"Robber Barons" and Exploitative Monopolies – which system fosters them and which system most discourages them?

I. The Regulatory State and the Mixed Economy -- Regulation and Regulatory Agencies as Legal Tools of Special Interests for Special Privileges & Monopoly Power

It is claimed that in a fully free-market economy (an economy with the ABSENCE of positive, initiatory government intervention in any form, including controls on prices and antitrust laws – a society in which the government is limited to protecting people from and retaliating only against violent force and fraud) that unscrupulous "robber barons" would be able – by purely market means -- to obtain monopolies over critical goods we all want and depend on, and then charge ruinously high monopoly prices and thereby get away with making huge profits at the unnecessarily high expense of the consuming public. Many have tried to do this historically, but have not succeeded. Indeed, it was the failure of big business interests to maintain their dominant market positions in the face of the rising tide of competition during the late 19th and early 20th centuries that led certain special interest elements of big business to give up on trying to use purely market means (price cutting, better quality, offers to buy out competitors, etc.) to keep their positions and instead to support and sometimes even secretly push for more new federal regulations, controls, and taxes to "stabilize the market" (control the competition) during the misnamed "Progressive Era"; researchers have shown case studies in the transportation and banking industries, for example, in the deliberate creation of the Interstate Commerce Commission, the Federal Trade Commission, and the Federal Reserve monopoly – all creations by Acts of Congress and certainly NOT private entities spontaneously arising in a free market. This is well-documented. In other words, certain "political capitalists" resorted to Big Government to run interference for them in gaining special privileges and monopoly grants they could not get on a free market.

Moreover, while these agencies of political interventionism were being promoted, fashioned and used by special business interests in the industries under regulation to maintain monopolies or oligopolies, these monopoly interests received unwitting support from naïve populists and "progressives" who believed (falsely but sincerely) that their efforts were fighting "Wall Street insiders" and other aspects of the monopoly Establishment. William Jennings Bryan, for example, naively endorsed the passage of the Federal Reserve Act of 1913 as a great victory of the people against the big Wall Street interests. Nothing could be further from the truth. It had been the Wall Street Insiders – particularly agents of J. P. Morgan and other Wall Street banksters – who had been promoting and even wrote the legislation for what ultimately became known as the Federal Reserve System. They had met in secret at J.P. Morgan’s estate on Jekyl Island, Georgia to fashion this political interventionist institution to cartelize the banking industry under their control. This is exactly what happened. The Fed’s board was dominated by Morgan men. The populists and other leftists of the day had been cruelly used and fooled. They falsely believed that political interventionism could be used as a tool for the "common man" at the expense of the super-wealthy class already on top; they did not and still do not understand that it is the wealthiest interests and the already most powerful groups that will always have the most powerful influence on the real-world day-to-day operations of government bureaucracies and how they implement the regulations passed by the peoples’ Congress.

Whenever a government regulatory bureaucracy is created by legislation, it virtually always becomes the tool of special interests within the industry under regulation. This is not only true of those early regulatory agencies (the ICC, the FTC, and the Fed), but tends to be true for them all – from OSHA and the USDA to the FDA and the EPA. They never operate as market neutral agencies, but always tend to favor some special interests at the expense of the others – especially at the expense of the consumers and taxpayers.

In a sense, there is no such thing as "government" (as an abstract entity) regulating "business"; in the real world, it turns out to be SOME specific business interests which manage to use the power of the regulatory state to regulate OTHER businesses (i.e., their competitors or potential competitors) in a given industry. The purpose is to limit competition in such a way as to favor the special interests in control of the regulatory state, and this virtually always tends to be the already reigning establishment. In short, contrary to "liberal" mythology, government regulation almost always tends to be a tool for cartelization of industry and does not result in more choices for consumers. Rather, it is almost always DEregulation that allows more alternatives to be offered to consumers.

Contrary to Marxist propaganda, it was NOT increasing monopolization and exploitative abuses that led to government regulation of Big Business. It was just the opposite. It was the increasing competition and inability of certain vested interests to cope with the rising tide of economic diversity and diffusion that led some of them to resort to political intervention in order to control their markets by suppressing their competitors.

In the system of the "Liberal" Regulatory State, it is not against the law for the government to meddle in the economy, so there is no separation of Market and State. This results in a symbiotic relationship developing between politicians and some of the wealthiest vested business interests -- and the interventionist agencies of the Regulatory State become legal instruments for cartelization by the oligopolists and monopolists – almost always in the name of the "public interest" of course! Under such a system it is not surprising that we see the "pull peddlers" of the interventionist state trading grants of privilege in exchange for big money donations from the special interests for political re-election campaigns.

II Full Socialism – The Ultimate Violent Monopoly

Contrary to the myths of the Reactionary Left, socialism is not the way to eradicate capitalist monopolies and exploitation. Indeed, socialism is the ultimate in exploitative monopolism. After all, what could be more monopolistic than a system in which the government owns and controls the various industries – while the monopolistic clique behind the scenes owns or controls the government and uses it as a legal holding company to merge competitors under its wing of control? No competition allowed! You have to buy your necessities from the Monopoly State; there is nowhere else to go (legally). The average person under Socialism is beholden to the socialist state as his only source for supplies. Of course, there is always some favoritism among the elite party members. All animals are equal – but some are "more equal" than others! This is inevitable.

Socialism is characterized not only by state monopolies in every major industry, but by totalitarian tyranny over the people – little or no freedom for the individual. And an economy beset with chronic shortages and long, long lines of poor people trying to get basic goods. In short, socialism sucks big time!

III Laissez Faire – the Separation of Market & State

Finally, we come to the best (or some might say "least bad") solution, and that is a system in which the political government is limited to going after only those who initiate the use of violent force or commercial fraud (which can be shown to be an indirect use of violent force). Such a Republic leaves peaceful people alone with respect to their private activities or voluntary (market) relationships. It does not intervene in the private, voluntary exchanges of the people – no regulations or controls on prices, profits, interest rates, dividends, or rents; no antitrust laws; no laws interfering with contractual obligations; etc. In short, the government does not take sides, no matter what happens, until and unless one or more of the players resorts to physical violence or provable commercial fraud. This system not only allows more alternatives to be offered to consumers in the long run, but also preserves the rights and freedoms of individuals living in such a society. As a side consequence, such a system also eliminates problems of political campaign financing, since it makes it illegal for government officials to peddle privileges to anyone in the first place. There is therefore no incentive, as there is today, for big business interests to try to buy favors and special consideration from politicians and bureaucrats by major campaign contributions.

IN SUMMARY, I have briefly looked at three possible situations and conclude 1) that the Regulatory State becomes a legal tool of special interests for privilege and monopoly/oligopoly power at the expense of consumers and taxpayers; 2) that Socialism is not only not a way to combat monopolism but actually institutes the ultimate coercive monopoly with state ownership and control fronting for the special interests behind the scenes; and 3) the only ultimate cure for exploitative monopolism is Laissez Faire – the Separation of Market & State so that no one gets any special privileges, and anything goes as long as it does not involve violence.

Of the three worlds – the "Liberal" Regulatory-Industrial Complex, the total monopoly of Socialism, or Freedom under the Laissez-Faire Republic – only the libertarian system of Laissez Faire can best serve consumers and avoid coercive monopolies and truly rapacious robber barons.