Special Privileges from the Interventionist State & Conspiracies of Would-Be Monopolists
(Murray Rothbard in Defense of Rational Conspiracy Theory)
To reiterate and summarize the previous few paragraphs for emphasis,
when someone dares to point out that coercive monopolism goes hand in
hand with socialism, fascism, and other interventionist (statist)
systems of the Left, he is often attacked as an "extremist" or a
right-wing (pro-freedom) radical. Such observations and criticisms of Establishment power and coercive monopolies are often met with such snide epithets as
"paranoid" or "The Conspiracy Theory of History" (said
sneeringly) by Establishment partisans. In rebuttal to such ad hominem
charges, Dr. Rothbard makes the following observations: "Suppose we find
that Congress has passed a law raising the steel tariff or imposing
import quotas on steel? Surely only a moron will fail to realize that
the tariff or quota was passed at the behest of lobbyists from the
domestic steel industry, anxious to keep out efficient foreign
competitors. No one would level a charge of 'conspiracy theory' against
such a conclusion. But what the conspiracy theorist is doing is simply
to extend his analysis to more complex measures of government: say, to
public works projects, the establishment of the ICC, the creation of the
Federal Reserve System, or the entry of the United States into a war.
In each of these cases, the conspiracy theorist asks himself the
question cui bono? Who benefits from this measure? If he finds that
Measure A benefits X and Y, his next step is to investigate the
hypothesis: did X and Y in fact lobby or exert pressure for the passage
of Measure A? In short, did X and Y realize that they would benefit and
act accordingly?
"Far from being a paranoid or a determinist, the conspiracy analyst is a praxeologist: that is, he believes that people act purposively -- that they make conscious choices to employ means in order to arrive at goals. Hence, if a steel tariff is passed, he assumes that the steel industry lobbied for it; if a public works project is created, he hypothesizes that it was promoted by an alliance
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of construction firms and unions who enjoyed public works contracts, and bureaucrats who expanded their jobs and incomes. It is the opponents of 'conspiracy' analysts who profess to believe that all events -- at least in government -- are random and unplanned, and that therefore people do not engage in pruposive choice and planning."18
CONCLUSION
As we have seen, classical economist Adam Smith, New Left historian Gabriel Kolko, activist "liberal" consumerist Ralph Nader, conservative Chicago School economist Milton Friedman, liberal power-structure analyst William Domhoff, right-wing constitutionalist Dan Smoot, Austrian economist Ludwig von Mises, power-elites researcher Antony Sutton, and libertarian economic historian Murray Rothbard -- whatever their differences on policy recommendations and other issues -- they all concur on one point: privileged power elites and oligopolies tend to be strengthened rather than weakened by bureaucratic regulations from government. Political interventionism tends to artificially stabilize the market in favor of "the big boys" (as Ralph Nader calls them) and against greater diversity, market alternatives, and competition.
There seems to be a consensus among an increasing number of scholars with widely diverse ideological perspectives that when the political state uses its power to intervene in the economy, regardless of the initial motives or outward intentions, it seldom, if ever, does so as a neutral agent for the "common good"; rather, political interventionism always tends to favor certain special, vested interests -- almost always those big firms already on top in their particular fields -- at the expense of their competitors and the consumers. This phenomenon seems to be due to the nature of the beast and therefore is endemic and inescapable in any interventionist political system.
As long as political regulations over private industries are sanctioned as legitimate, there will be vested-interest groups and lobbies clustering around Congress and the "independent" regulatory agencies -- competing for favors from the public trough at the expense of everybody else. This has been shown to be true of the Interstate Commerce Commission, the Federal Reserve System, the Food and Drug Administration, the Federal Trade Commission, the Export-Import Bank, the Commodity Credit Corporation of the U.S. Department of Agriculture, the foreign aid programs, occupational licensure, and even the antitrust laws. In case after case, the regulation or agency served the special interests by promoting oligopoly and monopoly and retarded competition and market alternatives to the detriment of consumers.
It would seem, then, that the way to avoid such abuses is not by giving even more power to the political regulators
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who, after all, are already comfortably in bed with the vested business interests. The way to prevent such regulatory-industrial complexes and oligarchal establishments is through a disestablishmentarian divorce, to be achieved by a Separation of Market and State -- that is, a strict adherence to a policy of laissez faire: "hands off" all peaceful market affairs by asny level of government.
If the government were constitutionally and legally forbidden to intervene on behalf of anyone, then Rockefeller, Haammer, or any other would-be monopolist would have no more influence over government than anyone else, and would have to compete in the marketplace like everybody else.
Moreover, if government had not already been in the business of intervening through regulations, controls, bureaucratic agencies, special taxes, and so on, there would have been no one in government to act as "pull peddlers" -- since there would have been no political favors to dispense, no privileges to peddle in exchange for campaign contributions; so, the oligarchy based on political pull would not have emerged.
It is only the government's ability to positively intervene -- and the widespread sanction of interventionism as legitimate -- which makes pressure groups, lobbies, and political factions so powerful and important in politics. Otherwise, they wouldn't cluster around Washington like flies around a garbage can. (Isn't this what a very disillusioned David Stockman meant by 'the triumph of politics'?) Making it illegal for government to regulate or otherwise intervene in production and trade would be much more effective in combatting political abuses and corruption than any restrictions on campaign financing or other superficial reforms.
With government constitutionally prohibited from meddling in the private affairs and economic dealings of peaceful people, and restricted to protecting everyone's person and property from criminal violation, then no conspiracy of would-be monopolists or special-interest hustlers could use political power as a legal tool to obtain special privileges, exploitative monopolies, or plunder from the taxpayers. Without government intervention, they would lose their power base, and the chain of privilege could be broken. A policy of non-interventionism -- never really tried on a national scale -- could be the ultimate solution to the problem of coercive monopolies and coercive power elites.
As former Congressman Ron Paul of Texas has cogently observed, "The free market is not only the most productive system, it is also the only system consistent with individual liberty. It is also the only one that stops special interests from oppressing taxpayers and consumers.
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"In an economy characterized by government intervention, the powerful use the government to their own ends. The only cure is not more government, but getting politicians and bureaucrats out of the economy."19
In sum, then, if coercive power elites and exploitative monopolies are bred from the interaction and collusion between special business interests and interventionist politics, then a policy of laissez faire -- a separation of market and state -- would seem to be the ultimate cure or best solution.
Notes, References, & Bibliography
1. Wayne Leeman, "The Limitations of Price Cutting As A Barrier to Local Entry," Journal of Political Economy. December, 1956; Robert Masters, "An Alternative Concept of Competition," The IREC Review Vol. II No. 5.; John S. McGee, "Predatory Price-Cutting: The Standard Oil (N.J.) Case," The Journal of Law and Economics. (October, 1958, pp. 137-169); Yale Brozen, "Is Government the Source of Monopoly?" The Intercollegiate Review. (vol. V no. 2, pp. 67-78). We have even seen this in a relative way on an international scale with the breakdown in effectiveness of the OPEC cartel in recent years. Seeking to gain even more revenues, various members refused to limit production and sold oil at prices below that set by the cartel. Indeed, it has been suggested that OPEC never would have had much power to keep oil prices high in the first place if there had not been domestic price controls and a myriad of regulations and controls imposed on energy industries. Cf. George Reisman, The Government Against the Economy, (Appleton, 1979).
2. The terms "monopoly" and "competition" are somewhat vague and elusive in that they are hard to define outside of rather narrow, artificial, and more-or-less arbitrary assumptions. Acknowledging the problems of ambiguity in these concepts, the term "monopoly" is used in this article loosely to mean a situation in which one seller fully dominates his particular market because competition is barred from that field.
3. Gabriel Kolko, The Triumph of Conservatism, (Quadrangle Books, 1967, pp. 4-5.)
4. Ibid, p. 3.
5. Antony Sutton, Wall Street and FDR, (Arlington House, 1975).
6. Ralph Nader, The Monopoly Makers: Ralph Nader's Study Group Report on Regulations and Competition. (Grossman Publishers, 1973).
7. Milton Friedman, on Donahue, a TV program originating in Chicago.
8. Gary Allen, The Rockefeller File, (Concord Press, 1974).
9. Ludwig von Mises, Human Action, (Chicago, 3ed Rev. Edition, 1966), pp. 808-809.
10. Murray Rothbard, "Bankers Conspire," MoneyWorld (Winter, 1987); Antony Sutton, Wall Street and FDR (Arlington House, 1975); Sutton, Wall Street and the Bolshevik Revolution (Arlington House, 1974(; Sutton, Wall Street and the Rise of Hitler (76 Press, 1976).
11. Carroll Quigley, Tragedy and Hope (Macmillan, 1966), pp. 950-951.
12. Ibid.
13. Ibid.
14. Ibid.
18
15. Dan Smoot, The Invisible Government. (Belmont, Mass., Western Islands, 1967).
16. Smoot, Op. cit.; Cf., Frederick Lewis Allen, Morgan the Great. (Life magazine, April 25, 1949); Quigley, op cit. Cleon Skousen, The Naked Capitalist (1970); Gary Allen, None Dare Call It Conspiracy, (Concord Press, 1971); Gary Allen, The Rockefeller File, (Concord Press, 1974). G. William Domhoff, The Powers That Be: Processes of Ruling Class Domination in America. (New York, Vintage Books, 1978); G. William Domhoff, Who Rules America? (Englewood Cliffs, N.J., Prentice-Hall, 1967).
17. Murray Rothbard, "The Conspiracy Theory of History Revisited," Reason (April 1977).
18. Ibid.
19. Ron Paul, from a May 1981 press release issued by the office of Congressman Ron Paul.
19 BIBLIOGRAPHY
Allen, Frederick Lewis. Morgan the Great. Life magazine, April 25, 1949.
Allen, Gary. None Dare Call It Conspiracy. Seal Beach, Calif.: Concord Press, 1971.
Allen, Gary. The Rockefeller File. Seal Beach, Calif.: Concord Press, 1974.
Birmingham, Stephen. Our Crowd. New York: Dell Books, 1967.
Brozen, Yale. "Is Government the Source of Monopoly?" The Intercollegiate Review. vol. V no. 2, pp. 67-78.
Domhoff, G. William. The Powers That Be: Processes of Ruling Class Domination in America. New York, Vintage Books, 1978.
Domhoff, G. William. Who Rules America? Englewood Cliffs, N.J.: Prentice-Hall, 1967.
Hansl, Proctor. Years of Plunder New York: Smith & Haas, 1935.
Kolko, Gabriel. Railroads and Regulations 1877-1916. Princeton University Presss, 1965.
Kolko, Gabriel. The Triumph of Conservatism. Chicago: Quadrangle Books, 1967.
Leeman, Wayne. "The Limitations of Price Cutting As A Barrier to Local Entry," Journal of Political Economy. December, 1956.
Lundberg, Ferdinand. America's 60 Families. New York: Vanguard, 1938.
Lundberg, Ferdinand. The Rich and the Super Rich. New York: Lyle Stuart, 1968.
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Masters, Robert. "An Alternative Concept of Competition," The IREC Review Vol. II No. 5.
McGee, John S. "Predatory Price-Cutting: The Standard Oil (N.J.) Case," The Journal of Law and Economics. October, 1958, pp. 137-169.
Mills, C. Wright. The Power Elite. New York: Oxford University Press, 1956.
Myers, Gustavus. History of the Great American Fortunes. New York: Random House, 1936.
Nader, Ralph. The Big Boys: Power and Position in American Business. New York: Pantheon Books, 1986.
Nader, Ralph. The Monopoly Makers: Ralph Nader's Study Group Report on Regulations and Competition. Grossman Publishers, 1973.
Navarro, Peter. The Policy Game. New York: John Wiley & Sons, Inc., 1984.
Quigley, Carroll. Tragedy and Hope: A History of the World in Our Time. New York: Macmillan, 1966.
Quirk, William J. "A Cross of Paper," The New Republic, January 19, 1980.
Skousen, W. Cleon. The Naked Capitalist.
(c) Copyright 1987 & 1999 Sam Wells
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"Robber Barons" & Exploitative Monopolies which system fosters them & which discourages them?
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