Antitrust Against Economic Freedom

Anti-trust are non-objective laws that punish trusts (business enterprises, corporations) for being successful, i.e., dominant.

Anti-trust are non-objective laws that punish trusts (business enterprises, corporations) for being successful, i.e., dominant.

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The economic foundation of the antitrust laws is the socialist myth that unregulated, free-market results in the formation of coercive monopolies. (Eventually, through ‘historical necessity,’ they will form one big business which the ‘proletariat’ will take over with the establishment of communism.)

The political foundation of antitrust laws is that the individual does not have a right to liberty and property, but only holds property by the permission of the state.

The ethical foundation of the antitrust laws is the doctrine of altruism/collectivism that holds that the successful should sacrifice for others, and if they do not, they should be forced to do so.

To quote philosopher Ayn Rand writing on “Antitrust: The Rule of Unreason” in The Voice of Reason,

“The alleged purpose of the Antitrust laws was to protect competition; that purpose was based on the socialistic fallacy that a free, unregulated market will inevitably lead to the establishment of coercive monopolies. But, in fact, no coercive monopoly has ever been or ever can be established by means of free trade on a free market. Every coercive monopoly was created by government intervention into the economy: by special privileges, such as franchises or subsidies, which closed the entry of competitors into a given field, by legislative action…The Antitrust laws were the classic example of a moral inversion prevalent in the history: an example of the victims, the businessmen, taking the blame for the evils caused by government, and the government using its own guilt as a justification for acquiring wider powers, on the pretext of ‘correcting’ the evils.”

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Don’t the antitrust laws stop harmful, monopolistic practices? All harmful monopolies from the old AT&T monopoly to the U.S. Post Office monopoly were created by the state. The U.S. Post Office, for example, maintains its monopoly on the lucrative first-class mail market by having the state outlaw its competition.

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Take for example Judge Learned Hand’s indictment of ALCOA. What ‘crimes’ was ALCOA punished for? To quote Judge Hand:

“It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every new- comer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.” [Alan Greenspan, “Antitrust” published in Ayn Rand’s Capitalism: The Unknown Ideal]

The government punished ALCOA for being too good a company, too competent in its management, and too successful (profitable) in its outcome.

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The government punished Standard Oil for dropping the price of oil more than half.

Standard Oil accomplished by buying up competitors to gain more significant economies of scale, lowering their production costs, enabling them to lower their prices while increasing their profits: a win-win for Standard Oil (higher profits) and their customers (lower prices). By taking over inefficient refineries and lowering prices, their inefficient competitors who remained were unable to compete successfully.

Their competitors were free to enter the market and compete, but because they were not as productive they could not ‘win,’ and so under antitrust ‘Standard Oil’ was punished for being too successful.

Writes Dominick Armentano [professor of economics at the University of Hartford] on the issue of Standard Oil “monopoly”:

“The little-known truth is that when the government took Standard Oil to court in 1907, Standard Oil’s market share had been declining for a decade. Far from being a ‘monopoly,’ Standard’s share of petroleum refining was approximately 64% at the time of trial. Moreover, there were at least 147 other domestic oil-refining competitors in the market — and some of these were large, vertically integrated firms such as Texaco, Gulf Oil, and Sun. Kerosene outputs had expanded enormously (contrary to usual monopolistic conduct); and prices for kerosene had fallen from more than $2 per gallon in the early 1860s to approximately six cents per gallon at the time of the trial. So much for the myth of the Standard Oil ‘monopoly.’ “

 

Capitalism FAQ

Intellectually “chew” the ideas brought up in the tour by exploring the Capitalism FAQ (Frequently Asked Questions).

 

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