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
INTERVENTIONISM &
SOCIALISM: THE POLITICS OF MONOPOLY
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
3
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)
4
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
industry.
". . . 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
5
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
themselves.
"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 --
6
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
THE SOCIALIST-MONOPOLIST
ALLIANCE
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
7
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
8
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
faire.
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
9
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
feudalism.)
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.
10
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.
THE ESTABLISHMENT'S WALL
STREET ROOTS
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
follows:
"At the center were a group of less than a
dozen
investment banks, which were, at the height of
their powers,
11
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
Government.
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
12
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.
13
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
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
14
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
15
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
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.
16
"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
|