of the good news story, and I liked it when others saw me this way as well. Shortly before flying to America, I had visited my younger brother in Scotland, and he had said he was proud that I was willing to take real risks to pursue a profession. (He also was relieved that I was not becoming another investment banker, like so many other Oxford grads.) When a group of us went to an Edinburgh restaurant one evening, I was seated next to a raven-haired beauty, a half-Italian who had just graduated from university as well. After one of the courses, she asked perfunctorily about my plans for the summer holiday, and I began to talk excitedly about my impending trip. I needed to know whether I could survive in an environment like Iraq, which was now the center of the universe for the kind of reporting I wanted to do. Although dangerous, such work was essential, I said, since people back home needed to understand the painful realities at the other ends of the earth. She now leaned toward me, her dark eyes wide with interest. When I finally finished, she whispered, "That's very sexy."

I arrived at the Baghdad airport on July 7, after waiting for my luggage in Amman for nearly a week. People at the baggage claim shouted like tour guides for KBR employees to gather in one spot, while others, holding aloft signs with the names of various security firms, urged bulky, tattooed men to congregate in groups. But I saw no one there to greet me. As the hall emptied, I noticed a man and woman loitering indifferently near the exit. I eventually made my way over and asked if they were here to meet Willem Marx. They were. Each shook my hand, and then they led me in silence out of the airport and to the back seat of a battered sedan.

On the short drive to the U.S. Army's Camp Victory, a sprawling complex of prefabricated buildings in what was one of Saddam Hussein's many estates, I caught sight of my first bomb-wrecked palace. Its dome had collapsed, and exposed girders poked violently skyward. I asked my new colleagues about their work and what they had done before joining the company. Gina, a fair-skinned woman in her late twenties, said she had a military background in Iraq, and Ryan, who seemed not much older than me, had been a soldier as well. Their answers were so curt that I decided not to delve further.

Once inside Camp Victory, Ryan sent me to buy a transparent neck pouch for my military-contractor identification. I queued behind a group of soldiers, all of whom carried their rifles with them inside the base's PX. Then I was deposited in a dusty trailer, where I sat alone for the rest of the day watching Lara Croft and other action films on a giant flat-screen TV.

To get to the villa where I would be living for the summer, I was awakened before dawn and loaded onto what was essentially a Greyhound bus with armored plating and shatterproof windows. The road to Baghdad's Green Zone, where the Lincoln Group villa was located, is known as the Highway of Death, for the number of convoys that have been attacked along its route. And so we trundled along the dangerous road in complete darkness, flanked by a quartet of Humvees and watched over by helicopters with nightscopes.

There were four bedrooms on the villa's ground floor, and I was to share one of these with an Iraqi named Ahmed. Ahmed, who had attended American University in Washington, always wore immaculately pressed shirts and remained clean-shaven. Because he often shared his bed with one of several Baghdadi girlfriends, I moved down the hall after only a few nights. My new roommate, Steve, a recent Brown graduate, had signed on with Lincoln Group for a full year and seemed to be pacing himself accordingly. Most nights he would drink beers bought from a nearby market, and the next day he would sleep well into the afternoon.

The villa's other inhabitants had been sent to Iraq as part of a contract Lincoln Group had with USAID to build training centers for Iraqi businesses. None of them had much experience in the region nor had worked very long for the company. A tall San Franciscan, who passed whole days in the tarpaulin-covered courtyard smoking cigarettes with a former air-conditioning-systems executive from Arizona, had spent a year or so on an archaeological mission in Egypt. When they weren't in the courtyard, these two trawled the Internet, pretending to work. They often speculated about the company, suspecting that it might secretly be owned by the Carlyle Group or that some of its employees were really CIA. I asked them whom I should speak to about getting going on my media internship, but they only shrugged. They had no idea. The Arizonan declared the whole organization a mess but couldn't say specifically what he meant by this.

Because I had just two short months in Iraq, I emailed Bailey and Craig back in Washington after several days of inaction. What projects could I begin working on? I wanted to know. Who was in charge here? What could I do to contribute? A day later I received a rather brusque response from Paige Craig. They didn't have time to deal with my little problems. I needed only to take my lead from Jim Sutton, the country manager, whom I had seen just once during my first week.

But my badgering did seem to pay off. I was soon contacted by a Lincoln Group employee named Jon, who formerly had run political campaigns in Chicago and now worked on the company's I.O., or Information Operations. Over lunch at the recently bombed and rebuilt Green Zone Café -- an air-conditioned tent with plastic chairs and a TV airing Lebanese music videos -- Jon explained that he was returning home for several weeks of

R & R and that Jim Sutton had chosen me to be his replacement. Jon quickly sketched out my new I.O. responsibilities. An Army team inside the Al Faw palace, another of Saddam's former residences, would send me news articles they had cobbled together from wire stories and their own reports from the field. It was my job to select the ones that seemed most like Iraqis had written them. I was then to pass these articles along to our Iraqi employees, who would translate the pieces into Arabic and place them in local newspapers. Jon told me that the U.S. Army could hardly carry out this work in their military uniforms, so they hired Lincoln Group, which could operate with far fewer restrictions. It was a bread-and-butter contract, he said, that paid the company about $5 million annually. I asked if the newspapers knew that Lincoln Group or the U.S. military were behind these articles. They did and they didn't, Jon said. The Iraqis working for us posed as freelance journalists, but they also paid editors at the papers to publish the stories -- part of the cost Lincoln Group billed back to the military. "Look," Jon assured me, "it's very straightforward. You just have to keep the military happy."

Despite some misgivings, I returned to the villa feeling like my career was starting. I would contribute to the news-making process during war and be embroiled in the politics that this entailed. The experience of doing any work in Baghdad, in and of itself, would help instill in me the skills necessary for survival in other perilous environments. Perhaps I could even change how the company operated and, if at all possible, maybe improve the situation in Iraq through my efforts.

I began my media work on July 14, waking up early to shave in the bathroom's cracked sink and brew some coffee in the sandy kitchen. I chose a spot on the large red sofa in the villa's living room, which also doubled as its office space, and waited for an email to arrive from the military. For several hours I checked the BBC website for news on Iraq, brewed more coffee, and sent emails home, telling friends and family that I was beginning to do real work here. In the afternoon I finally received an email from a First Lieutenant Christopher Denatale that was also copied to a long list of American military personnel with @iraq.centcom.mil address suffixes. The communiqué was labeled "Unclassified/For Official Use Only" and stated simply, "Here are the Corps IO storyboards for 14 JUL 05."

I carefully read the five articles that were attached as PowerPoint slides. The first reported on a speech by then prime minister Ibrahim al-Jaafari, in which he announced that Iraqi troops would soon be able to replace foreign forces. It was accompanied by a photo of Jaafari at a lectern and ended with this bit of uplift: "Combined with the recurring successes of the ISF, Prime Minister Jaafari's remarks inspire a greater degree of hope for the peaceful and progressive future of Iraq." In the second article, also on the progress of the Iraqi Security Forces, the U.S. Army writers at the Al Faw palace put an even more positive spin on the country's prospects. "Unlike the terrorists, who offer nothing but pain and fear, the ISF bring the promise of a better Iraq. No foreign al-Qa'ida mercenary would ever consider bringing gifts to Iraqi children. The Iraqi Army, however, fights for a noble cause. ... Together with the Iraqi people, they will bring peace and prosperity to the nation."

The remaining stories continued in this vein. The American soldier writing one of them took on the persona of an Iraqi to denounce the terrorist Abu Musab al-Zarqawi, another argued that insurgents were attacking Iraqis solely to instigate a civil war, and the final one concluded with an apparent public-service announcement: "Continue to report suspicious activities and make Iraq safe again." These were far from exemplars of objective journalism, but Jon had said that I should think of the storyboards not so much as news but as messages Iraqis needed to hear. I supposed they were that.

I was to publish at least five stories each week, so I now had to decide which of these, if any, made the cut. After some deliberation, I chose the piece on the insurgency inciting Iraqi-on-Iraqi violence. Its rhetoric was powerful, even Ciceronian, I thought, with the grand sweep of its opening line: "Great triumphs and great tragedies can redirect the course of a people's destiny." And I agreed with its overall message that one destructive act should not beget others. I was to pass along the article to a man named Muhammad, who would see that it was translated from the English. It also fell to me to tell Muhammad where to place the translated piece. Jon had left me a spreadsheet listing Iraqi newspapers and the amounts they charged to run our stories.

Yet I knew nothing at all about the media in Iraq, and certainly didn't know the difference between the newspaper Al Sabah and the similar sounding Al Sabah Al Jadeed. Jon didn't believe this would be a problem, however, having himself started with no regional expertise, and he made it very clear that I should under no circumstances ask the military team for guidance. He warned me that the two majors in charge, Scott Rosen and John Muirhead, would hound me for information on exactly how Lincoln Group placed the stories, and that I should remain cagey about the process, allowing secrecy to swell the perceived value of the company's work. I was to send them only the results of what had been published, detailed in a spreadsheet. The military, Jon said, loves statistics.

From the dozen publications on the list, I picked out Al Mutamar, or The Congress, because it was one of the least expensive (around $50 per story) and I could see we hadn't used it in a while. (I thought it would be good to mix things up a bit.) Later that day, Steve came into the living room with a story Jon had asked him to put together. Written from the perspective of a frustrated Iraqi citizen, it condemned a recent insurgent attack that had left twenty-three children dead. Steve's information came directly from news sources on the Internet, with no actual reporting of his own, but he had authored what I considered to be a very decent opinion piece. I emailed this to Muhammad as well, asking that it be published in another of the newspapers, Al Sabah (The Morning), which I selected because it was the most expensive on the spreadsheet, charging over $1,500 to run one of our pieces. Steve's writing, I felt, deserved the best.

I received an email back from Muhammad the following day, acknowledging my instructions and including two Word files. They separately contained the two stories in English and in what I assumed were their Arabic versions, and I saved the files onto my laptop, as Jon had instructed me to do. Two days later I felt a little thrill when Muhammad sent me scanned versions of the "articles" as they appeared in the Iraqi newspapers. Despite the subject matter of Steve's piece, he and I both laughed at the thought that he was now published in a major Iraqi newspaper.

I forwarded the scanned articles to Rosen and Muirhead and received emails thanking me for my work. Then I sat back on the red sofa, proud that I had successfully completed my initial run through this process. I had even made what I believed were sound journalistic decisions.

Over the next weeks, my U.S. military liaisons at the Al Faw palace continued to send me around five storyboards each day. I soon had a better sense of how Lincoln Group was positioned between the Army team and our Iraqi staff, who were themselves the company's sole link to the local press. Lincoln Group had originally signed its media contract with the military's Public Affairs Office, which supplies "real" information to reporters wishing to know about troop casualties or reconstruction projects. But Paige Craig had later convinced the military that his company was better suited to the more covert Information Operations sphere. I was still struggling to get a grip on all this information myself but recognized that there was some power in selecting which storyboards to publish. Although not exactly intoxicating, this power was certainly more significant in the grander scheme of things than anything I had experienced at university.

I also learned that whatever power I possessed was not absolute. When senior commanders labeled storyboards a priority, this trumped my particular journalistic proclivities. One storyboard, with the alliterative headline "Badr Corps Not Baited into Fight," was given a special "emphasis" by General George Casey, the most senior U.S. officer in Iraq at the time, and as such was made a top priority by Majors Rosen and Muirhead. The story took a new tack, it seemed, praising Shiite militias for refraining from retaliatory attacks against Al Qaeda. "The restraint of the Badr Corps and their faith in all Iraqis to stand up to terrorist violence bring great credit to themselves and great honor to all of Iraq," the article opined. "History does not fondly remember murderers and destroyers. History reveres the people who stand up against pain and risk of death to say 'No' to the murderers and destroyers. This is why it is such treacherous blasphemy when the al-Qa'ida gang claims the honored title of 'martyr' for their murderers."

I had by then developed what I considered a rapport with Muhammad and his staff, who had been remarkably forgiving of my naiveté. Although I had assumed that all of the newspapers on the list Jon had left me were daily publications, Muhammad told me that, in fact, many were weekly, triweekly, or just unreliably issued. When I requested that an article appear in a specific paper, he would sometimes go against my request if he knew that the paper wouldn't publish for several days, and would place it instead in a daily. As he explained to me in an email, if he didn't do this, "Some of those articles will delay in time for couple or three days, and in this case their importance will reduce and attenuate and other newspapers will deal with them before us. This is one of the most important points which leads the newspapers' editors to know about the connection of those articles with the American, because who would pay money to publish an article which got old news!!!"

I passed Muhammad the Badr Corps story, explaining that it was of the utmost importance and feeling a bit excited to be carrying out the orders of such a senior officer. Days later, however, the story still had not been published. Muhammad told me that an editor at the newspaper I had chosen, Addustour, had rung the evening before it should have run, claiming that his managers had objected to its politics. By Muhammad's account, the same editor had then relented after some discussion, agreeing to publish the piece. (I assumed this meant that Muhammad had swayed him with an offer of more Lincoln Group money.) But when the newspaper came out the following morning, there was still no "Badr Corps Not Baited into Fight." I sent an apologetic email to the two majors, explaining why such a high-priority story had not been published. I hadn't taken up this issue with the newspaper's management, I wrote, because I didn't want to sour my relationship with the paper's editors. Rosen accepted this reasoning and was even somewhat pleased by the insight he thought it provided. "It is good feedback actually that the piece rubbed up against political/philosophical boundaries," he replied. "Is this something we should use to shape future pieces for that paper, for all papers, etc.? It is good to keep us on our toes and it shows that they are not our lapdogs."

Indeed, because Rosen and his team assumed I interacted regularly with the Iraqi press, they believed I was someone to take seriously. And Rosen's encouraging words actually emboldened me to offer additional suggestions on ways to improve our "pro-democracy" pieces. I told him that an article on the military's discovery of a cache of bulletproof vests was too outdated to run in a daily newspaper and read like a catalogue of munitions, with none of the "human appeal" that grabs readers. "This is not criticism," I wrote Rosen, "merely my honest opinion as a media analyst." (Jim Sutton had bestowed this title upon me, and it was by then printed on my Lincoln Group business cards.)

For other articles, I pointed out that the military had failed to properly mask its own voice and intel, such as in one piece when the Army writers directly responded to an Abu Musab al-Zarqawi claim: "It is true that during one security operation a woman was detained by Coalition Forces." I told them that their entire approach to Zarqawi was wrong, as they were giving him far too much exposure -- bad press being better than none at all. Rosen thanked me for all my "efforts to steer us toward better products." Although they, too, were reconsidering how to write about Zarqawi, the team had been "given some fairly rigid guidelines from our boss." Rosen added that they also were "synchronizing messages with PSYOP and PAO," and were thus limited in what they could do. But attached below Rosen's comments was a forwarded email to him from a confused subordinate: "Should we continue to write the same way?"

In one correspondence with me, Rosen confided that his biggest frustration was when his colleagues -- "a bunch of white guys" -- nitpicked over this or that word for a piece that would eventually be translated into Arabic. "Not once have they consulted one Arab on the best way to write the thought in Arabic. They forget that it is the message that we are trying to get across not the word."

One morning toward the end of July, Jim Sutton decided that I needed to check up on Muhammad and his team in their downtown offices. He picked me up outside the villa in a black BMW and drove us to the concrete blast barriers and razor wire at the outer limits of the Green Zone. A sign instructed drivers and passengers to "Lock and Load," and Jim gave me a Glock 9mm pistol to hold out of sight in my lap. Then we drove on, into the vast portion of Baghdad every American I had met called the Red Zone. At six two, with a shock of blond hair, I had little chance of blending in there, and my striped polo shirt and Ray-Bans hardly put me "under the radar."

Along a narrow street of ramshackle stores beside the Tigris River, Jim slowed the car to a crawl, waving to some kids on a nearby doorstep who returned the gesture. Then, without warning, another vehicle speeding toward us from behind slammed on its brakes and came to a halt directly in front of our BMW. Jim jumped out, and I frantically looked from him to the strange car, out of which large swarthy men were now emerging. One of these men ran past Jim toward our car. Before I could react, he was in the driver's seat beside me. He quickly introduced himself in rudimentary English as part of Lincoln Group's security detail. Able to breathe again, I saw Jim get into the second car, a silver-gray BMW, along with a couple of armed guards, and we were joined by a man wielding an AK-47 who sidled in behind me. My driver was Kurdish, from the area around Fallujah, and as he steered us into the downtown center he barked orders to the car in front through a two-way radio.

I was 22 years old, and here I was holding a loaded gun while being ushered through Baghdad's dangerous, detritus-laden streets by two total strangers. Maybe this was the real Iraq. Maybe this was what it was like to be John Simpson.

By this time, I was winning plaudits for my work. Jim Sutton liked my easy manner with the Iraqis and attempts at basic Arabic. He praised me, too, for my cool-headedness in unfamiliar situations -- such as the automobile switch beside the Tigris, which seemed to have been at least in part a test. Even Gina, who had been so cold when I had first arrived in Iraq, became far less frosty toward me. Because of the Oxford background I shared with Christian Bailey, she initially thought I might be his spy, here to report back to him on company problems and employee activities. But when Gina learned I was risking my life in Baghdad for just $1,000 a month, as opposed to her $70,000 annual salary, she mostly felt sorry for me.

Jim Sutton sat me down one afternoon at the villa to talk about what he said was "the next step" in the company's operations. In line with Lincoln Group's longer-term aims, he and the established team (the half-dozen or so who had been in Iraq longer than two months) were intent on carrying out a much larger military contract. "Western Mission" would be a hugely expanded version of the current media efforts. It would be an all-out "media blitz," Jim said, and the largest contract ever of its kind. During the months of August and September alone, we were proposing to place sixteen different pro-government/anti-insurgent spots on Iraqi television stations for a fee of $16.5 million. There would be twenty radio broadcasts as well, with the military paying us around $20,000 for each. We would publish eighty half-page color advertisements and thirty-two op-ed articles, for which we would charge nearly $400,000. Blanketing Baghdad with 140,000 posters would earn us another $400,000, and we would design nine Internet news sites, at a cost of $2,500 each, and produce five DVDs, for just over $580,000. Lincoln Group's overall haul for the two months: $19 million.

We were also to create something called a Rapid Response Cell. Lincoln Group would hire Iraqi journalists and send them to the Anbar province west of Baghdad, which Jim called the "insurgency's center of gravity." Working in the violent cities of Ramadi and Fallujah, the journalists would be paid by Lincoln Group to report news that bolstered the U.S. military message. They would be on hand as well to capture breaking stories, about which they alone would be conveniently forewarned by Coalition forces, and would thus be able to "positively" portray events before the insurgency could put out its own account. Ahmed and I were told to recruit cameramen, reporters, and television stations to do this work. We were also to line up op-ed writers, so that once Western Mission was formally approved our team would be ready on August 1 to "execute." Finally, in order to show the military officers at the Al Faw palace that we were giving them more bang for their buck, I was now to pass ten stories along to Muhammad each week.

Ahmed had worked in the press office of the Coalition Provisional Authority, where he issued professional accreditations to Iraqi reporters, and also as a fixer for ABC News. (He often reverentially recounted a brief meeting he had with Peter Jennings a couple of years before the broadcaster's death.) So to find willing op-ed writers, we began by visiting Ahmed's past associates. Two of them I met several times at the Baghdad Press Center -- an office that the U.S. State Department funded to provide Iraqi reporters with equipment and to train them in journalistic ethics and professional conduct. And yet we were hiring these same Iraqi reporters to work indirectly for the U.S. military. When State Department officials at the press center asked me about my work in Iraq, I would tiptoe around an answer, saying I ran advertising campaigns in local newspapers on behalf of multinationals. (Which was effectively true.) A director in the office explained their belief that an independent media would help buttress the country's nascent democracy, and she thought it was great that my efforts were allowing local newspapers to gain commercial independence.

It was easy to find Iraqi reporters who would write U.S. military-friendly op-ed pieces for a little extra cash. But hiring those who would go to the dangerous Anbar province was altogether a different matter. The reporters, cameramen, and sound operators we spoke with all said the same thing: they would work in Ramadi and Fallujah as part of a Rapid Response Cell only if they were embedded with U.S. troops. But because the whole point was that they were to report news that at least appeared to be independent of the military, this was impossible. We even explored whether we could embed our reporters with Iraqi troops there. But this also proved to be untenable.

Gina then had the idea of placing a Lincoln Group team permanently in a U.S. base near Ramadi or Fallujah, where they would operate one half of a satellite uplink system that would send footage or sound recordings to Baghdad. At the other end, Iraqis working in the company's Green Zone villa would receive the footage and splice it into whatever form was required. Breaking news, the thinking went, could then be rushed to a TV station and aired immediately.

To explore this option, Ahmed and I visited a number of upstart production companies in their heavily guarded compounds. We found one company that would produce one of our half-minute TV spots for as little as $10,000. At Iraq's national station, Al Iraqiya, located within Baghdad's old Jewish ghetto, an English-speaking commercial director said he could air the spot during the station's nightly news, the most expensive time, for only $2,000. Production and distribution together, then, would cost us around $12,000. The amount Lincoln Group was charging the military for developing, producing, and airing each commercial had already been determined: just over $1 million.

At Al Iraqiya, Ahmed and I were then escorted to another part of the decrepit compound and introduced to the station's news director. We were left alone with him, and Ahmed began to explain that we were part of a recently formed independent news-gathering service that sought to cover the Anbar province. I followed the Arabic with difficulty but heard Ahmed launch into an account of his work with ABC. Then he said I was a former BBC reporter, which was an outright lie. I kept quiet, and Ahmed proposed that Al Iraqiya consider airing the footage from our Iraqi reporters. Ideally we would get paid for this, Ahmed said, but at this stage we wanted to make a reputation for ourselves and would in certain circumstances be willing to pay to have our footage shown on the news programs. The news director nodded repeatedly and then vigorously shook our hands. He seemed thrilled by our proposal.

The chubby head of the Lebanese Broadcasting Corporation's Baghdad bureau, yet another of Ahmed's old friends, was less enthusiastic about doing business with us. Over small glasses of sweetened tea, Ahmed again portrayed us as a start-up news service but revealed to his past associate that the U.S. military was bankrolling our operation. The station director listened in silence, finally speaking to warn us that we were embarking on an extremely perilous campaign. All would inevitably be uncovered, he said, and we, our employees, and our partners would be placed in grave danger.

With all I was doing on Western Mission, I had begun to pay far less attention to the military's daily storyboards. Although I was passing along more than ten articles to be published each week, thrilling the stats-obsessed military team, I had stopped reading all the items the military sent me, and I'm sure I forwarded on to Muhammad stories I would previously have held back. Every week I was required to confirm the details of the military's spreadsheet, which listed the stories written by the I.O. team, the stories published, and which newspapers had published them. But it wasn't until early August that I really looked closely at the figures for the previous three weeks. When I examined Muhammad's records, I saw that the amounts some newspapers had charged us for placing articles had shot up dramatically.

During July, pieces published in the newspaper Addustour had gone from $84, to $423, to $1,345, and finally to $2,156. For another newspaper, Al Adala, what we were charged had climbed from $82 at the start of July to $1,088 by month's end. I checked the word counts of the articles, since we paid more for additional column inches, but all the stories were roughly the same length. On closer inspection, I also noticed that articles had been published in newspapers I had not specified. One particular paper, Al Sabah Al Jadeed (The New Morning), had been paid around $12,000 over a ten-day period from late July to early August, although I had never told Muhammad to place stories there.

I traveled the Highway of Death to discuss all this with Jim Sutton at Camp Victory. We spoke on a fourth-floor balcony, the clicks of military boots echoing on the palace's red marble atrium. Jim said it was up to me to ferret out the thief or thieves: it could be Muhammad, members of his staff, or the entire office. I told Jim that I now believed I had naively misread the Iraqis at our downtown office, mistaking their effusive "Yes, Mr. Willem" and "Soon, Mr. Willem" for real fealty. I had allowed them to exploit my ignorance: because I didn't know exactly how they published the military-written storyboards or whom they dealt with at the papers, they were able to inflate prices and take advantage of Lincoln Group. Jim said there was some important Western Mission work to take care of the next morning, but after that I needed to make my way downtown to get to the bottom of this matter.

Western Mission, after an initial delay, was finally beginning in earnest. Lincoln Group, as usual, had promised more than it could deliver, so in order to purchase airtime up front, it was forced to request an unusually large advance payment from the military. In fact, as Gina and I drove with Jim to the Green Zone villa that next day, the advance sat a few feet behind us, in the trunk of Jim's car: $3 million in cash, separated into thirty plastic-wrapped $100,000 blocks.

Just beyond the concrete blast barriers at the camp's exit, where we waited for our Kurdish guards, Jim told me to turn off my cell phone so that our location couldn't be traced. I held one of the Iranian submachine guns at the ready, and Gina, who rode shotgun, hid behind gold-rimmed sunglasses and a black kaffiyeh head scarf. The guards were late, and as cars slowly passed and our wait lengthened, an ambush began to seem imminent. My fears were somewhat allayed when the Kurds finally pulled into the parking area, apologetic and prepared to escort us and our secret cargo to the villa. The seven-mile ride turned out to be uneventful, and the $3 million was locked up in a safe inside my bedroom.

A few hours later, after lunch, I drove into Baghdad to speak to Muhammad and his staff. Jim, who said he was a former FBI field agent, had instructed me on the best ways to question my suspects. During each interview a staff member was to be seated in a single empty chair in the center of Muhammad's office -- without a wall nearby, Jim explained, the man would feel vulnerable and lose his nerve. It was very important as well that I remain calm yet forceful at all times, and Jim said that I should test various hypotheses by accusing each man of carrying out the crime in a different manner. According to Sutton, I would be able to hear guilt in their denials. To further unsettle the staff, Lincoln Group had also arranged for two Sunnis to be there while I conducted the examination. These men had worked for Saddam's notorious Mukhabarat, the intelligence arm of the Iraqi Baath party. And I had asked an Iraqi I had come to know quite well to accompany me, essentially to serve as my personal bodyguard and translator. Hamza worked for another American firm based in the same compound as our villa and was responsible for delivering our soft drinks. I offered him $100 for his time.

I began by interviewing Muhammad, and we all squeezed into his cramped office, with its gaudy ashtrays and low leather chairs. I took Muhammad's seat at his desk, and Hamza, in baseball cap and Oakley sunglasses, sat to my left. The Sunnis positioned themselves on a couch along one of the walls while Muhammad remained standing by the solitary chair. Muhammad was surprised as well by the discrepancies in the ledger, and his suspicions fell on two Christians in his office, Farooq and Majid -- those on his staff who physically transported the translated articles to the newspapers. Farooq, he thought, was our man. I, too, found Farooq to be dodgy. His hands were clammy whenever he greeted me, and he seemed always to have an elaborate excuse ready for Mr. Willem. On several occasions when I had phoned to question him about late work, our connection had suddenly gone dead. He would later blame this on the country's notoriously bad telecommunications network, but I believed he had simply hung up on me.

So we brought in Farooq, pointing him to the empty seat in the middle of the room. His protestations of innocence began even before he sat down, his face quickly turning a deep shade of red and the lip beneath his bushy mustache quivering in indignation. As I tried to follow Hamza's rapid-fire translations, I was distracted by the loaded Glock that I had tucked into the belt of my trousers and that now jabbed into my groin. We generally were armed whenever we traveled outside the Green Zone, and on this occasion I had to consider that the entire office of Iraqis could be in collusion and willing to act against their young British accuser. I shifted to try to alleviate the discomfort but soon found the weapon's position unbearable. Removing it from my pants, I placed the gun on the polished surface of Muhammad's desk. Farooq looked from the weapon to me and then back again, and I realized too late just how threatening my action seemed. Yet I couldn't simply apologize and remove the pistol -- this would seem a sign of weakness. Now panicking, Farooq begged frantically that I consider his livelihood, that I think of the well-being of his young family.

Along with adrenaline and fear, a profound feeling of disgust welled up inside me. I had become a kind of stock character in a movie, someone I categorically despised. I hated violence and guns, was against the American presence in Iraq, and was sympathetic to almost every Iraqi I had met during the summer. The Glock's barrel even pointed directly at Farooq, for Christ's sake! John Simpson may have been on the receiving end of interrogations, but he certainly never carried one out. And I was doing all this to recover a few thousand misappropriated dollars, for a company that was set to make millions from the American war effort.

With Farooq gone, the Mukhabarat heavies said there was no doubt about the Christian's guilt. They encouraged me to threaten him with a CIA criminal investigation. "Those three letters scare every Iraqi," the taller patrician-looking one said. As we went through the motions with Majid, his calm denials sounding the very timbre of innocence, we learned that Farooq had fled the building. Since it was also beginning to get dark, I decided I had had enough. It was time that Hamza and I returned to the Green Zone.

Back at the villa, Hamza waited in the living room while I went to get his money. Before he left, he said he didn't understand how I could drive around Baghdad without real protection and enter an Iraqi office where I had no idea what was going on. He liked me and appreciated the extra money but said he would never do this again.

The day had been extremely long, and I was exhausted and more than a little shaken. The blocks of cash that we had locked up in my room had been picked up and moved to a bank in central Baghdad. In my email inbox, there were messages from both my parents, asking me when I would leave Iraq and saying they hoped that it would be very soon. Lincoln Group had also sent me a newly drawn contract; they were offering me up to $70,000 to postpone journalism school and to work another ten months in Baghdad. But I couldn't fathom doing the work any longer. I had become what I had to admit was the antithesis of a journalist. And if I continued to suborn Iraqi reporters with U.S. military money, this would surely mean I would never be able to work as one.

That night I rang Christian Bailey and Paige Craig at the company's D.C. headquarters and told them I wanted to go home. On August 20, I boarded a plane out of Baghdad, and my summer internship was over.

There is an undeniable beauty to laissez-faire theory, with its promise that by struggling against one another, by grasping and elbowing and shouting and shoving, we create efficiency and satisfaction and progress for all. This concept has shaped, at the most fundamental levels, how we understand and engineer our basic freedoms -- economic, political, and moral. Until recently, however, most politicians and economists accepted that freedom within the marketplace had to be limited, at least to some degree, by rules designed to ensure general economic and social outcomes.

From Adam Smith onward, almost all the great preachers of laissez-faire were tempered by a strain of deep realism. Most accepted that a national economy ultimately served a nation that had to survive in an often brutal world. So, too, did most accept that all economies are characterized by struggles for power and precedence among men and institutions run by men; in other words, that all economies are fundamentally political in nature. And so most accepted the need to use the power of the state -- most dramatically in the form of antitrust law -- to prevent any one man or firm from consolidating so much power as to throw off basic balances. The invisible hand of the marketplace, and all that derives from it, had to be protected by the visible hand of government.

It is now twenty-five years since the Reagan Administration eviscerated America's century-long tradition of antitrust enforcement. For a generation, big firms have enjoyed almost complete license to use brute economic force to grow only bigger. And so today we find ourselves in a world dominated by immense global oligopolies that every day further limit the flexibility of our economy and our personal freedom within it. There are still many instances of intense competition -- just ask General Motors.

But since the great opening of global markets in the early 1990s, the tendency within most of the systems we rely on for manufactured goods, processed commodities, and basic services has been toward ever more extreme consolidation. Consider raw materials: three firms control almost 75 percent of the global market in iron ore. Consider manufacturing services: Owens Illinois has rolled up roughly half the global capacity to supply glass containers. We see extreme consolidation in heavy equipment; General Electric builds 60 percent of large gas turbines as well as 60 percent of large wind turbines. In processed materials; Corning produces 60 percent of the glass for flat-screen televisions. Even in sneakers; Nike and Adidas split a 60- percent share of the global market. Consolidation reigns in banking, meatpacking, oil refining, and grains. It holds even in eyeglasses, a field in which the Italian firm Luxottica has captured control over five of the six national outlets in the U.S. market.

The stakes could not be higher. In systems where oligopolies rule unchecked by the state, competition itself is transformed from a free-for-all into a kind of private-property right, a license to the powerful to fence off entire marketplaces, there to pit supplier against supplier, community against community, and worker against worker, for their own private gain. When oligopolies rule unchecked by the state, what is perverted is the free market itself, and our freedom as individuals within the economy and ultimately within our political system as well.

Popular notions of oligopoly and monopoly tend to focus on the danger that firms, having gained control over a marketplace, will then be able to dictate an unfairly high price, extracting a sort of tax from society as a whole. But what should concern us today even more is a mirror image of monopoly called "monopsony." Monopsony arises when a firm captures the ability to dictate price to its suppliers, because the suppliers have no real choice other than to deal with that buyer. Not all oligopolists rely on the exercise of monopsony, but a large and growing contingent of today's largest firms are built to do just that. The ultimate danger of monopsony is that it deprives the firms that actually manufacture products from obtaining an adequate return on their investment. In other words, the ultimate danger of monopsony is that, over time, it tends to destroy the machines and skills on which we all rely.

Examples of monopsony can be difficult to pin down, but we are in luck in that today we have one of the best illustrations of monopsony pricing power in economic history: Wal-Mart. There is little need to recount at any length the retailer's power over America's marketplace. For our purposes, a few facts will suffice -- that one in every five retail sales in America is recorded at Wal-Mart's cash registers; that the firm's revenue nearly equals that of the next six retailers combined; that for many goods, Wal-Mart accounts for upward of 30 percent of U.S. sales, and plans to more than double its sales within the next five years.

The effects of monopsony also can be difficult to pin down. But again we have easy illustrations ready to hand, in the surprising recent tribulations of two iconic American firms -- Coca-Cola and Kraft. Coca-Cola is the quintessential seller of a product based on a "secret formula." Recently, though, Wal-Mart decided that it did not approve of the artificial sweetener Coca-Cola planned to use in a new line of diet colas. In a response that would have been unthinkable just a few years ago, Coca-Cola yielded to the will of an outside firm and designed a second product to meet Wal-Mart's decree. Kraft, meanwhile, is a producer that only four years ago was celebrated by Forbes for "leading the charge" in a "brutal industry." Yet since 2004, Kraft has announced plans to shut thirty-nine plants, to let go 13,500 workers, and to eliminate a quarter of its products. Most reports blame soaring prices of energy and raw materials, but in a truly free market Kraft could have pushed at least some of these higher costs on to the consumer. This, however, is no longer possible. Even as costs rise, Wal-Mart and other discounters continue to demand that Kraft lower its prices further. Kraft has found itself with no other choice than to swallow the costs, and hence to tear itself to pieces.

The idea that Wal-Mart's power actually subverts the functioning of the free market will seem shocking to some. After all, the firm rose to dominance in the same way that many thousands of other companies before it did -- through smart innovation, a unique culture, and a focus on serving the customer. Even a decade ago, Americans could fairly conclude that, in most respects, Wal-Mart's rise had been good for the nation. But the issue before us is not how Wal-Mart grew to scale but how Wal-Mart uses its power today and will use it tomorrow. The problem is that Wal-Mart, like other monopsonists, does not participate in the market so much as use its power to micromanage the market, carefully coordinating the actions of thousands of firms from a position above the market.

One of the basic premises of the free-market system is that actors are free to buy from or sell to a variety of other actors. In the case of Wal-Mart, no one can deny that every single firm that supplies the retailer is, technically, free not to do so. But is this true in the real world? After all, once a firm comes to depend on selling through Wal-Mart's system, just how conceivable is the idea of walking away? Producers own and maintain machines, employ skilled workers, lease land and buildings. Even with careful planning, most would find the sudden surrender of 20 percent or more of their revenue to be extremely disruptive, if not suicidal.

Another basic premise of the free-market system is that the price of a commodity or good carries vital information from actor to actor within an economy -- say, that cherries are scarce, or vinyl floor tiles abundant, or the latest iPod includes a new technology. Again, no one can deny that, technically, every firm that supplies Wal-Mart is free to ask whatever price it wants. But again, we must ask whether this holds true in the real world. Every producer knows that Wal-Mart is, as one of its executives told the New York Times, a "no-nonsense negotiator," which means the firm sets take-it-or-leave-it prices, which as we know from the previous paragraph are far harder to leave than to take. Every so often Wal-Mart will accept a higher price, but then the retailer's managers may opt to punish the offending supplier, perhaps by ratcheting up competition with its own in-house brands. Price, within the consumer economy, increasingly carries but one bit of information -- that Wal-Mart is powerful enough to bend everyone else to its will.

Those who would use the word "free" to describe the market over which Wal-Mart presides should first consult with Coca-Cola's product-design department; or with Kraft managers, or Kraft shareholders, or the Kraft employees who lost their jobs. These results were decided not within the scrum of the marketplace but by a single firm. Free-market utopians have long decried government industrial policy because it puts into the hands of bureaucrats and politicians the power to determine which firms "win" and which "lose." Wal-Mart picks winners and losers every day, and the losers have no recourse to any court or any political representative anywhere.

Antimonopoly sentiment in America dates to the nation's founding. We see it in the acceptance by the thirteen newly independent states of English common law, with its rich antimonopoly tradition. We see it in the most vital statement on industry in American history, Alexander Hamilton's Report on Manufactures, itself deeply influenced by Adam Smith's antimonopoly writings in The Wealth of Nations. We see its citizen-centered nature in a 1792 essay by James Madison, in which he condemns monopolies for denying Americans "that free use of their faculties, and free choice of their occupations, which not only constitute their property in the general sense of the word; but are the means of acquiring property strictly so called." We see it dominating many of the great political battles of the nineteenth century, from Andrew Jackson's war on the Second Bank of the United States to William Jennings Bryan's populist campaign of 1896.

It would be wrong, however, to regard America's powerful antitrust law of the twentieth century as especially populist in nature. By the time Congress passed the Sherman Antitrust Act in 1890, the industrial explosion that began during the Civil War had resulted in the rise of hundreds of big firms, which often proved far more efficient than their older, smaller competitors. The phenomenal productivity of these newcomers tempered support for more radical antimonopoly proposals. The result was a sort of compromise, engineered mainly by the progressive wing of the Republican Party. The Sherman Act came to be seen not as a license to destroy all big firms simply because they were big but as a very big stick with which to convince the average firm not to overreach, and on rare occasions to break companies like Standard Oil, which had developed reputations for grossly abusing power. Most big firms were allowed to remain big as long as they avoided outright collusion with competitors, or extreme abuse of their consumers, or overly rapid predation against smaller property holders.

Thus did antitrust power come to serve as a sort of constitutional law within America's political economy. The goal was to enforce a balance of power among economic actors of all sizes, to maintain some degree of liberty at all levels within the economy. In recent years it has become a truism that antitrust law is designed to protect only the consumer. But the fact that Congress intended these laws also to preserve both competition per se and to shelter entire classes of entrepreneurs (among whom is the individual worker) was clear at the beginning and has been made clearer many times since. The text of the Sherman Act itself is famously vague, but the Supreme Court's decision in the 1911 Standard Oil case was based flatly on the assumption that the need to ensure robust competition sometimes outweighs the benefits of near-term efficiency. Standard's roll-up of the oil industry cut the cost of kerosene by nearly 70 percent, and yet the justices shattered the firm into thirty-four pieces. For many legislators, this was not nearly enough. Three years later, Congress greatly strengthened the rules against inter-firm price discrimination, in the Clayton Antitrust Act. Then in 1936, Congress did so again, even more resoundingly, by passing the Robinson-Patman Act. Wright Patman, the Texas Democrat who was the main force behind the bill, made sure everyone understood Congress's intent. "The expressed purpose of the Act is to protect the independent merchant," he wrote on the first page of a book he published to explain the law, "and the manufacturer from whom he buys."

During the twentieth century, antitrust law shaped the American economy more than did any other government power. Over the years, many thousands of antitrust cases were filed, by federal and state governments against particular firms and by one firm against another. Antitrust law determined not merely how big a firm could grow but where it could do business, how it was managed, how it could compete, even what lines of business it could enter. As the industrial scholar Alfred D. Chandler has noted, the vertically integrated firm -- which dominated the American economy for most of the last century -- was to a great degree the product of antitrust enforcement. When Theodore Roosevelt began to limit the ability of large companies to grow horizontally, many responded by buying outside suppliers and integrating their operations into vertical lines of production. Many also set up internal research labs to improve existing products and develop new ones. Antitrust law later played a huge role in launching the information revolution. During the Cold War, the Justice Department routinely used antitrust suits to force high-tech firms to share the technologies they had developed. Targeted firms like IBM, RCA, AT&T, and Xerox spilled many thousands of patents onto the market, where they were available to any American competitor for free.

When Ronald Reagan took power in 1981, one of his first targets was antitrust law. The new administration put forth a variety of arguments -- not least that international competition, especially with Japan, had rendered moot the old fears of monopoly. Yet the driving motive clearly was the philosophical antipathy of the Reaganites to the idea that the American people, acting through their representatives, had any business whatsoever telling business what to do. And the practical effect was to harness the institution of the corporation to that administration's larger project of shifting power and profit from the working, middle, and entrepreneurial classes to the powerful and rich. The radical nature of Reagan's attack on antitrust law is, in retrospect, astounding. Early in the administration, Attorney General William French Smith declared that "bigness is not necessarily badness."

Antitrust enforcer William Baxter held that big firms were more efficient than smaller and said he had the "science" to prove it. When the Reagan team published its new Merger Guidelines in 1982, the document formalized two revolutionary changes: it redefined the American marketplace as global in nature, and it severely restricted who could be regarded as a victim of monopoly. From this point on, only one action could be regarded as truly unacceptable -- to gouge the consumer. Any firm that avoided such a clumsy act was, for all intents, free to gouge any other class of citizen, not least through predatory pricing and the blatant exercise of power over suppliers and workers.

If a single business deal illuminates the degree to which Wal-Mart has centralized control over America's consumer economy, it was last year's takeover of Gillette by Procter & Gamble. Gillette would seem one of the last firms likely to find itself unable to protect its pricing power; its 70 percent share of global razor sales gives it some weight at the negotiating table. Yet the Boston-based firm discovered that it could no longer keep its profit margins safely out of the grasp of the Arkansas retailer. And so was conceived the largest in a long list of buyouts due at least in part to Wal-Mart's power, including Newell's takeover of Rubbermaid, Kellogg's purchase of Keebler, and Kraft's buyout of Nabisco. And of course there is the long list of firms that have ended up dead or in Chapter 11 reorganization at least partly because of their dealings with Wal-Mart. Some are small fry, like Vlasic Foods. Others were once powers, like Pillowtex. Some were beloved brands, like Schwinn. Others were family enterprises, like Lovable Garments.

Even with Gillette in hand, Procter & Gamble itself is anything but safe. For decades, P&G was regarded by retailers as the "800-pound gorilla" among suppliers of home products. It was one of two firms that most spurred Sam Walton as he built Wal-Mart -- the competitor to beat was K-Mart; the supplier to tame, P&G. By the time Walton died in the early 1990s, he was able to brag of how he had forced P&G to accept a "win-win partnership" based on the sharing of information. Had he lived a few years longer, though, Walton would have witnessed what amounts to the outright capture of his foe. And for a man who spent much of his life scrounging for deals on lingerie and hawking hula-hoop knockoffs, he would surely have relished how this struggle for the heights of the consumer economy was decided by the power to price toilet paper and detergent.

In recent years, Wal-Mart beat P&G into submission by mercilessly pitting its in-house brands against top P&G brands; the retailer, for instance, introduced not one but two detergents to compete with Tide and, in a particularly audacious move, grabbed outright the copyright for the White Cloud line of toilet paper, after P&G unwisely forgot to protect its own brand's name.

With the purchase of Gillette, P&G has achieved a new scope and scale, vaulting past Unilever to become the world's biggest maker of consumer goods. Yet the new balance of power is unlikely to last. Wal-Mart has become so strong, so sure of the invulnerability of its position, that not only does it not fear consolidation among its suppliers; it actually forces many of them to form fully self-conscious, collusive oligopolies with their rivals. Not that these relationships are advertised as such. The key here is the innocuous-sounding term "category management," and it describes a practice that is now common to all large retailers. But it is a practice that grew out of Wal-Mart's original "partnership" with P&G, and it is a practice that has been pushed especially hard by Wal-Mart.

Until recently, every retailer would draw up its own merchandising plan, detailing which brands to promote, how much shelf space to grant each, which products to place at eye level. These days, Wal-Mart and a growing number of other retailers ask a single supplier to serve as its "Category Captain" and to manage the shelving and marketing decisions for an entire family of products, say, dental care. Wal-Mart then requires all other producers of this class of products to cooperate with the new "Captain." One obvious result is that a producer like Colgate-Palmolive will end up working intensely with firms it formerly competed with, such as Crest manufacturer P&G, to find the mix of products that will allow Wal-Mart to earn the most it can from its shelf space. If Wal-Mart discovers that a supplier promotes its own product at the expense of Wal-Mart's revenue, the retailer may name a new captain in its stead.

Not surprisingly, one common result is that many producers simply stop competing head to head. In many instances, a single firm ends up controlling 70 percent or more of U.S. sales in an entire product line, such as canned soups or chips. In exchange, its competitor will expect that firm to yield 70 percent or more of some other product line, say, snacks or spices. Such sharing out of markets by oligopolies is taking place throughout the non-branded economy -- in grains, meats, medical devices, chemicals, electronic components. But nowhere is it more visible than in the aisles of Wal-Mart.

In essence, Wal-Mart has grown so powerful that it can turn even its largest suppliers, and entire oligopolized industries, into extensions of itself. The effects of this practice are most obvious in Wal-Mart's horizontal competition against other retailers. Retail experts sometimes talk of a "waterbed effect," which takes place when a supplier insists on collecting from weaker retailers at least some of the rent a more powerful firm refuses to pay. One recent study of how such power plays out within an entire system shows that a small retailer can expect to pay upward of 10 percent more than a powerful firm for the same basket of items. The effect also explains what takes place economically between communities served by Wal-Mart and those served by less powerful firms -- the more power Wal-Mart accrues, the more it is able to shift costs from, say, suburb to city. And so every day the competitive landscape tilts just that much more in Wal-Mart's favor. And so, every year, the landscape is littered with that many more dead or half-dead retailers -- including such once-big names as Winn Dixie, Albertsons, K-Mart, Toys R Us, and Sears.

This advantage is simply what can be quantified in price. Many of the benefits Wal-Mart extracts from its suppliers lie in a realm far beyond the market economy. If Wal-Mart's aim were simply to dictate the price it will pay for a product, then leave up to its suppliers all decisions as to how to get to that price, it would cause far less economic damage than it does now. But that is not Wal-Mart's way.

Instead, the firm is also one of the world's most intrusive, jealous, fastidious micromanagers, and its aim is nothing less than to remake entirely how its suppliers do business, not least so that it can shift many of its own costs of doing business onto them. In addition to dictating what price its suppliers must accept, Wal-Mart also dictates how they package their products, how they ship those products, and how they gather and process information on the movement of those products. Take, for instance, Levi Strauss & Co. Wal-Mart dictates that its suppliers tell it what price they charge Wal-Mart's competitors, that they accept payment entirely on Wal-Mart's terms, and that they share information all the way back to the purchase of raw materials. Take, for instance, Newell Rubbermaid. Wal-Mart controls with whom its suppliers speak, how and where they can sell their goods, and even encourages them to support Wal-Mart in its political fights. Take, for instance, Disney. Wal-Mart all but dictates to suppliers where to manufacture their products, as well as how to design those products and what materials and ingredients to use in those products. Take, for instance, Coca-Cola.

We should be most disturbed by the fact that Wal-Mart has gathered the power to dictate content, even to the most powerful of its suppliers. Because no longer is the retailer's attention focused only on firms that produce T-shirts, electrical cords, and breakfast cereal. Every day Wal-Mart expands its share of the U.S. markets for magazines, recorded music, films on DVD, and books. This means that every day its tastes, interests, and peculiarities weigh that much more on decisions made in Hollywood studios, in Manhattan publishing houses, and in the editorial offices of newspapers and network news shows.

Americans who favor abortion have much to worry about these days, between South Dakota's recent ban and the appointment to the Supreme Court of Justice Joseph Alito. But at least these battles are taking place entirely in the public eye, and the decisions are being made by democratically elected representatives. Such was not the case when Wal-Mart recently decided to allow each individual pharmacist in the company to choose whether or not to stock the "morning after" pill. Given the degree to which Wal-Mart has rolled up the pharmaceutical business in many towns and regions across the country, this act amounted, for all intents, to a de facto ban on these pills in many communities. This political decision was made and en-forced by a private monopoly.

To appreciate just how blatantly Wal-Mart defies America's antitrust tradition, consider how our grandparents handled the last retailer to gather extreme power: the Great Atlantic & Pacific Tea Company. Better known as the A&P, the grocer at its height operated more than 4,000 supermarkets in nearly forty states and wielded immense influence over the entire food economy. The A&P was famous for its innovations in discount retailing, in distribution, in advertising. And it was infamous for its use of monopsony power, not least its perfection of the art of setting in-house brands against producers who resisted its will. Relative to Wal-Mart today, the A&P a half century ago was a far less awesome force. The firm sold only groceries; it was only double the size of its nearest competitor; and its total workforce was, as a percentage of the U.S. population, only a fifth as large as Wal-Mart's is now. Even so, the A&P was widely and vociferously denounced by local communities, state governments, newspapers, and labor unions as a threat to the American way of life.

Over the years, the federal government repeatedly hauled the A&P into court for abusing its market power. The government first began to scrutinize the firm in 1915, when Cream of Wheat refused to sell to the A&P because of its pricing policy. Then in 1936 came the Robinson-Patman law, which was popularly known as the "Anti-A&P Act." A year later, the Federal Trade Commission filed suit against the A&P, charging that the company had forced a Maryland vegetable packer to grant it a special 4 percent discount. In November 1942, the Antitrust Division filed a Sherman Act case against the retailer, one section of which detailed how the A&P had used "several turns of the screw" to coerce Ralston Purina into granting it a discount three and a half times what the cereal packer offered any other firm. Three years after winning that case, the Justice Department was back in court in September 1949 with another Sherman Act suit, this time asking for the dismemberment of the A&P.

Filed at a time when the grocer was already clearly in decline--not least because of antitrust enforcement -- the 1949 case was dropped five years later. But this was only after the A&P admitted guilt, agreed to dissolve an internal company that traded in agricultural products, and signed an outright prohibition against "dictating systematically" to suppliers. The final antitrust case against the A&P was not resolved until February 1979, a month after a West German grocery mogul bought control over the remnants of the once-huge firm.

Antitrust enforcement against the A&P and other big firms like Sears prevented any twentieth-century American retailer from ever growing nearly as powerful as Wal-Mart is today. But since the Reagan Administration, the only effective constraints on Wal-Mart have been set by investors and revenue flow. Even during the 1990s, when the Clinton Administration targeted a few companies for abusing their pricing power, the Arkansas-based retailer somehow managed to avoid any action. It is unclear whether this was in any way due to the close relationship between the Clinton family and Wal-Mart, on whose board Hillary Clinton served for many years. But even as Staples and McCormick & Co. were sued, a firm with vastly more power over the American economy was left entirely free to extend its domain in whatever direction and to whatever extent it wished. In fact, in one of the highest-profile antitrust cases of the 1990s, an FTC suit against Toys R Us for colluding with toy manufacturers, Wal-Mart emerged as one of the biggest winners.

The Reagan Administration's assault on antitrust enforcement had an even more dramatic effect on manufacturers. Complete license to expand horizontally resulted, in many industries, in the virtual collapse of the vertically integrated firm. Once they consolidated control over their marketplaces, scores of big manufacturers shut down or spun off most or even all of such naturally expensive and risky activities as production and research. These firms opted instead to purchase components and other manufacturing "services" from smaller companies whose main or only path to the final marketplace passed through their offices. This is true of corporations as diverse as Nike, Boeing, 3M, and Merck. Although it has become commonplace to trace the phenomenon of "outsourcing" to the emergence of new technologies and changes in the global "marketplace," it is much more accurate to trace it back to the disappearance of antitrust enforcement. The change in law that gave Wal-Mart license to grow to such a huge size also gave to many manufacturers the license to recast themselves in Wal-Mart's image and become retailers themselves. The result? More and more production systems are run by companies designed not to manufacture but to trade in components manufactured by other, smaller firms, over which they can exercise at least some degree of monopsony power.

Some of Wal-Mart's more sophisticated boosters will defend the company by defending the exercise of monopsony power itself. Wal-Mart, in their view, should be seen as a firm that aggregates our will and buying power as consumers in much the same way that unions once aggregated the interests of workers. One of the better known versions of the argument was put forth by Jason Furman, a former campaign adviser to Senator John Kerry, who last year published a strong defense of Wal-Mart. The huge retailer, Furman wrote, is "a progressive success story" that has brought "huge benefits" to the "American middle class." Sure, this argument goes, Wal-Mart may employ its power with a certain Stalinist flair; but it does so in our name, and the result is to make the production system on which we all rely more efficient. This efficiency is good for all society, and it is especially good for those poor folks who cling to the lower rungs of the economic ladder.

There are two great flaws in such thinking. The first and most obvious is that it ignores the effects of monopoly on our political system -- the consolidation of vision and voice, the de facto merger of private and public spheres, the gathering of power unchecked and unaccountable. It is to view American society through an entirely materialistic prism, to measure "human progress" only in terms of how many calories or blouses can be stuffed into an individual's shopping cart. It is to view the American citizen not as someone who yearns to decide for himself or herself what to buy and where to work in a free market but to say, instead, "Let them eat Tastykake."

The second flaw is economic, and is of even more immediate concern. Even if the American people did choose to bear the extreme political costs of monopoly, the particular type of power wielded by Wal-Mart and its emulators makes no economic sense in the long run. On the surface, it may seem to matter little who wins the great battles between such goliaths as Wal-Mart and Kraft, or between Wal-Mart and P&G. Yet which firm prevails can have a huge effect on the welfare of our society over time. The difference between a system dominated by firms built to produce and a system dominated by firms built to exercise monopsony power over producers is extreme. The producers that dominated the American economy for most of the 20th century were geared to build more and to introduce new, to protect their capital investments against overly predatory investors, to raise price faster than cost, to show some degree of loyalty to workers and outside suppliers and communities.

Wal-Mart and a growing number of today's dominant firms, by contrast, are programmed to cut cost faster than price, to slow the introduction of new technologies and techniques, to dictate downward the wages and profits of the millions of people and smaller firms who make and grow what they sell, to break down entire lines of production in the name of efficiency. The effects of this change are clear: We see them in the collapsing profit margins of the firms caught in Wal-Mart's system. We see them in the fact that of Wal-Mart's top ten suppliers in 1994, four have sought bankruptcy protection.

In a world of rising tensions within and among nations, of accelerating climate and environmental change, we would be wise to design the production systems on which we rely to be able to evolve as rapidly as the human and natural worlds around us evolve. Instead, we have programmed the dominant institutions within our economy to eliminate all the wonderful chaos of a free-market system. Rather than speed up the random motion and serendipitous collisions that have for so long propelled the American economy, Wal-Mart and other monopsonists are slowly freezing our economy into an ever more rigid crystal that holds each of us ever more tightly in place, and that every day is more liable to collapse from some sudden shock. To defend Wal-Mart for its low prices is to claim that the most perfect form of economic organization more closely resembles the Soviet Union in 1950 than 20th-century America. It is to celebrate rationalization to the point of complete irrationality.

There are many ways to counterbalance the power of Wal-Mart and the other new goliaths. In the case of Wal-Mart, we could encourage yet more mergers among its suppliers and its competitors. Or we could make it easier for its workers to unionize. Or we could micromanage the firm through our state and municipal governments (e.g., requiring it, as Maryland recently did, to devote 8 percent of its payroll to health insurance). Yet every one of these approaches runs the risk of only further warping our economy and perhaps even reinforcing Wal-Mart's power by creating new allies for it. After all, super-consolidated suppliers already share many of Wal-Mart's political interests; labor unions now committed to Wal-Mart's destruction could overnight become equally as committed to the further extension of Wal-Mart's power; and new bureaucracies will generally tend to sympathize with the firms they regulate. We can also, of course, choose to do nothing, and surrender to the immense retailer all the decisions that in the past were made within the marketplace itself or by democratically elected legislators. In other words, we can cede to Wal-Mart the role it so relentlessly seeks for itself -- to be dictator over the central functions of the U.S. consumer economy.

If, however, we choose the path of the free market, and of individual freedom within the market; if we choose to ensure the health and flexibility of our economy and our industrial systems and our society; if we choose to protect our republican way of government, which depends on the separation of powers within our economy just as in our political system -- then we have only one choice. We must restore antitrust law to its central role in protecting the economic rights, properties, and liberties of the American citizen, and first of all use that power to break Wal-Mart into pieces. We can devise no magic formula or scientific plan for doing so -- all antitrust decisions are inherently subjective in nature. But when we do so, we should be confident that we act squarely in the American tradition, as illuminated by the cases against Standard Oil and the A&P. We should act knowing that the ultimate fault lies not with Wal-Mart but with our last generation of representatives, who have abjectly failed to enforce laws refined over the course of two centuries. We should act knowing that much similar work lies ahead, against many other giant oligopolies, in many other sectors. We should act knowing that to falter is to guarantee political and perhaps economic disaster.

As we make our case, we should be sure to call one expert witness in particular. Last year, Wal-Mart CEO Lee Scott called on the British government to take antitrust action against the U.K. grocery chain Tesco. Whenever a firm nears a 30 percent share of any market, Scott said, "there is a point where government is compelled to intervene." Now, Wal-Mart has never been shy about using antitrust for its own purposes. In addition to the Toys R Us case, the firm was also the instigator of a Sherman Act suit against Visa and MasterCard. And so such a statement, by the CEO of a firm that already controls upward of 30 percent of many markets and has announced plans to more than double its sales, sets a new standard for hubris. It also sets a simple goal for us -- elect representatives who will take Citizen Scott at his word.

This article has been reprinted with permission from Harper's magazine Copyright 2006 by Harper's Magazine.