Are monopolies really as dangerous as Marx said they were?

"Competition engenders misery, it foments civil war, it 'changes natural zones,' mixes up nationalities, causes trouble in families, corrupts the public conscience, 'subverts the notion of equity, of justice,' of morality, and what is worse, it destroys free, honest trade, and does not even give in exchange synthetic value, fixed, honest price. It disillusions everyone, even economists. It pushes things so far as to destroy its very self."

- Karl Marx, in "The Poverty of Philosophy," Chapter 2, Part 3 (as translated into English at Marxists.org)

Most people today know Karl Marx was an opponent of free markets, and that he gave all kinds of objections to them in his writings. But lesser-known is an objection he gave to free competition: that competition inevitably destroys itself - through monopoly.

Karl Marx

Quote from Marx about competition "destroy[ing] its very self"

In the words of Marx himself:

"Competition engenders misery, it foments civil war, it 'changes natural zones,' mixes up nationalities, causes trouble in families, corrupts the public conscience, 'subverts the notion of equity, of justice,' of morality, and what is worse, it destroys free, honest trade, and does not even give in exchange synthetic value, fixed, honest price. It disillusions everyone, even economists. It pushes things so far as to destroy its very self." (Source: "The Poverty of Philosophy," Chapter 2, Part 3, as translated into English at Marxists.org)

Is it true that competition inevitably destroys itself through monopoly?

The idea that competition needs to be watched - that monopolies need to be guarded against - is held by many today, who are otherwise in favor of free markets. Competition is a good thing, many say; but it needs to be monitored. But ... is it true that competition inevitably destroys itself through monopoly?

Capitol Dome

My own history with this idea

I once believed that this was true, and that there was a needful function for anti-monopoly laws, such as the Sherman Antitrust Law of 1890. This was one of the arguments that fascinated me; because if it was true, then that meant that competition could be dangerous if unfettered, which would undermine my faith in the free market if true. Thus, I had to know whether or not this argument held water; and whether competition was something to be celebrated or feared.

Senator John Sherman, the principal author of the Sherman Antitrust Act

My change of heart in this matter

But I have since come to the conclusion that monopolies are not something to be feared - that there are many forces in place to prevent their rise; and which ensure that if they do appear, that they will not have much power. This might seem to be a strange argument, and I acknowledge that I once saw it as strange myself. But I have come to the conclusion that competition doesn't really destroy itself through monopoly - that free-market forces prevent this from happening, and that Mr. Marx exaggerates their dangers and effects.

Pleas for an open mind in the reader

I will present arguments in this blog post to support this point of view, and challenge Mr. Marx's objection to free-market competition. If this seems counter-intuitive to you, I ask only that you entertain my arguments with an open mind; and refrain from judging them until after you've heard them. So with that in mind, I will now turn to my arguments about free-market competition, and use some quotes from Dr. Thomas Sowell to support them. These will show why competition being destroyed through monopoly is not something that we should worry about.

Thomas Sowell

The Marshall Plan: Helping the poor, keeping the peace, and stopping the communists

"If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict, will not limp. Nothing can then delay for very long that final civil war between the forces of Reaction and the despairing convulsions of Revolution, before which the horrors of the late German war will fade into nothing, and which will destroy, whoever is victor, the civilization and the progress of our generation."

- John Maynard Keynes, in "The Economic Consequences of the Peace" (1919), Chapter VII, Section 1

There was never a "Marshall Plan" after World War One (like there should have been) ...

It might seem strange to begin a post about the Marshall Plan this way, but the end of the First World War a generation earlier was so poorly handled that a second war became necessary twenty years later, to finish the work of the first. Why did the second war happen? The debate is long and complicated, but there are two themes that often come up as explanations. One is the failure to obtain an unconditional surrender from the Germans, and change their system of government enough to make a second war less likely. The other is the imposition of reparations, or the plan to force Germany to pay for the damages that it had caused. This angered the Germans enough that they went to war again a generation later, largely as revenge for the impoverishment caused by the reparations.

Germans demonstrate against Treaty of Versailles, Reichstag 1919

... but there was a "Marshall Plan" after World War Two, and it may have kept the peace

No one will ever know for sure, but I think that it could have been prevented - that rebuilding Germany, instead of punishing it, would have been a better way to prevent a second war. In short, what they needed was a Marshall Plan; and the Marshall Plan following World War II (which was the plan to provide economic assistance, to rebuild postwar Europe) may have been a large part of the reason that the peace with Germany was kept after the war was over. The Allied troops did what they had to do to stop Germany; but after the war, the best thing they could have done for their countries was to turn their former enemies into friends, and win the hearts of the people so that they would not be likely to invade their neighbors again. They had won the war - now they needed to win the peace, and the Marshall Plan was a large portion of the reason why the peace has lasted as long as it has.

Devastation of postwar Berlin, June 1945

A review of “Reconstruction: The Second Civil War”

"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations, and claims shall be held illegal and void."

- Fourteenth Amendment to the United States Constitution (ratified 1868), Section 4

It was the end of a civil war in which four million slaves were freed, but which failed to bring true freedom to the people on whose behalf it had largely been fought. It was called the "Reconstruction Era" because its purpose was to rebuild (and heal) a war-torn nation, but which saw almost as much violence and destruction as actual reconstruction. And it brought the vote and other rights to the former slaves of the South for a time, only to see those rights taken away almost overnight when the Reconstruction Era ended in a corrupt political deal, giving the White South almost everything it wanted.

Confederate capitol of Richmond, 1865 (the end of the war)

Reconstruction period characterized by anarchy, chaos, and even (at times) armed conflict

Much has been written about the military conflict called the "Civil War" (fought between North and South), but not as much has been written about the postwar Reconstruction period, which is perhaps even more complex politically than the war itself. Indeed, some historians have even called it the "Second Civil War," because it was characterized by anarchy, chaos, and even (at times) armed conflict. This was between former Union soldiers occupying the South, and former Confederate soldiers joining the Ku Klux Klan and other terrorist organizations, who were trying to undo all that the North had fought and died for.

Actually, communism HAS been tried (and it doesn't work)

Tiananmen Square, China 1989

"China isn't all that bad," some say ...

The critics of communism have long pointed out the failure of states like China and the Soviet Union, which all attempted to implement Marxist doctrine. The variety of liberal responses to this is rather interesting, and the shaky nature of the premises used is rather telling. Some contend that China isn't all that bad, and make grand proclamations about how "developed" it is, and how wonderful things supposedly are there. (Obama has made this argument before - see below.) Even the most cursory examination of the actual evidence shows how wrong this is - China is extremely poor, and their standard of living lags far behind anything in the industrialized West. There is economic development in China, it is true; but it seems to do little to raise the standard of living there; and it's not all that it's cracked up to be.

"China is bad," others say, "but that's because it's 'capitalist' ... "

Others admit that China is poor and miserable, but say that it is capitalist, and thus try to put the blame for its failures on capitalism. Again, even the most cursory examination of the evidence shows that this is not the case, and that China is vastly far removed from a capitalist society, possessing no freedom of the market like that found in the West. It's hard to decide which is more lame - the attempt to find a scapegoat, or their odd choice of which one to use; but regardless of the comparison in lameness, there is plenty of lameness to go around; and their attempt to shift the blame is ultimately illegitimate.

A review of “Founding Brothers” (History Channel)

"[The Congress shall have the power] To exercise exclusive legislation in all cases whatsoever, over such district (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States ... "

- Constitution of the United States, Article 1, Section 8, Heading and Paragraph 17

What happened to the Founding Fathers after the Revolution was over?

Most people have some cursory knowledge of what happened during the American Revolution, and what the Founding Fathers did during this period. But what happened to them after the Revolution? What did the Founding Fathers do when the war was over, and the Constitution was ratified? These are the questions that a documentary by the History Channel attempts to address. They follow in the footsteps of a Pulitzer-Prize-winning book by Joseph Ellis - a book called "Founding Brothers," the same title as this History Channel program. The results of it are more surprising, more interesting, and more moving than what you 'd think possible.

What did the Founding Fathers disagree with one another about?

If you're interested in what happened to the Founding Fathers - in the issues they disagreed over, the quarrels between them, and their postwar accomplishments - then this is the best documentary to see. It covers the administrations of our first three presidents - George Washington, John Adams, and Thomas Jefferson - and does not shy away from depicting Benjamin Franklin, Alexander Hamilton, and James Madison as well. These guys are much more interesting than the paintings we have of them, with the powdered wigs and the dated clothing. Moreover, the way that they handled the early days of the Republic set the precedents for all of the democratic dialogue that we've had since then. The government had been created, but it had not yet been given a trial run, and no one was quite sure how it would work in practice.

James Madison: The most underrated Founder

"[The Americans] accomplished a revolution which has no parallel in the annals of human society. They reared the fabrics of governments which have no model on the face of the globe."

- James Madison, in the Federalist Papers (Federalist No. 14)

The Founding Fathers, as a group, are an underrated lot. Even Washington, Hamilton, Jefferson, and Franklin sometimes don't get the respect they deserve; and many have never even heard of John Adams or James Madison. John Adams has been somewhat better-known since the HBO miniseries about him with Paul Giamatti, but even he is still unknown to many; and there has been virtually nothing made about James Madison. PBS has done documentaries about all five of the other Founders that I mentioned, but they didn't do a single documentary about James Madison. They did one about his wife Dolley, which was quite good; but nothing about him that I can find (and I've looked). More than the other major Founders, James Madison doesn't get the respect he deserves.

Another measure of how overlooked Madison is can be found in the History Channel's "Founding Brothers" documentary, based on Joseph Ellis's Pulitzer-Prize-winning book of the same name. The documentary covers the presidencies of our first three presidents, which were Washington, Adams, and Jefferson; and they give some mention of Madison's role in these times. But they do not cover the administration of Madison, who was the only other Founding Father president. Perhaps they didn't want to get into the War of 1812 issue, since that's a subject for a documentary in and of itself; but for whatever reason, they neglected Mr. Madison's presidency. Thus, I am of the opinion that James Madison is the most underrated of the Founding Fathers; and I decided I'd write a little bit about this unknown genius.

A review of “Andrew Jackson: Good, Evil, and the Presidency”

"Andrew Jackson was a patriot, and a traitor. He was the greatest of generals, and wholly ignorant of the art of war. He was the most candid of men, and capable of the profoundest dissimulation. He was a democratic autocrat, an urbane savage, an atrocious saint."

- Andrew Jackson's first biographer

He was a slaveholding Southerner, who stopped an early attempt at seceding from the Union. He was a champion of the "common man," so long as that common man was white. And his face is found on the $20 bill, even though he caused Indian Removal and the Trail of Tears - after the Supreme Court had ruled it unconstitutional.

His name was Andrew Jackson, and he was one of the toughest son-of-a-gun presidents that this country has ever produced. His presidency was not without its praiseworthy moments, but he had more than his share of shameful acts; and some of them taint his legacy to this day. He has been admired and hated by generations of Americans; and continues to excite controversy today. One thing both sides agree on, though - the man was extremely interesting. While his legacy is not always inspiring, it is a source of endless fascination for anyone interested in our history - and as the ongoing interest in Nazi Germany demonstrates, people are (perhaps morbidly) fascinated by Hitler, puzzled and sensationalized by how anyone could do such things. Although Andrew Jackson was no Hitler, the evils in his nature and legacy continue to have much the same effect - puzzling and sensationalizing, scandalizing and mystifying. People love him and hate him, but never lose interest in him. A documentary at PBS explains why.