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)

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


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


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

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

It would seem, then, that the way to avoid such abuses
is not by giving even more power to the political regulators


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

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

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.


"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.


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,

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.



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,

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,

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.


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


"Robber Barons" & Exploitative Monopolies which system fosters them & which discourages them?