Glossary: Monopoly, monopolist
, by Percy L. Greaves Jr.
, Mises Made Easier
Definition of monopoly and monopolist, based on Mises' Human Action
(1966) and Omnipotent Government
(1944) and Greaves' Understanding the Dollar Crisis
"These terms have two distinctly different meanings: (1) A state of affairs in which an individual or group of individuals has the exclusive control of one of the vital conditions of human survival. In this situation, the monopolist is the master and the rest are slaves. It is the pattern of the socialist state (see 'Socialism') and has no reference to a market economy. (2) A state of affairs in which an individual or a group of individuals has the exclusive control of the supply of a definite commodity or factor of production. In this sense, every market participant is a monopolist if the commodity or service he offers cannot be exactly duplicated by a competitor. Such a monopoly is of no importance unless market conditions permit the monopolist to charge monopoly prices (q.v.), which they rarely do without government interventionism (q.v.)."
Barristers and Barriers: Sir Edward Coke and the Regulation of Trade
[PDF], by Gary M. Anderson, Robert D. Tollison, Cato Journal
Examines Coke's impact on the regulation of the legal profession and argues that while he opposed royal grants of monopoly privileges, his efforts tended to enhance monopoly advantages of common law barristers
"The common law courts consistently fought for the privilege to allocate monopoly rents to be granted to the common law courts. Coke was a leader of this effort. Finally, the common lawyers achieved a successful alliance with Parliament, and together those two groups sought and obtained a legal monopoly in the granting of monopoly privileges. ... The main difference between the regulations promulgated by the two branches of government was that the monarch tended to issue grants of monopoly privileges, or 'patents of monopoly,' to specific individuals, whereas Parliament produced numerous legal entry barriers which restricted competition in specific markets."
Benjamin Ricketson Tucker, Part 2
, by Wendy McElroy
, Future of Freedom
, Sep 2007
Biographical essay on Benjamin Tucker from the first issue of Liberty
until his death
"From the beginning, Tucker introduced readers to a powerful class that robbed the average man with impunity: politicians and their associates. But how? He answered, 'Monopoly.' Specifically, theft occurred through 'two great monopolies, — the monopoly of land and the monopoly of credit.' The monopolies were created and maintained by the state, which allied with business against the common man."
Big Business and the Rise of American Statism
, by Roy Childs
, Feb 1971
Originally a speech given at first convention of the Society for Individual Liberty, 15-16 Nov 1969
"The NCF [National Civic Federation] sponsored legislation to promote the formation of 'public utilities,' a special privilege monopoly granted by the state, reserving an area of production to one company. Issuing a report on 'Public Ownership of Public Utilities,' the NCF established a general framework for regulatory laws, stating that utilities should be conducted by legalized independent commissions. Of such regulation one businessman wrote another: 'Twenty-five years ago we would have regarded it as a species of socialism'; but seeing that the railroads were both submitting to and apparently profiting from regulation, the NCF's self-appointed job of 'educating' municipal utilities corporations became much easier."
Big Pharma and Crony Capitalism
, by Wendy McElroy
, 9 Jul 2012
Examines the ways in which pharmaceutical companies influence government
"... all prescription drugs continue to require approval by the Food and Drug Administration (FDA). They continue to be dispensed only by state-licensed doctors and druggists who enjoy a monopoly privilege in medical care as the only legal drug dealers in America. It is a privilege of which they are jealous. For example, the American Medical Association has a long history of persecuting competitors, such as midwives. As with all monopolies, quality suffers even as the cost to consumers soars. This is particularly true of drug costs, because the government's grant of a monopoly — namely, a drug patent — is such a long and expensive process that competitors to big pharma are shut out. This manufactures scarcity."
Blockading with Trade Restrictions
, by Jim Powell
, 27 Oct 2010
Explores the writings of Henry George in his book Protection or Free Trade
offering advice to current waves of protectionism
"George wrote Protection or Free Trade because he hated monopolies. They could be maintained only if there were government-enforced restrictions that prevented people from dealing with alternative suppliers. He concluded that the most effective antitrust policy was free trade — consumers and businesses able to shop the world for the best values. He explained why trade restrictions mainly harm nations that impose them: 'Every tariff that raises prices for the encouragement of one industry must operate to discourage all other industries into which the products of that industry enter. ...'"
How Much Do You Know About Liberty? (a quiz)
, The Freeman
, Jun 1996
A 20-question quiz (with answers) on various topics related to liberty in the history of the United States
"What was the primary reason for the Sherman Antitrust Act? ... Contemporary and near-contemporary accounts suggest the Sherman Antitrust Act was passed to provide political cover for the McKinley Tariff, enacted at nearly same time. Back then, many observers commented on the hypocrisy. For example, ... 'In this way our politicians prove to the great combinations who furnish campaign disbursements for political parties their fidelity to monopolistic interests ...'"
Related Topics: United States Bill of Rights
, Compulsory Education
, Federal Reserve System
, Free Trade
, John Hancock
, Warren G. Harding
, Abraham Lincoln
, Right to Trial by Jury
Monopolies versus the Free Market, Part 1
, by Gregory Bresiger, Future of Freedom
, Sep 2006
Contrasts state-backed monopolies or quasi-monopolies vs. regular businesses in a free market, with historical and current examples, and discusses antitrust laws
"A monopoly created through the legal protection and the police powers of a state is something completely different. Here, the state makes it illegal for competitors to enter the market. This kind of privileged power inevitably institutionalizes inefficiency and discourages innovation. ... State enterprises with monopoly or quasi-monopoly powers can also draw on the inexhaustible powers of the government for tax dollars."
Monopoly and Aggression
, by Sheldon Richman
, 19 Dec 2014
Argues that monopoly and aggression are intimately related and that IP laws are currently the main monopolistic interventions
"Adam Smith's approach to monopoly makes more sense than the mainstream neoclassical view. To Smith, monopoly denoted a privilege, a legal barrier to competition, such as a license or a franchise — in other words, a grant from the state. Anyone who attempted to compete with the monopolist would run afoul of the law and be suppressed by force, because that's how the state assures its decrees are faithfully carried out."
Schumpeter, Joseph (1883-1950)
, by Thomas M. Humphrey, The Encyclopedia of Libertarianism
, 15 Aug 2008
"As for monopolistic firms and monopoly profits, they bothered Schumpeter not at all. He thought that monopolies, unless protected by government, are short-lived, inherently self-destroying, and require no antitrust legislation. Their high profits attract the very rivals and producers of substitute products that undercut them. For the same reason, he regarded antitrust laws aimed at breaking up large, nonmonopolistic firms as ill-advised."
Spooner, Lysander (1808-1881)
, by Randy Barnett
, The Encyclopedia of Libertarianism
, 15 Aug 2008
"In 1844, he founded the American Letter Mail Company to contest the U.S. Post Office's monopoly on the delivery of first class mail. Postal rates in that period were notoriously high, and several companies arose to challenge the government's monopoly. ... Spooner vigorously defended his action with a lengthy pamphlet titled 'The Unconstitutionality of the Laws of Congress, Prohibiting Private Mails' (1844). Unfortunately, this time he was up against a more intransigent foe. Although Spooner's mail company was successful commercially, legal challenges by the government soon exhausted his financial resources ..."
Stop Those Who Would Stop Uber
, by Sheldon Richman
, 11 Nov 2014
Explains how the Uber and Lyft services work and describes the local government reaction when Uber started offering its service in Little Rock, Arkansas
"The only losers from thwarting Uber are riders, who must suffer the inefficiency and backwardness of the local monopoly, and would-be drivers who can't break into the business because of that protectionist, interest-ridden system. Did you know New York City had fewer taxi licenses (medallions) in 2012 than in the late 1930s? ... You were taught monopolies are bad, right? Apparently not government-created monopolies."
The Alleged Liberalism of Sir Edward Coke
, by Murray Rothbard
, Economic Thought Before Adam Smith
From the third section, titled "The 'economic liberalism' of Sir Edward Coke" of chapter 10; argues that Coke was not a sympathizer of laissez-faire but rather objected to the king (versus the Parliament) intervening in markets
"Thus, in the famous Statute of Monopolies, passed in 1623 and drafted largely by Coke, Parliament abolished royal grants of monopoly privilege, but explicitly reserved to itself the right to grant such privileges, which it soon proceeded to do. The statute also specifically exempted from abolition large categories of royal monopoly, including such industries as printing, gunpowder, and saltpeter, and the rights of 'corporations' such as London to prevent non-Londoners from engaging in trade within the city limits, or monopoly corporations engaged in foreign trade."
The Challenge to the U.S. Postal Monopoly, 1839-1851
[PDF], by Kelly B. Olds, Cato Journal
Analysis of the operation of the U.S. Post Office in the 1840s, including estimates of subsidies to various groups, and discussion of the private competitors and the effects they had on the postal service
"The Post Office's large hidden profits caused very high postal rates relative to the cost of transportation. ... it was in 1839 that the U.S. Post Office first came up against significant formal competition. Private companies deliver mail efficiently and at low rates. To defeat the private mail and express companies, Congress was forced to lower postage rates. Rates were lowered to an average of 6.3¢ per half-ounce letter in 1845. Private competition and postal reform agitation were temporarily checked, but did not cease. In 1851, Congress lowered postage further, to 3¢ per half-ounce letter."
The Death of Politics
, by Karl Hess
, Mar 1969
Discusses libertarianism, contrasting it with both conservatism and modern liberalism, including specific policy differences
"To suppose that anyone needs government protection from the creation of monopolies is to accept two suppositions: that monopoly is the natural direction of unregulated enterprise, and that technology is static. Neither, of course, is true. The great concentrations of economic power, which are called monopolies today, did not grow despite government's anti-monopolistic zeal. They grew, largely, because of government policies, such as those making it more profitable for small businesses to sell out to big companies rather than fight the tax code alone."
Related Topics: Cold War
, War on Drugs
, Barry Goldwater
, Ayn Rand
, Freedom of Speech
The Idea of a Private Law Society
, by Hans-Hermann Hoppe, Mises Daily
, 28 Jul 2006
Discusses the problem of social order, i.e., rules to regulate the use of "everything
scarce so that all
possible conflicts can be ruled out"
"Among political economists and political philosophers it is one of the most widely accepted proposition that every 'monopoly' is 'bad' from the viewpoint of consumers. Here, monopoly is understood as an exclusive privilege granted to a single producer of a commodity or service, or as the absence of 'free entry' into a particular line of production. ... Accordingly, it should be expected that state-provided law and order will be excessively expensive and of particularly low quality."
The Kirznerian Way: An Interview with Israel M. Kirzner
, by Israel Kirzner
, Austrian Economics Newsletter
Topics include: Ludwig von Mises, the Austrian School, equilibrium, entrepreneurship, capital, business cycle theory, time preference, Hayek, Lachmann and Rothbard
"Ordinarily, the ownership of a resource provides value to its owner only to the extent he is prepared to put that resource to use in the service of the consuming public. The only possible exception is where the entire supply of a scarce resource, for which there are no substitutes, happens to be in the hands of a single seller. It may indeed be the case that the interests of the resource owner may be counter to that of consumers. ... Mises ... didn't think it was an important case, but he did draw attention to it. He did not use this exceptional case to argue for controls over monopolies."
Related Topics: Capital Goods
, Austrian Economics
, Friedrich Hayek
, Ludwig Lachmann
, Ludwig von Mises
, Murray Rothbard
, Joseph Schumpeter
The Many Monopolies
, by Charles W. Johnson, 24 Aug 2011
Describes four ways in which markets are distorted by government interventions, explains Tucker's "Four Monopolies", examines five present-day monopolies and discusses Tucker's libertarian views
"Legal mandates and government monopolies produce captive markets in which customers are artificially locked in to particular services or sellers that they wouldn't otherwise patronize because political requirements enforce the demand. For example, the car insurance market is shaped by laws requiring insurance and regulating the minimum service that must be purchased. Captive markets legally guarantee privileged companies access to a steady stock of customers, corralled by the threat of fines and arrest."
Related Topics: Banking
, Communications Technology
, Free Market
, Free Trade
, Health Care
, Intellectual Property Laws
, Occupational Licensing
, Benjamin Tucker
The Post Office as a Violation of Constitutional Rights
, by Wendy McElroy
, The Freeman
, May 2001
Prompted by the announcement of the U.S. Postal Service eBillPay service (now discontinued), surveys the history of mail service vis-à-vis civil rights, from colonial days to the present
"The USPS is a government monopoly accustomed to operating at public expense. ... The history of the USPS suggests something different, however. It chronicles centuries of civil-rights violations that began at the very birth of a national postal system and that have nothing to do with providing a service. Rather, the USPS promoted and protected the interests of those in power. In asserting the monopoly that allows it to do so, it has been indifferent or hostile to providing the best service at the lowest price."
The Production of Security
, by Gustave de Molinari
, Journal des économistes
, Feb 1849
Questions whether the provision of security to citizens should be an exception to the economic principle of free competition, delving into arguments favoring monopolistic and communistic government and concluding with a hypothetical free market example
"Suppose that a man or a group of men succeed in having the exclusive production and sale of salt assigned to themselves. It is apparent that this man or group could arise the price of this commodity well above its value, well above the price it would have under a regime of free competition. One will then say that this man or this group possesses a monopoly, and that the price of salt is a monopoly price. ... Every monopoly necessarily rests on force."
Who Owns the Internet?
, by Tim Swanson, Mises Daily
, 4 May 2006
Explains how and why "net neutrality" proposals came about, monopolistic tendencies, comparisons to natural resources and others held in common, and how variable pricing has been used elsewhere to solve similar problems
"Throughout much of the country, individuals, families and companies have usually only one or two choices for accessing the Internet: through the cable company or the telephone company. Similar to utilities such as water and electricity, the reason for this is that the State intervened and gave certain companies a geographic monopoly for offering these services. This is misleading and a sham for it alone has put content providers in the bind, in between the proverbial rock and hard place."