A Don Boudreaux letter to the New York Times:
In “The Real Villain Behind Our New Gilded Age” (May 1), Eric Posner and Glen Weyl perpetuate a common myth by writing that in late-19th-century America “leaders put into place antitrust laws” because Standard Oil and other “great monopolies of that period … used their power to corrupt the economy and politics.”In fact, as careful students of antitrust have shown, that legislation was enacted in order to protect smaller and less-efficient, but politically influential, producers from the dynamic, new, and more intense competition unleashed by entrepreneurs such as J.D. Rockefeller, Gustavus Swift, and James J. Hill. For example, as the economist D.T. Armentano documented about Standard Oil, “Prices for kerosene [Standard’s principal output] fell from 30 cents a gallon in 1869 to 9 cents in 1880, 7.4 cents in 1890, and 5.9 cents in 1897. Most important, this feat was accomplished in a market open to competitors, the number and organizational size of which increased greatly after 1890. Indeed, competitors grew so quickly in the years preceding the federal antitrust case that Standard’s market share in petroleum refining declined from roughly 85 percent in 1890 to 64 percent in 1911. In 1911 [the year that Standard lost its antitrust case before the Supreme Court], at least 147 refining companies were competing with Standard, including such large firms as Gulf, Texaco, Union, Pure, Associated Oil and Gas, and Shell.”*To the extent that the economy and politics of that period were corrupted, the guilty parties were opportunistic politicians serving as cronies for disgruntled competitors of the misnamed “robber barons.”Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030* D.T. Armentano, Antitrust Policy (Washington, DC: Cato Institute, 1986), pp. 24-25.
The above originally appeared at Cafe Hayek.
When I discovered Rothbard in 1973, this was THE BOOK I was told to read to refute the “Laissez Faire Caused the Robber Barrons”. B.S. My copy still has my mid-Michigan phone number and area code and I haven’t lived there since April 1975. Libertarians don’t seem to realize the very thin threads that the statist hang their entire U.S. Constitutional hat on: In law school, the professor generally spends about 90 seconds explaining that the Constitution was originally interpreted to allow and promote “laissez faire”. But by the 1930s, everyone realized that laissez caused both monopolies and the Great Depression and so we are finally wise enough to know that the government must regulate the economy. END OF DISCUSSION.
ReplyDeleteAll subsequent judicial legal opinions flow on the constitutionality of government regulation from those 90 seconds. Once you have granted the government the power to "do good" to fix the economy, such grant of power is essentially unlimited. Determining what is "good for the economy" is for the legislative branch and not fo the judges to determine. Libertarian outreach on these issues has naturally been hopeless over the years. From an Amazon review:
“The Triumph of Conservativism: A Reinterpretation of American History, 1900 – 1916”, subtitled "A radically new interpretation of the Progressive Era which argues that business leaders, and not the reformers, inspired the era's legislation regulating business", published in 1963 by the Free Press, by economic historian Gabriel Kolko, is a radical new interpretation of the reforms of the Progressive Era which attempts to show that the leaders of big business and not the reformers sought to regulate business to counteract the effects of competition and economic decentralization and to achieve concentration and monopoly. Gabriel Kolko (1932 - ) is a leading historian who has made an extensive study and reinterpretation of economic regulation and American militarism and was frequently associated with the New Left. Kolko's claims challenge the conventional wisdom which see business leaders as promoters of laissez-faire economics, by arguing instead that business leaders sought to regulate business so as to concentrate their power and avoid competition. This behavior has been termed "corporatism", but Kolko defines it to be "political capitalism" in this work. This book will focus primarily on the role of such business leaders and the corporations in the furthering of their interests through the power of the state. In another work, _Railroads and Regulation: 1877 - 1916_ (1965), Kolko focuses on the situation with the railroad monopolies so that is left out of this work. Kolko maintains that progressivism rather than being a fundamental movement for reform was actually a conservative movement aimed at furthering the goals of big business and for this reason he refers to the triumph of regulation as the "triumph of conservativism" and the "triumph of political capitalism". This book remains important for what it shows about the true nature of regulation and who really desires it. It can be seen that through regulation the corporations and monopolies are able to stifle competition and in that manner assure their continuing dominance.
https://www.amazon.com/gp/customer-reviews/RRII809O0TQ2B/ref=cm_cr_othr_d_rvw_ttl?ie=UTF8&ASIN=0029166500
I always insist that the statists have the burden of proof to demonstrate that laissez faire caused monopolies and/or the business cycle. We do not have to prove anything. You will quickly find that the statists cannot and will not present such proof and that they have no familiarity whatsoever with libertarian or Austrian analysis or the specific facts we know in such detail about both historical periods.