The Ultimate Antidote to the Politics of Exploitative Monopoly

OLIGOPOLY AND POLITICAL PULL (Or, Beware the Regulatory-Industrial Complex)

by Sam Wells

The eighteenth-century Scottish economist Adam Smith 
maintained that keeping a market free from political meddling 
benefits consumers and the economy as a whole -- but not 
necessarily particular business interests. This is why, 
throughout The Wealth of Nations, we find a deep suspicion of 
businessmen as a class and especially as members of 
politically-active special interest groups. Smith wrote: 

"People of the same trade seldom meet together, even for 
merriment and diversion, but the conversation ends in a 
conspiracy against the public, or in some contrivance to 
raise prices. It is impossible indeed to prevent such 
meetings, by any law which either could be enforceable, or 
would be consistent with liberty or justice. But though the 
law cannot hinder people of the same trade from sometimes 
assembling together, it ought to do nothing to facilitate 
such assemblies, much less to render them necessary."

Such private, voluntary schemes among would-be 
oligopolists seldom, if ever, secured any lasting advantage 
for the colluding firms. Historically, attempts to secure 
lasting monopolies and sustain monopoly prices through purely 
market means (price "wars," buying out competitors, colluding 
to fix prices, assigning market territories, advertising, 
etc.) ultimately backfired. Because of the lure of greater 
profits, there was always the temptation by some firms to 
cheat on collusion arrangements, undercutting the agreed-upon 
price. Price-cutting as a means for achieving monopoly by 
eliminating competitors inevitably failed because heavy 
losses had to be sustained by the would-be monopolist as long 
as he kept his prices below his competitors' prices, giving 
consumers a bargain. Later, when prices were raised in order 
to try to recupe those losses, competition was quickly drawn 
back into the field because of the profit that could be made 
by selling the product at prices below the monopoly asking 
price. In the meantime, consumers benefited as increased 
market competition resulted in relatively lower prices and 
more numerous alternatives became available from which to 
choose. 1 


Throughout history, certain ambitious individuals have sought to gain monopolies
in order to amass greater wealth by charging higher prices than they could get away
with in a more competitive situation.2 There is nothing wrong with that desire -- as far
as it goes -- but it can be a very difficult challenge. The key to attaining and maintaining
a monopoly, in order to sell at a higher-than-competitive price, is to find some way of
keeping others from selling in your market. But, as previously noted, purely market
(peaceful) means have seldom if ever worked to achieve that kind of monopoly, at least
for any period of time. 

So, how do you keep others from selling in your market? You get government --
the political state -- to run interference for you. You get "fair trade" laws against
"unfair competition" or government price floors or restrictions on imports or some
other political measure to give you the edge. You go to government to artificially "fix"
prices by law to stifle the dynamic competitive nature of the marketplace. 

On the local level, if you want a monopoly on taxi 
service in your community, you have to have friends at City 
Hall who can be depended on to make sure that you get a 
"license" to run a taxi business and other people don't get 
one. The friend at City Hall is an essential factor. 

If you happen to be one of your state's big dairy 
interests and want to shield your cozy oligopoly from 
competition from a newcomer who wants to sell milk at a 
cheaper price, you get your associates and lobby for the 
creation of some kind of bureaucracy called a "Milk 
Commission" or "Dairy Stabilization Board" in ordeer to 
"stabilize" the market by keeping milk prices artificially 
high by law. To do this, you cultivate friends in the state 
legislature -- persons who will vote your way at the right 
times. You also make sure your regulatory bureaucracy is 
properly staffed with those who will do the right things -- 
in the name of the public good, of course. 

If you want a national monopoly in your field, you must 
have enough influence in fifty state legislatures to make 
sure each state government excludes or at least limits your 
competition. But that is very difficult and expensive. It 
is easier to gather more and more power in a centralized 
national government in Washington, D.C. to do the intervening 
for you. It is easier to manipulate and control one national 
government than fifty state legislatures. The Federal 
Reserve Act of 1913, which established a legal monopoly in 
national counterfeiting in the United States, was passed by 
the national Congress -- rather than having to go through all 
the various state legislatures for approval. The Fed did not 
spontaneously arise on a free market; it was created by a 
deliberate political Act of Congress. 

In each case, would-be monopolists -- unable to gain 
lasting, coercive monopolies through purely market means -- 
have had to go to and promote interventionist government to 
gain special privileges, exclusive charters, subsidies, 
bailouts, licenses, and other forms of political ntervention. 

In his path-breaking study of the Progressive Era, New 
Left historian Gabriel Kolko reached the following 
"startling" conclusion about who was actually behind the push 


for the estabolishment of the Interstate Commerce Commission 
and other major agencies of governmental intervention on the 
federal level: 

"Despite the large number of mergers, and the growth in 
the absolute size of many corporations, the dominant tendency 
in the American economy at the beginning of this century was 
toward growing competition. Competition was unacceptable to 
many key business and financial interests, and the merger 
movement was, to a large extent, a reflection of voluntary, 
unsuccessful business efforts to bring irresistible 
competitive trends under control. Although profit was always 
a consideration, rationalization of the market was frequently 
a necessary prerequisite for maintaining long-term profits. 
As new competitors sprang up, and as economic power was 
diffused throughout an expanding nation, it became apparent 
to many important businessmen that only the national 
government could 'rationalize' the economy. Although 
specific conditions varied from industry to industry, 
internal problems that could be solved only by political 
means were the common denominator in those industries whose 
leaders advocated greater federal regulation. Ironically, 
contrary to the consensus of historians, it was not the 
existence of monopoly that caused the federal government to 
intervene in the economy, but the lack of it." 3 

Kolko's historical research demonstrates that giant 
businesses were not only unable to prevent new competitors 
from entering their industries, but they were less profitable 
than many much-smaller firms. Having failed to establish 
control over the economy by purely market means, certain big 
business leaders became the chief initiators of "progressive" 
legislation on the national level. And, as Kolko goes on to 
prove, the regulations and commissions were "invariably 
controlled by leaders of the regulated industry, and directed 
toward ends they [certain big business interests] deemed 
acceptable or desirable."4 

This pattern is demonstrated by Kolko in the case of the 
big railroads and the Interstate Commerce Commission, certain 
Wall Street bankers and the establishment of the Federal 
Reserve System, and the Federal Trade Commission was used 
to outlaw "unfair methods of competition" to protect the big 
firms already on top. Kolko shows that this pattern existed 
under Republican Presidents Theodore Roosevelt and William 
Howard Taft, and even more so under Woodrow Wilson. After 
the enactment of these "progressive" reforms, generally 
cheered on by the populists such as William Jennings Bryan, 
"big business as a whole was very pleased, to put it mildly, 
with the new state of affairs," explains Kolko. "The 
provisions of the new laws attacking unfair competitors and 
price discrimination meant that the government would now make 
it possible for many trade associations to stabilize, for the 
first time, prices within their industries, and to make 
effective oligopoly a new phase of the economy." (p. 268) 


When would-be monopolists, particularly in the fields of 
banking, railroading, and petroleum, no longer confined their 
activities to the private sector of production and trade, 
and, instead, resorted to the coercive force of government 
intervention to gain privileges and monopolies, they crossed 
the line from market competitors to political pressure 
groups. This set the stage for the further forced 
cartelization of American industry under F.D.R.'s N.R.A., the 
plans for which having been drafted by Gerard Swope of 
General Electric.5 

Even though a special interest group is greatly 
outnumbered by consumers, taxpayers, and 
marginal or potential competitors, it gets most of what it 
wants in the political arena if the political system is 
interventionistic. As consumerist Ralph Nader has observed, 
after a regulatory agency is established to serve the common 
good, an accomodation tends to develop between the regulatory 
bureaucracy and certain vested interests in the industry 
being regulated. Many of the regulatory personnel come from 
the industry itself. The agency is soon captured, one way or 
another, to benefit the vested interests in the industry. 

In The Monopoly Makers: Ralph Nader's Study Group 
Report on Regulation and Competition6, Nader makes the 
following revealing observations: "The arms-length 
relationship which must characterize any democratic 
government in its dealings with special interest groups has 
been replaced, and not just by ad hoc wheeling and dealing, 
which have been observed for generations. What is new is the 
institutionalized fusion of corporate desires with public 
bureaucracy -- where the national security is synonymous with 
the state of Lockhead and Litton, where career roles are 
interchangeable along the industry-to-government-to-industry 
shuttle, where corporate risks and losses become taxpayer 
obligations. For the most part, the large unions do not 
object to this situation, having become modest co-partners, 
seeking derivative benefits from the governmental patrons of 

". . . It is so much easier and, above all, more stable 
to seize the legal and administrative apparatus than to fight 
it, turning government agencies into licensors of private 
monopolies and co-conspirators against the people. . . . " 

Ironically, although Nader himself continues to advocate 
several categories of government regulatory involvement in 
American life, his study group concluded that government 
regulatory agencies, established to keep costs low for 
consumers, instead end up undermining competition and 
entrenching monopoly power -- turning government agencies 
against the consumer in connivance with those they are 
supposed to regulate. 

In chapter after chapter -- in industries ranging from 


transportation (and the FTC) and the pharmaceutical industry 
(and the FDA) to electric power (and the Federal Power 
Commission) and others, the Nader group report shows how 
governmental regulation -- through licensing, subsidies, 
procurement policies, patents, import restrictions, and so on 
-- has "frustrated competitive efficiencies and has promoted 
monopolistic rigidities advocated by the regulatees 

"Not that monopoly and unchecked corporate power are 
unusual in our economy. They are all too common. But when 
they are bred and nourished by the government itself, in the 
guise of 'the public interest,' then it becomes time to 
question the purpose and goals of economic [i.e., political] 
regulation. This is especially true when the intended 
beneficiary of the elaborate regulatory structure -- the 
consumer -- becomes its first victim. The consumer 
ultimately pays for the increased prices, encouraged waste, 
and retarded economy that economic regulation fosters." 

Nader correctly identifies our system of government- 
promoted monopoly power as "corporate socialism, a 
condition of federal statecraft wherein public agencies 
control much of the private economy on behalf of a 
designated corporate clientele." 

Conservative economist Milton Friedman agrees with Nader 
and Kolko, saying: "Nobody ever goes up to Congress and 
says, 'Look, vote me a big bonanza of $100,000 because I'm a 
good man and I deserve $100,000 out of the public purse.' 
No, he says, 'You should subsidize X, Y, and Z because the 
poor people in the slums will be benefited by it.' So, you 
have two classes of people: the selfish special interests on 
the one hand, and the so-called do-gooders on the other. 
These do-gooders are generally sincere people, but they 
invariably end up being the unwitting front men for private 
interests they would never knowingly support. 

"An example of that are the 19th Century Ralph Naders 
who got the Interstate Commerce Commission established -- 
supposedly to protect the consumers. The 'do-gooder' 
reformers, the Ralph Nader types, were sincere. They wee 
interested in promoting the interests of the consumers, and 
they were complaining that the railroads were monopolies and 
that they were charging too-high freight rates, and that we 
had to get the federal government involved in order to 
eliminate that exploitation of the consumers. So, the ICC 
was set up. But who benefited from it? The well-meaning 
reformers, the do-gooders, went on to their next reform. The 
big railroads took over the ICC. And they used the ICC to 
keep out competition and to raise rates rather than lowering 
them. Then they used it in the 1920s to get the control of 
the ICC extended to trucking, because that was the most 
dangerous source of competition for them. So, those 
well-meaning reformers -- not that they were bad people -- 


but they wound up being the front men for special interests 
they thought they were opposing. And you have that pattern 
over and over again."7 

In blunt terms, government bureaucracies and other 
mechanisms for intervention tend to become tools of special 
interest groups whose influence is focused and specific -- at 
the expense of the 'general public' whose influence is 
general and diffused. 

For example, it's generally the big, Establishment-connected 
firms that get the fat (taxpayer-underwritten) foreign trade deals -- 
and have them get approval by the Departments of State and 
Commerce; it is their less-connected competitors whose export 
licenses get denied or delayed in the government's bureaucracy. 
While pretending to be bound by government regulations, the 
corporate special-interest elitists inwardly clasp them to 
their bosoms for the protection they provide from much 
greater competition in their particular fields. They know 
that, in the real world, government does not enforce its 
regulations neutrally; exceptions are made for special 
people. The regulations are to keep others out. 

Hence, an interventionist system (whether "democratic" 
or not) tends to cater most to the demands of the wealthiest 
special interest groups -- not the poverty class or the 
ordinary working class. David Rockefeller has a great deal 
more influence over policy in Washington, D.C. than either 
Wendy Welfare or Joe Hardhat. He's got a bigger vote where 
it counts: the regulatory agencies, the State Department, 
and key congressional committees. 

In other words, the "public interest"/ "common good" 
mythology for justifying interventionism and socialism is 
muddy eye-wash for the public, to hide the oligarchist and 
monopolist nature of socialism from its victims. In a 
fundamental sense, there is really no such thing as 
"government" (as an abstract entity) regulation of "business" 
(as an abstract entity); rather, what's happening is that 
some business interests use the interventionist powers of the 
political state to regulate other bussinesses to keep 
competition down 


Furthermore, socialism, being the ultimate in 
interventionism, is the most monopolistic of all systems. No 
competition is permitted; there is only one deliverer of 
primary goods and services -- the government. After all,
what could be more monopolistic than a system in which the 
government owns and controls all the major industries -- 
while the clique of monopolists behind the scene owns or 
controls the government? When the government "nationalizes" 
an industry, the monopolists in power are merely merging 


their competitors under their control. A socialist state 
serves them as a sort of legal holding company to grab up 
land, resources, and companies that belong to other people -- 
all in the name of "the people" of course. 

This explains why certain super-wealthy bankers and 
heads of multinational corporations lend their support for 
socialist, and even Communist, causes and movements. More 
people are beginning to check their premises and are coming 
to grips with the reality of this on-going 
socialist/monopolist alliance. Consider the following 
remarks by Harold Pease, Ph.D., Professor of History at Palo 
Verde College: 

"Those of us who teach political science on the college 
and university level find ourselves seriously handicapped by 
the lack of textbooks and carefully prepared historical 
research on one of the most important phenomena of our time, 
namely, the amazing alliance which which has been growing for 
more than half a century between the leaders of the 
world-wide Communist movement and the leaders of some of the 
most powerful banks and industries of Europe and America. 

"That such an alliance should even exist came as an 
intellectual shock to this writer. It seemed irrational, an 
ideological contradiction, a conflict of interests. 
Nevertheless, the more I have researched the matter, the more 
convinced I have become that the alliance is not only a 
reality, but that also herein might be found the Gordian knot 
which must be cut before we can solve some of the world's 
most critical problems." 

What must be cut is the knot tying banking and industry 
to the interventionist state. No special favors from 
government means a policy of laissez faire, that oft-maligned 
prescription put forth by nineteenth century classical 
liberals and modern libertarians. This, of course, is the 
last thing wanted by clever would-be monopolists who wish to 
eliminate free-market competition. 

As John D. Rockefeller, Sr. ("Competition is a sin!") 
and his lieutenants learned so well, when you control an 
interventionist state, you can control the economy by getting 
the government to run interference for your operations and 
provide yourself special privileges to keep competitors out 
of your way.8 This, of course, is not competitive 
free-market enterprise; it is monopolistic privileged 
enterprise -- or, as Kolko names it, "political capitalism" 
as contrasted to market capitalism. 

Back in Adam Smith's era, it was a widely recognized 
fact that specific monopolies came from government in the 
form of grants of special privilege from the reigning 
monarch. The Bank of England, for example, was chartered by 
the British Crown. But, in our own century, socialists and 


other anti-market propagandists have distorted the facts of 
history by forcing them to fit into their ideological 
template of "capitalist exploitation" and have sought to give 
the impression that exploitative monopolies arose -- and 
necessarily will arise -- in an environment of laissez faire, 
on a fully free market. The real or alleged predatory 
practices of the legendary "robber barons" of American 
capitalism are still trotted out by statist historians as 
examples of a free-market economy resulting from a 
governmental policy of laissez faire! Unfortunately, the 
fact is there never was an across-the-board policy of laissez 
faire. The truth is: a fully free market economy was never 
allowed to exist, not even in 19th-century America, even 
though it came closer than any other nation to approaching 
it. There was slavery in the South, tariffs for northern 
industries, and central banking institutions for eastern 
bankers -- just to name three major forms of governmental 
intervention. As Kolko and others have demonstrated, the 
actual cases of monopolistic exploitation were made possible 
by already existing government interventions -- from land 
grants to subsidies -- and became much more entrenched and 
institutionalized as a consequence of "progressive" political 
reforms. From the first major federal regulatory 
bureaucracies of the 1880s, then the Federal Reserve Act of 
1913, the federal income tax amendment, the gleeful 
acceptance of the Keynesian rationale by policymakers in the 
1930s, New Deal fascism, and a host of other regulations and 
taxes that have been imposed by the states and the federal 
government up to the present time, more and more levels and 
layers of interventionism have accrued over the American 
economy. The U.S. is a very long way from a system of 
laissez faire capitalism. Whatever ills beset our economy, 
they cannot be laid at the doorstep of a non-existent laissez 

The great Austrian economist Ludwig von Mises long ago 
noted the relationship between coercive monopolies and 
government intervention -- and he warned against false 
premises about the source of monopolies: "It is wrong to 
assume that there prevails within a market economy, an 
economy not hampered and sabotaged by government 
interference, a general tendency toward the formation of 
monopoly. It is a grotesque distortion of the true state of 
affairs to speak of 'monopoly capitalism' instead of 
'monopoly interventionism' and of 'private caartels' instead 
of 'government-made cartels.'"

The Road to Monopoly Power for the Super Wealthy

Why do some of the most wealthy members of the corporate 
world seem to favor interventionism and socialism? One might 
at first think that they would have the most to lose. Yet, 
it is significant to note how many heirs of great industrtial 
and banking fortunes-- the second- and third-generation 
millionaires, such as the Rockefeller family -- are welfare 
statists who clamor for more and more taxes and government 
controls. The answer makes sense when one realizes, from a 


study of free-market economics -- that the more that 
political intervention exists in a country, the more 
cartelized and the less competitive is its economy. 

It is a mixed economy, such as the semi-fascist, 
semi-socialist system we have today, that tends to protect 
the non-productive rich by freezing a society on a given 
level of development and reducing the freedom and fluidity of 
the economy so that it is more difficult for people to rise 
or fall according to their own efforts and good judgements. 
Whoever inherited a fortune before the freeze can keep it 
without fear of competition -- like an heir in a feudal 
society. (Scratch a socialist and you will find someone who 
longs for the "stability" of the stagnant system of 

Clearly, the target of the controls and taxes of the 
modern interventionist state are those able, dynamic 
businessmen who, in a free society, would displace the less 
competitive heirs -- the men with whom the heirs would be 
unable to compete effectively. And the victims are the 
consumers who have fewer and poorer alternatives in the 
marketplace, and the taxpayers who are forced to pay the 
taxes. All by itself, for example, taxation tends to smother 
innovation and competitiveness within an economy. As the 
great Ludwig von Mises pointed out in his monumental treatise 
Human Action: 

"Today taxes often absorb the greater part of the 
newcomer's 'excessive' profits. He cannot accumulate 
capital; he cannot expand his own business; he will never 
become big business and a match for the vested interests. 
The old firms do not need to fear his competition: they are 
sheltered by the tax collector. They may, with impunity, 
indulge in routine . . . . It is true that the income tax 
prevents them as well from accumulating new capital. But 
what is more important for them is that it prevents the 
dangerous newcomer from accumulating any new capital. They 
[the old, established firms and families] are virtually 
privileged by the tax system. In this sense, progressive 
taxation checks economic progress and makes for rigidity. . . 
. "The interventionists complain that big business is 
getting rigid and bureaucratic, and that it is no longer 
possible for competent newcomers to challenge the vested 
interests of the old rich families. However, as far as their 
complaints are justified, they complain about things which 
are merely the result of their own policies."9 

As long as the state can intervene in a field, the 
political process affecting that field will become more and 
more dominated by pressure groups with a vested interest. 
For example, the banking industry in general, and the major 
money-center banks in particular, are among the most (many 
say the most) powerful lobbies in the national government. 


The New York Times has reported that, in the judgement of 
many Senators, Representatives, congressional staff members, 
Washington lobbyists, and other officials, "The nation's 
banks exert an influence over Congress and the Federal 
Government [which] surpasses the power of any other regulated 
industry." The Times went on to quote a banking lobbyist as 
boasting that, "The banking lobby can almost certainly stop 
anything it does not want in Congress." 

The megabanks of New York and California have loaned 
billions of dollars to shaky, despotic regimes in Latin 
America, Africa, and Asia, and also to Communist 
dictatorships such as those in control of Poland and Red 
China. But, because of their powerful influence in 
government circles, they made sure their risky loans were 
underwritten by the U.S. taxpayers through various 
governmental bailout mechanisms such as the Export-Import 
Bank, the Commodity Credit Corporation, the World Bank, the 
International Monetary Fund, the International Development 
Association, and other political agencies. What this means 
is that when a foreign government cannot or will not repay 
the loans, the American taxpayers are forced to pick up the 
tab for those due interest payments. This has already been 
done in the case of Poland, Mexico, Brazil, and other LDC and 
Red deadbeats. 

In a free market, bankers would have to loan at their 
own risk; the present scam of No-Risk Banking is made 
possible by government intervention. 


Criticism has often fallen on the machinations of Wall 
Street bankers, both from the Left and the Right. Especially 
criticized has been those institutions, like Chase Manhattan 
Bank, which are part of the Rockefeller empire. These 
critics, such as libertarian economist Murray Rothbard and 
power-elites researcher Antony Sutton, insist that the 
elitist Eastern "liberal" establishment which surrounds this 
Wall Street power structure is a legacy of Wall Street mogul 
J.P. Morgan, but has since come under the control of the 
Rockefellers. They contend that various forms of governmental 
intervention -- especially the Federal Reserve System -- have 
been and continue to be indispensable props to this 
establishment network.10 

At least one Establishment spokesman has come forth to 
confirm most of the charges made by anti-Establishment 
right-wingers and left-wingers. The late Georgetown 
University historian, Professor Carroll Quigley, described 
the structure of this powerful establishment clique as 

"At the center were a group of less than a dozen 
investment banks, which were, at the height of their powers, 


still unincorporated private partnerships. These included 
J.P. Morgan; the Rockefeller family; Kuhn, Loeb & Company; 
Dillon, Reed & Company; Brown Brothers and Harriman; and 
others. Each of these was linked in organizational or 
personal relationships with various banks, insurance 
companies, railroads, utilities, and industrial firms. The 
result was to form a number of webs of economic power of 
which the more important centered in New York, while other 
provincial groups allied with these were to be found in 
Pittsburgh, Cleveland, Chicago, and Boston."11 

It is interesting to note some of the general 
characteristics, enumerated by Professor Quigley, of this 
moneyed aristocracy: 

"This group which, in the United States, was completely 
dominated by J.P. Morgan and Company from the 1880's to the 
1930's [after which the Rockefellers assumed the leadership 
role] was cosmopolitan, Anglophile, internationalist, Ivy 
League, eastern seaboard, high Episcopalian, and 
European-culture conscious."12 

In addition to being international rather than 
nationalistic, these bankers were, notes Quigley, "close to 
governments, and were particularly concerned with questions 
of government debts, including foreign government debts . . . 
" (emphasis added) Being lenders to governments gave them a 
vested interest in government debt and debt instruments, 
especially bonds. They were "almost equally devoted to 
secrecy and the secret use of financial influence in 
politicasl life."13 

The key, relevant phrase is "close to governments . . . 
" The Establishment gained its privileged status and 
maintains itself ultimately through political power rather 
than market competition. 

Quigley goes on to observe, "The significant influence 
of 'Wall Street' (meaning Morgan) both in the Ivy League and 
in Washington, in the period of sixty or more years following 
1880, explains the constant interchange between the Ivy 
League and the Federal government. . . . "14 

What Quigley seems to have described was, and continues 
to be, a sort of Wall Street-Academic-Governmental Complex. 
Add to that powerful combine the influence of this group in 
the major news media, think tanks, well-endowed foundations, 
and certain elements of big industry, and you have quite an 
Establishment, indeed! That's what has happened as the 
result of the marriage/partnership of Big Business and Big 

The key organization in this oligarchy of pull is the 
Council on Foreign Relations and it constitutes what former 
FBI man Dan Smoot has dubbed "the invisible government" of 


the United States. Its members virtually dominate the fields 
of high finance, the major universities, foundations, 
national news media, and (certainly) U.S. foreign policy.15 

As John Franklin Campbell put it in New York magazine 
back in September 20, 1971: 

"Practically every lawyer, banker, professor, general, 
journalist and bureaucrat who has had any influence on the 
foreign policy of the last six Presidents -- from Franklin 
Roosevelt to Richard Nixon -- has spent some time in the 
Harold Pratt House [the CFR headquarters], a four-story 
mansion on the corner of Park Avenue and 68th Street, donated 
26 years ago by Mr. Pratt's widow (an heir to the Standard 
Oil fortune), to the Council on Foreign Relations, Inc. . . . 

"If you can walk -- or be carried -- into the Pratt 
House, it usually means that you are a partner in an 
investment bank or law firm -- with occasional 
'trouble-shooting' assignments in government. You believe in 
foreign aid, NATO, and a bipartisan foreign policy. You've 
been pretty much running things in this country for the last 
25 years, and you know it." 

Today, this foreign-policy establishment serves the 
internationalist interests of certain major international 
banks and their multinational corporate allies -- primarily 
the Rockefeller family ambit. The CFR has provided the key 
men, particularly in the field of foreign policy, for the 
Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, 
Carter, Reagan, Bush and Clinton administrations.16 

In 1973 David Rockefeller founded a new sister 
organization to the CFR called the Trilateral Commission to 
propose and coordinate common foreign policy objectives for 
America, Western Europe, and Japan. When, in 1977, it was 
found that the entire top leadership of the new Carter 
Administration had belonged to this small, low-profile 
organization of only eighty U.S. members, Dr. Murray Rothbard 
was among those anti-Establishment critics who questioned the 
possible conflicts of interest involved: "Do we say that 
David Rockefeller's prodigious efforts on behalf of certain 
statist public policies are merely a reflection of unfocused 
altruism? Or is there pursuit of economic interest involved? 
Was Jimmy Carter named a member of the Trilateral Commission 
as soon as it was founded because Rockefeller and the others 
wanted to hear the wisdom of an obscure Georgia governor? Or 
was he plucked out of obscurity and made President by their 
support? Was J. Paul Austin, head of Coca Cola, an early 
supporter of Jimmy Carter merely out of concern for the 
common good? Were all the Trilateralists and Rockefeller 
Foundation and Coca-Cola people chosen by Carter simply 
because he felt that they were the ablest possible people for 
the job? If so, it's a coincidence that boggles the mind. 


Or are there are more sinister political-economic interests 
involved? I submit that the naifs who stubbornly refuse to 
examine the interplay of political and economic interests in 
government are tossing away an essential tool for analyzing 
the world in which we live."17 

The aim of the CFR-Trilat planners is to control 
domestic regulatory agencies and conduct American foreign 
policy on behalf of the Special Interest Group of special 
interest groups -- the corporate-socialist elite in banking 
and industry. It is the government contracts and the 
academic grants and the administrative appointments -- no 
matter which party is in power -- that are important to those 
who play the game. 

This breed of "political capitalists" seeks 
politically-secured and governmentally-rigged markets, 
taxpayer-underwritten trade deals, and an environment in 
which competition is eliminated or controlled. Far from 
desiring a policy of laissez faire, these corporate statists 
-- such as David Rockefeller, Armand Hammer, Dwayne O. 
Andreas, Felix Rohatyn, William C. Norris, et al -- promote 
interventionism and socialism. 

Such observations and criticisms of Establishment power 
and coercive monopolies are often met with such epithets as 
"paranoid" or "The Conspiracy Theory of History" (always said 
with a sneer) 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 

"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, Trump, 
Hammer, 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. 

This article is continued by clicking on the following link:

Special Privileges Through Political Intervention