in economics, US history


The idea that monopolies are consequences of a free market is an economic fallacy that was promoted by Karl Marx and is still widely accepted today.
With free markets (laissez-faire) there would be no laws to prevent businesses to enter into any industry. By definition, coercive monopolies can only form under statism, i.e., through government intervention into the economy by: special franchises, licenses, subsidies, and legislative actions, which provide privileges to specific organizations, individuals or groups. [1]

In the United States, utility companies have been granted a franchise for exclusive distribution of electricity over specific territories. [2]
PanAm airlines used political influence to prevent competition.[3]
In 1913, the American Bell Telephone Company was granted a government sanctioned monopoly. [4]
In the United States, AT&T functioned as a government-granted monopoly from 1913 until 1984.

The viciousness of the antitrust laws.

Under antitrust, no businessman can objectively comply with the law. For example, if a businessman charges prices higher than his competitors, he can be tried for “price-gouging” or “intent to monopolize.” If he charges the same price as his competitors, he can be tried for “collusion.” If he charges less than his competitor, he can be tried for “unfair competition.” [5]

No private enterprise can establish a coercive monopoly, because it is precisely the freedom of the market that would break it up. In the 19th Century attempts were made to corner the market in various commodities and, invariably they ended with the failure and the bankruptcy of the man who had attempted to establish a private monopoly.
A coercive monopoly can be established only by law. That is by means of a special government privilege granted to one producer or one company.
If you look into their history, both in the USA and in Europe, you will find that there has never been a coercive monopoly that had been created by collusion or conspiracy of free enterprises on the free market. It has always been created by an act of government.

Ayn Rand

The sources of almost all monopolies and oligopolies are direct and indirect government intervention.
The only law that you would need to reduce the extent of monopoly is to guarantee free trade.

Milton Friedman

The doctrine of “social responsibility”, that corporations should care about the community and not just profit, is highly subversive to the capitalist system and can only lead towards totalitarianism. [6]

FEE Foundation for Economic Education
Clichés of Progressivism #41 – “Rockefeller’s Standard Oil Company Proved That We Needed Anti-Trust Laws to Fight Such Market Monopolies”


[1] Nathaniel Branden, The Vision of Ayn Rand, p.375
[5] Ayn Rand, Capitalism The Unknown Ideal