POWER ELITES IN AMERICA:
              OLIGOPOLY AND POLITICAL PULL
          (OR, BEWARE THE REGULATORY-INDUSTRIAL COMPLEX)

                                                                By Sam Wells

              The eighteenth-century Scottish economist Adam Smith
         maintained that keeping a market free from political meddling
         benefits consumers and the economy as a whole -- but not
         necessarily particular business interests.  This is why,
         throughout The Wealth of Nations, we find a deep suspicion of
         businessmen as a class and especially as members of
         politically-active special interest groups.  Smith wrote:
              "People of the same trade seldom meet together, even for
         merriment and diversion, but the conversation ends in a
         conspiracy against the public, or in some contrivance to
         raise prices.  It is impossible indeed to prevent such
         meetings, by any law which either could be enforceable, or
         would be consistent with liberty or justice. But though the
         law cannot hinder people of the same trade from sometimes
         assembling together, it ought to do nothing to facilitate
         such assemblies, much less to render them necessary."
              Such private, voluntary schemes among would-be
         oligopolists seldom, if ever, secured any lasting advantage
         for the colluding firms. Historically, attempts to secure
         lasting monopolies and sustain monopoly prices through purely
         market means (price "wars," buying out competitors, colluding
         to fix prices, assigning market territories, advertising,
         etc.) ultimately backfired.  Because of the lure of greater
         profits, there was always the temptation by some firms to
         cheat on collusion arrangements, undercutting the agreed-upon
         price.  Price-cutting as a means for achieving monopoly by
         eliminating competitors inevitably failed because heavy
         losses had to be sustained by the would-be monopolist as long
         as he kept his prices below his competitors' prices, giving
         consumers a bargain.  Later, when prices were raised in order
         to try to recupe those losses, competition was quickly drawn
         back into the field because of the profit that could be made
         by selling the product at prices below the monopoly asking
         price.  In the meantime, consumers benefited as increased
         market competition resulted in relatively lower prices and
         more numerous alternatives became available from which to
         choose. 1
 

         INTERVENTIONISM AND SOCIALISM:  THE POLITICS OF MONOPOLY

              Throughout history, certain ambitious individuals have
         sought to gain monopolies in order to amass greater wealth by
         charging higher prices than they could get away with in a
         more competitive situation.2  There is nothing wrong with
         that desire -- as far as it goes -- but it can be a very
         difficult challenge.  The key to attaining and maintaining a
         monopoly, in order to sell at a higher-than-competitive
 
 
 
 
 
 
 
 

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         price, is to find some way of keeping others from selling in
         your market.  But, as previously noted, purely market means
         have seldom if ever worked to achieve that kind of monopoly.

              So, how do you keep others from selling in your market?
         You get "fair trade" laws against "unfair competition" or
         government price floors or restrictions on imports or some
         other political measure.  You go to government to
         artificially "fix" prices to stifle the dynamic competitive
         nature of the marketplace.

              On the local level, if you want a monopoly on taxi
         service in your community, you have to have friends at City
         Hall who can be depended on to make sure that you get a
         "license" to run a taxi business and other people don't get
         one. The friend at City Hall is an essential factor.

              If you happen to be one of your state's big dairy
         interests and want to shield your cozy oligopoly from
         competition from a newcomer who wants to sell milk at a
         cheaper price, you get your associates and lobby for the
         creation of some kind of bureaucracy called a "Milk
         Commission" or "Dairy Stabilization Board" in ordeer to
         "stabilize" the market by keeping milk prices artificially
         high by law.  To do this, you cultivate friends in the state
         legislature -- persons who will vote your way at the right
         times.  You also make sure your regulatory bureaucracy is
         properly staffed with those who will do the right things --
         in the name of the public good, of course.

              If you want a national monopoly in your field, you must
         have enough influence in fifty state legislatures to make
         sure each state government excludes or at least limits your
         competition.  But that is very difficult and expensive.  It
         is easier to gather more and more power in a centralized
         national government in Washington, D.C. to do the intervening
         for you.  It is easier to manipulate and control one national
         government than fifty state legislatures.  The Federal
         Reserve Act of 1913, which established a legal monopoly in
         national counterfeiting in the United States, was passed by
         the national Congress -- rather than having to go through all
         the various state legislatures for approval.  The Fed did not
         spontaneously arise on a free market; it was created by a
         deliberate political Act of Congress.

              In each case, would-be monopolists -- unable to gain
         lasting, coercive monopolies through purely market means --
         have had to go to and promote interventionist government to
         gain special privileges, exclusive charters, subsidies,
         bailouts, licenses, and other forms of political
         intervention.

              In his path-breaking study of the Progressive Era, New
         Left historian Gabriel Kolko reached the following
         "startling" conclusion about who was actually behind the push
 
 
 
 
 
 
 

                                                                     3
 

         for the estabolishment of the Interstate Commerce Commission
         and other major agencies of governmental intervention on the
         federal level:

              "Despite the large number of mergers, and the growth in
         the absolute size of many corporations, the dominant tendency
         in the American economy at the beginning of this century was
         toward growing competition. Competition was unacceptable to
         many key business and financial interests, and the merger
         movement was, to a large extent, a reflection of voluntary,
         unsuccessful business efforts to bring irresistible
         competitive trends under control.  Although profit was always
         a consideration, rationalization of the market was frequently
         a necessary prerequisite for maintaining long-term profits.
         As new competitors sprang up, and as economic power was
         diffused throughout an expanding nation, it became apparent
         to many important businessmen that only the national
         government could 'rationalize' the economy.  Although
         specific conditions varied from industry to industry,
         internal problems that could be solved only by political
         means were the common denominator in those industries whose
         leaders advocated greater federal regulation.  Ironically,
         contrary to the consensus of historians, it was not the
         existence of monopoly that caused the federal government to
         intervene in the economy, but the lack of it." 3

              Kolko's historical research demonstrates that giant
         businesses were not only unable to prevent new competitors
         from entering their industries, but they were less profitable
         than many much-smaller firms.  Having failed to establish
         control over the economy by purely market means, certain big
         business leaders became the chief initiators of "progressive"
         legislation on the national level.  And, as Kolko goes on to
         prove, the regulations and commissions were "invariably
         controlled by leaders of the regulated industry, and directed
         toward ends they [certain big business interests] deemed
         acceptable or desirable."4

              This pattern is demonstrated by Kolko in the case of the
         big railroads and the Interstate Commerce Commission, certain
         Wall Street bankers and the establishment of the Federal
         Reserve System, and the Federal Trade Commission was used to
         outlaw "unfair methods of competition" to protect the big
         firms already on top.  Kolko shows that this pattern existed
         under Republican Presidents Theodore Roosevelt and William
         Howard Taft, and even more so under Woodrow Wilson.  After
         the enactment of these "progressive" reforms, generally
         cheered on by the populists such as William Jennings Bryan,
         "big business as a whole was very pleased, to put it mildly,
         with the new state of affairs," explains Kolko. "The
         provisions of the new laws attacking unfair competitors and
         price discrimination meant that the government would now make
         it possible for many trade associations to stabilize, for the
         first time, prices within their industries, and to make
         effective oligopoly a new phase of the economy." (p. 268)
 
 
 
 
 
 
 

                                                                     4
 

              When would-be monopolists, particularly in the fields of
         banking, railroading, and petroleum, no longer confined their
         activities to the private sector of production and trade,
         and, instead, resorted to the coercive force of government
         intervention to gain privileges and monopolies, they crossed
         the line from market competitors to political pressure
         groups. This set the stage for the further forced
         cartelization of American industry under F.D.R.'s N.R.A., the
         plans for which having been drafted by Gerard Swope of
         General Electric.5

              Even though a special interest group is greatly
         outnumbered in a democracy by consumers, taxpayers, and
         marginal or potential competitors, it gets most of what it
         wants in the political arena if the political system is
         interventionistic.  As consumerist Ralph Nader has observed,
         after a regulatory agency is established to serve the common
         good, an accomodation tends to develop between the regulatory
         bureaucracy and certain vested interests in the industry
         being regulated.  Many of the regulatory personnel come from
         the industry itself.  The agency is soon captured, one way or
         another, to benefit the vested interests in the industry.

              In The Monopoly Makers:  Ralph Nader's Study Group
         Report on Regulation and Competition6, Nader makes the
         following revealing observations:  "The arms-length
         relationship which must characterize any democratic
         government in its dealings with special interest groups has
         been replaced, and not just by ad hoc wheeling and dealing,
         which have been observed for generations.  What is new is the
         institutionalized fusion of corporate desires with public
         bureaucracy -- where the national security is synonymous with
         the state of Lockhead and Litton, where career roles are
         interchangeable along the industry-to-government-to-industry
         shuttle, where corporate risks and losses become taxpayer
         obligations. For the most part, the large unions do not
         object to this situation, having become modest co-partners,
         seeking derivative benefits from the governmental patrons of
         industry.

              ". . . It is so much easier and, above all, more stable
         to seize the legal and administrative apparatus than to fight
         it, turning government agencies into licensors of private
         monopolies and co-conspirators against the people. . . . "

              Ironically, although Nader himself continues to advocate
         several categories of government regulatory involvement in
         American life, his study group concluded that government
         regulatory agencies, established to keep costs low for
         consumers, instead end up undermining competition and
         entrenching monopoly power -- turning government agencies
         against the consumer in connivance with those they are
         supposed to regulate.

              In chapter after chapter -- in industries ranging from
 
 
 
 
 
 
 

                                                                     5
 

         transportation (and the FTC) and the pharmaceutical industry
         (and the FDA) to electric power (and the Federal Power
         Commission) and others, the Nader group report shows how
         governmental regulation -- through licensing, subsidies,
         procurement policies, patents, import restrictions, and so on
         --  has "frustrated competitive efficiencies and has promoted
         monopolistic rigidities advocated by the regulatees
         themselves.

              "Not that monopoly and unchecked corporate power are
         unusual in our economy.  They are all too common.  But when
         they are bred and nourished by the government itself, in the
         guise of 'the public interest,' then it becomes time to
         question the purpose and goals of economic [i.e., political]
         regulation.  This is especially true when the intended
         beneficiary of the elaborate regulatory structure -- the
         consumer -- becomes its first victim.  The consumer
         ultimately pays for the increased prices, encouraged waste,
         and retarded economy that economic regulation fosters."

            Nader correctly identifies our system of government-
       promoted monopoly power as "corporate socialism, a
       condition of federal statecraft wherein public agencies
       control much of the private economy on behalf of a
       designated corporate clientele."

              Conservative economist Milton Friedman agrees with Nader
         and Kolko, saying:  "Nobody ever goes up to Congress and
         says, 'Look, vote me a big bonanza of $100,000 because I'm a
         good man and I deserve $100,000 out of the public purse.'
         No, he says, 'You should subsidize X, Y, and Z because the
         poor people in the slums will be benefited by it.'  So, you
         have two classes of people:  the selfish special interests on
         the one hand, and the so-called do-gooders on the other.
         These do-gooders are generally sincere people, but they
         invariably end up being the unwitting front men for private
         interests they would never knowingly support.

              "An example of that are the 19th Century Ralph Naders
         who got the Interstate Commerce Commission established --
         supposedly to protect the consumers.  The 'do-gooder'
         reformers, the Ralph Nader types, were sincere.  They wee
         interested in promoting the interests of the consumers, and
         they were complaining that the railroads were monopolies and
         that they were charging too-high freight rates, and that we
         had to get the federal government involved in order to
         eliminate that exploitation of the consumers.  So, the ICC
         was set up.  But who benefited from it?  The well-meaning
         reformers, the do-gooders, went on to their next reform.  The
         big railroads took over the ICC.  And they used the ICC to
         keep out competition and to raise rates rather than lowering
         them.  Then they used it in the 1920s to get the control of
         the ICC extended to trucking, because that was the most
         dangerous source of competition for them.  So, those
         well-meaning reformers -- not that they were bad people --
 
 
 
 
 
 
 

                                                                     6
 

         but they wound up being the front men for special interests
         they thought they were opposing.  And you have that pattern
         over and over again."7

              In blunt terms, government bureaucracies and other
         mechanisms for intervention tend to become tools of special
         interest groups whose influence is focused and specific -- at
         the expense of the 'general public' whose influence is
         general and diffused.

              For example, it's generally the big, Establishment-connected
         firms that get the fat (taxpayer-underwritten) foreign trade deals --
         and have them get approval by the Departments of State and
         Commerce; it is their less-connected competitors whose export
         licenses get denied or delayed in the government's bureaucracy.
         While pretending to be bound by government regulations, the
         corporate special-interest elitists inwardly clasp them to
         their bosoms for the protection they provide from much
         greater competition in their particular fields.  They know
         that, in the real world, government does not enforce its
         regulations neutrally; exceptions are made for special
         people. The regulations are to keep others out.

              Hence, an interventionist system (whether "democratic"
         or not) tends to cater most to the demands of the wealthiest
         special interest groups -- not the poverty class or the
         ordinary working class.  David Rockefeller has a great deal
         more influence over policy in Washington, D.C. than either
         Wendy Welfare or Joe Hardhat.  He's got a bigger vote where
         it counts:  the regulatory agencies, the State Department,
         and key congressional committees.

              In other words, the "public interest"/ "common good"
         mythology for justifying interventionism and socialism is
         muddy eye-wash for the public, to hide the oligarchist and
         monopolist nature of socialism from its victims. In a
         fundamental sense, there is really no such thing as
         "government" (as an abstract entity) regulation of "business"
         (as an abstract entity); rather, what's happening is that
         some business interests use the interventionist powers of the
         political state to regulate other bussinesses to keep
         competition down

         THE SOCIALIST-MONOPOLIST ALLIANCE

              Furthermore, socialism, being the ultimate in
         interventionism, is the most monopolistic of all systems.  No
         competition is permitted; there is only one deliverer of
         primary goods and services -- the government.  After all,
         what could be more monopolistic than a system in which the
         government owns and controls all the major industries --
         while the clique of monopolists behind the scene owns or
         controls the government?  When the government "nationalizes"
         an industry, the monopolists in power are merely merging
 
 
 
 
 
 
 

                                                                     7
 

         their competitors under their control.  A socialist state
         serves them as a sort of legal holding company to grab up
         land, resources, and companies that belong to other people --
         all in the name of "the people" of course.

              This explains why certain super-wealthy bankers and
         heads of multinational corporations lend their support for
         socialist, and even Communist, causes and movements. More
         people are beginning to check their premises and are coming
         to grips with the reality of this on-going
         socialist/monopolist alliance.  Consider the following
         remarks by Harold Pease, Ph.D., Professor of History at Palo
         Verde College:

              "Those of us who teach political science on the college
         and university level find ourselves seriously handicapped by
         the lack of textbooks and carefully prepared historical
         research on one of the most important phenomena of our time,
         namely, the amazing alliance which which has been growing for
         more than half a century between the leaders of the
         world-wide Communist movement and the leaders of some of the
         most powerful banks and industries of Europe and America.

              "That such an alliance should even exist came as an
         intellectual shock to this writer.  It seemed irrational, an
         ideological contradiction, a conflict of interests.
         Nevertheless, the more I have researched the matter, the more
         convinced I have become that the alliance is not only a
         reality, but that also herein might be found the Gordian knot
         which must be cut before we can solve some of the world's
         most critical problems."

              What must be cut is the knot tying banking and industry
         to the interventionist state.  No special favors from
         government means a policy of laissez faire, that oft-maligned
         prescription put forth by nineteenth century classical
         liberals and modern libertarians.  This, of course, is the
         last thing wanted by clever would-be monopolists who wish to
         eliminate free-market competition.

              As John D. Rockefeller, Sr. ("Competition is a sin!")
         and his lieutenants learned so well, when you control an
         interventionist state, you can control the economy by getting
         the government to run interference for your operations and
         provide yourself special privileges to keep competitors out
         of your way.8  This, of course, is not competitive
         free-market enterprise; it is monopolistic privileged
         enterprise -- or, as Kolko names it, "political capitalism"
         as contrasted to market capitalism.
 

              Back in Adam Smith's era, it was a widely recognized
         fact that specific monopolies came from government in the
         form of grants of special privilege from the reigning
         monarch.  The Bank of England, for example, was chartered by
         the British Crown.  But, in our own century, socialists and
 
 
 
 
 
 
 

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         other anti-market propagandists have distorted the facts of
         history by forcing them to fit into their ideological
         template of "capitalist exploitation" and have sought to give
         the impression that exploitative monopolies arose -- and
         necessarily will arise -- in an environment of laissez faire,
         on a fully free market. The real or alleged predatory
         practices of the legendary "robber barons" of American
         capitalism are still trotted out by statist historians as
         examples of a free-market economy resulting from a
         governmental policy of laissez faire!  Unfortunately, the
         fact is there never was an across-the-board policy of laissez
         faire.  The truth is:  a fully free market economy was never
         allowed to exist, not even in 19th-century America, even
         though it came closer than any other nation to approaching
         it.  There was slavery in the South, tariffs for northern
         industries, and central banking institutions for eastern
         bankers -- just to name three major forms of governmental
         intervention.  As Kolko and others have demonstrated, the
         actual cases of monopolistic exploitation were made possible
         by already existing government interventions -- from land
         grants to subsidies -- and became much more entrenched and
         institutionalized as a consequence of "progressive" political
         reforms.  From the first major federal regulatory
         bureaucracies of the 1880s, then the Federal Reserve Act of
         1913, the federal income tax amendment, the gleeful
         acceptance of the Keynesian rationale by policymakers in the
         1930s, New Deal fascism, and a host of other regulations and
         taxes that have been imposed by the states and the federal
         government up to the present time, more and more levels and
         layers of interventionism have accrued over the American
         economy.  The U.S. is a very long way from a system of
         laissez faire capitalism.  Whatever ills beset our economy,
         they cannot be laid at the doorstep of a non-existent laissez
         faire.

              The great Austrian economist Ludwig von Mises long ago
         noted the relationship between coercive monopolies and
         government intervention -- and he warned against false
         premises about the source of monopolies:  "It is wrong to
         assume that there prevails within a market economy, an
         economy not hampered and sabotaged by government
         interference, a general tendency toward the formation of
         monopoly. It is a grotesque distortion of the true state of
         affairs to speak of 'monopoly capitalism' instead of
         'monopoly interventionism' and of 'private caartels' instead
         of 'government-made cartels.'"

              Why do some of the most wealthy members of the corporate
         world seem to favor interventionism and socialism?  One might
         at first think that they would have the most to lose.  Yet,
         it is significant to note how many heirs of great industrtial
         and banking fortunes-- the second- and third-generation
         millionaires, such as the Rockefeller family -- are welfare
         statists who clamor for more and more taxes and government
         controls.  The answer makes sense when one realizes, from a
 
 
 
 
 
 
 

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         study of free-market economics -- that the more that
         political intervention exists in a country, the more
         cartelized and the less competitive is its economy.

              It is a mixed economy, such as the semi-fascist,
         semi-socialist system we have today, that tends to protect
         the non-productive rich by freezing a society on a given
         level of development and reducing the freedom and fluidity of
         the economy so that it is more difficult for people to rise
         or fall according to their own efforts and good judgements.
         Whoever inherited a fortune before the freeze can keep it
         without fear of competition -- like an heir in a feudal
         society.  (Scratch a socialist and you will find someone who
         longs for the "stability" of the stagnant system of
         feudalism.)

              Clearly, the target of the controls and taxes of the
         modern interventionist state are those able, dynamic
         businessmen who, in a free society, would displace the less
         competitive heirs -- the men with whom the heirs would be
         unable to compete effectively.  And the victims are the
         consumers who have fewer and poorer alternatives in the
         marketplace, and the taxpayers who are forced to pay the
         taxes.  All by itself, for example, taxation tends to smother
         innovation and competitiveness within an economy.  As the
         great Ludwig von Mises pointed out in his monumental treatise
         Human Action:

              "Today taxes often absorb the greater part of the
         newcomer's 'excessive' profits.  He cannot accumulate
         capital; he cannot expand his own business; he will never
         become big business and a match for the vested interests.
         The old firms do not need to fear his competition:  they are
         sheltered by the tax collector.  They may, with impunity,
         indulge in routine . . . .  It is true that the income tax
         prevents them as well from accumulating new capital.  But
         what is more important for them is that it prevents the
         dangerous newcomer from accumulating any new capital.  They
         [the old, established firms and families] are virtually
         privileged by the tax system.  In this sense, progressive
         taxation checks economic progress and makes for rigidity. . .
         .      "The interventionists complain that big business is
         getting rigid and bureaucratic, and that it is no longer
         possible for competent newcomers to challenge the vested
         interests of the old rich families.  However, as far as their
         complaints are justified, they complain about things which
         are merely the result of their own policies."9
 

              As long as the state can intervene in a field, the
         political process affecting that field will become more and
         more dominated by pressure groups with a vested interest.
         For example, the banking industry in general, and the major
         money-center banks in particular, are among the most (many
         say the most) powerful lobbies in the national government.
 
 
 
 
 
 
 

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         The New York Times has reported that, in the judgement of
         many Senators, Representatives, congressional staff members,
         Washington lobbyists, and other officials, "The nation's
         banks exert an influence over Congress and the Federal
         Government [which] surpasses the power of any other regulated
         industry."  The Times went on to quote a banking lobbyist as
         boasting that, "The banking lobby can almost certainly stop
         anything it does not want in Congress."

              The megabanks of New York and California have loaned
         billions of dollars to shaky, despotic regimes in Latin
         America, Africa, and Asia, and also to Communist
         dictatorships such as those in control of Poland and Red
         China.  But, because of their powerful influence in
         government circles, they made sure their risky loans were
         underwritten by the U.S. taxpayers through various
         governmental bailout mechanisms such as the Export-Import
         Bank, the Commodity Credit Corporation, the World Bank, the
         International Monetary Fund, the International Development
         Association, and other political agencies.  What this means
         is that when a foreign government cannot or will not repay
         the loans, the American taxpayers are forced to pick up the
         tab for those due interest payments.  This has already been
         done in the case of Poland, Mexico, Brazil, and other LDC and
         Red deadbeats.

              In a free market, bankers would have to loan at their
         own risk; the present scam of No-Risk Banking is made
         possible by government intervention.
 
 

         THE ESTABLISHMENT'S WALL STREET ROOTS

              Criticism has often fallen on the machinations of Wall
         Street bankers, both from the Left and the Right.  Especially
         criticized has been those institutions, like Chase Manhattan
         Bank, which are part of the Rockefeller empire.  These
         critics, such as libertarian economist Murray Rothbard and
         power-elites researcher Antony Sutton, insist that the
         elitist Eastern "liberal" establishment which surrounds this
         Wall Street power structure is a legacy of Wall Street mogul
         J.P. Morgan, but has since come under the control of the
         Rockefellers. They contend that various forms of governmental
         intervention -- especially the Federal Reserve System -- have
         been and continue to be indispensable props to this
         establishment network.10

              At least one Establishment spokesman has come forth to
         confirm most of the charges made by anti-Establishment
         right-wingers and left-wingers.  The late Georgetown
         University historian, Professor Carroll Quigley, described
         the structure of this powerful establishment clique as
         follows:

              "At the center were a group of less than a dozen
         investment banks, which were, at the height of their powers,
 
 
 
 
 
 
 

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         still unincorporated private partnerships.  These included
         J.P. Morgan; the Rockefeller family; Kuhn, Loeb & Company;
         Dillon, Reed & Company; Brown Brothers and Harriman; and
         others.  Each of these was linked in organizational or
         personal relationships with various banks, insurance
         companies, railroads, utilities, and industrial firms.  The
         result was to form a number of webs of economic power of
         which the more important centered in New York, while other
         provincial groups allied with these were to be found in
         Pittsburgh, Cleveland, Chicago, and Boston."11

              It is interesting to note some of the general
         characteristics, enumerated by Professor Quigley, of this
         moneyed aristocracy:

              "This group which, in the United States, was completely
         dominated by J.P. Morgan and Company from the 1880's to the
         1930's [after which the Rockefellers assumed the leadership
         role] was cosmopolitan, Anglophile, internationalist, Ivy
         League, eastern seaboard, high Episcopalian, and
         European-culture conscious."12

              In addition to being international rather than
         nationalistic, these bankers were, notes Quigley, "close to
         governments, and were particularly concerned with questions
         of government debts, including foreign government debts . . .
         " (emphasis added)  Being lenders to governments gave them a
         vested interest in government debt and debt instruments,
         especially bonds.  They were "almost equally devoted to
         secrecy and the secret use of financial influence in
         politicasl life."13

              The key, relevant phrase is "close to governments . . .
         "  The Establishment gained its privileged status and
         maintains itself ultimately through political power rather
         than market competition.

              Quigley goes on to observe, "The significant influence
         of 'Wall Street' (meaning Morgan) both in the Ivy League and
         in Washington, in the period of sixty or more years following
         1880, explains the constant interchange between the Ivy
         League and the Federal government. . . . "14

              What Quigley seems to have described was, and continues
         to be, a sort of Wall Street-Academic-Governmental Complex.
         Add to that powerful combine the influence of this group in
         the major news media, think tanks, well-endowed foundations,
         and certain elements of big industry, and you have quite an
         Establishment, indeed!  That's what has happened as the
         result of the marriage/partnership of Big Business and Big
         Government.

              The key organization in this oligarchy of pull is the
         Council on Foreign Relations and it constitutes what former
         FBI man Dan Smoot has dubbed "the invisible government" of
 
 
 
 
 
 
 

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         the United States.  Its members virtually dominate the fields
         of high finance, the major universities, foundations,
         national news media, and (certainly) U.S. foreign policy.15

              As John Franklin Campbell put it in New York magazine
         back in September 20, 1971:

              "Practically every lawyer, banker, professor, general,
         journalist and bureaucrat who has had any influence on the
         foreign policy of the last six Presidents -- from Franklin
         Roosevelt to Richard Nixon -- has spent some time in the
         Harold Pratt House [the CFR headquarters], a four-story
         mansion on the corner of Park Avenue and 68th Street, donated
         26 years ago by Mr. Pratt's widow (an heir to the Standard
         Oil fortune), to the Council on Foreign Relations, Inc. . . .
 

              "If you can walk -- or be carried -- into the Pratt
         House, it usually means that you are a partner in an
         investment bank or law firm -- with occasional
         'trouble-shooting' assignments in government.  You believe in
         foreign aid, NATO, and a bipartisan foreign policy.  You've
         been pretty much running things in this country for the last
         25 years, and you know it."

              Today, this foreign-policy establishment serves the
         internationalist interests of certain major international
         banks and their multinational corporate allies -- primarily
         the Rockefeller family ambit. The CFR has provided the key
         men, particularly in the field of foreign policy, for the
         Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford,
         Carter, Reagan, Bush and Clinton administrations.16

              In 1973 David Rockefeller founded a new sister
         organization to the CFR called the Trilateral Commission to
         propose and coordinate common foreign policy objectives for
         America, Western Europe, and Japan.  When, in 1977, it was
         found that the entire top leadership of the new Carter
         Administration had belonged to this small, low-profile
         organization of only eighty U.S. members, Dr. Murray Rothbard
         was among those anti-Establishment critics who questioned the
         possible conflicts of interest involved:  "Do we say that
         David Rockefeller's prodigious efforts on behalf of certain
         statist public policies are merely a reflection of unfocused
         altruism? Or is there pursuit of economic interest involved?
         Was Jimmy Carter named a member of the Trilateral Commission
         as soon as it was founded because Rockefeller and the others
         wanted to hear the wisdom of an obscure Georgia governor? Or
         was he plucked out of obscurity and made President by their
         support?  Was J. Paul Austin, head of Coca Cola, an early
         supporter of Jimmy Carter merely out of concern for the
         common good?  Were all the Trilateralists and Rockefeller
         Foundation and Coca-Cola people chosen by Carter simply
         because he felt that they were the ablest possible people for
         the job?  If so, it's a coincidence that boggles the mind.
 
 
 
 
 
 
 

                                                                     13
 

         Or are there are more sinister political-economic interests
         involved?  I submit that the naifs who stubbornly refuse to
         examine the interplay of political and economic interests in
         government are tossing away an essential tool for analyzing
         the world in which we live."17

              The aim of the CFR-Trilat planners is to control
         domestic regulatory agencies and conduct American foreign
         policy on behalf of the Special Interest Group of special
         interest groups -- the corporate-socialist elite in banking
         and industry.  It is the government contracts and the
         academic grants and the administrative appointments -- no
         matter which party is in power -- that are important to those
         who play the game.

              This breed of "political capitalists"  seeks
         politically-secured and governmentally-rigged markets,
         taxpayer-underwritten trade deals, and an environment in
         which competition is eliminated or controlled.  Far from
         desiring a policy of laissez faire, these corporate statists
         -- such as David Rockefeller, Armand Hammer, Dwayne O.
         Andreas, Felix Rohatyn, William C. Norris, et al -- promote
         interventionism and socialism.

              Such observations and criticisms of Establishment power
         and coercive monopolies are often met with such epithets as
         "paranoid" or "The Conspiracy Theory of History" (always said
         with a sneer) by Establishment partisans.  In rebuttal to
         such ad hominem charges, Dr. Rothbard makes the following
         observations: "Suppose we find that Congress has passed a
         law raising the steel tariff or imposing import quotas on
         steel?  Surely only a moron will fail to realize that the
         tariff or quota was passed at the behest of lobbyists from
         the domestic steel industry, anxious to keep out efficient
         foreign competitors. No one would level a charge of
         'conspiracy theory' against such a conclusion.  But what the
         conspiracy theorist is doing is simply to extend his analysis
         to more complex measures of government:  say, to public works
         projects, the establishment of the ICC, the creation of the
         Federal Reserve System, or the entry of the United States
         into a war.  In each of these cases, the conspiracy theorist
         asks himself the question cui bono?  Who benefits from this
         measure?  If he finds that Measure A benefits X and Y, his
         next step is to investigate the hypothesis:  did X and Y in
         fact lobby or exert pressure for the passage of Measure A? In
         short, did X and Y realize that they would benefit and act
         accordingly?

              "Far from being a paranoid or a determinist, the
         conspiracy analyst is a praxeologist:  that is, he believes
         that people act purposively -- that they make conscious
         choices to employ means in order to arrive at goals.  Hence,
         if a steel tariff is passed, he assumes that the steel
         industry lobbied for it; if a public works project is
         created, he hypothesizes that it was promoted by an alliance
 
 
 
 
 
 
 

                                                                     14
 

         of construction firms and unions who enjoyed public works
         contracts, and bureaucrats who expanded their jobs and
         incomes.  It is the opponents of 'conspiracy' analysts who
         profess to believe that all events -- at least in government
         -- are random and unplanned, and that therefore people do not
         engage in pruposive choice and planning."18
 

         CONCLUSION

              As we have seen, classical economist Adam Smith, New
         Left historian Gabriel Kolko, activist "liberal" consumerist
         Ralph Nader, conservative Chicago School economist Milton
         Friedman, liberal power-structure analyst William Domhoff,
         right-wing constitutionalist Dan Smoot, Austrian economist
         Ludwig von Mises, power-elites researcher Antony Sutton, and
         libertarian economic historian Murray Rothbard -- whatever
         their differences on policy recommendations and other issues
         -- they all concur on one point:  privileged power elites and
         oligopolies tend to be strengthened rather than weakened by
         bureaucratic regulations from government.  Political
         interventionism tends to artificially stabilize the market in
         favor of "the big boys" (as Ralph Nader calls them) and
         against greater diversity, market alternatives, and
         competition.

              There seems to be a consensus among an increasing number
         of scholars with widely diverse ideological perspectives that
         when the political state uses its power to intervene in the
         economy, regardless of the initial motives or outward
         intentions, it seldom, if ever, does so as a neutral agent
         for the "common good"; rather, political interventionism
         always tends to favor certain special, vested interests --
         almost always those big firms already on top in their
         particular fields -- at the expense of their competitors and
         the consumers.  This phenomenon seems to be due to the nature
         of the beast and therefore is endemic and inescapable in any
         interventionist political system.

              As long as political regulations over private industries
         are sanctioned as legitimate, there will be vested-interest
         groups and lobbies clustering around Congress and the
         "independent" regulatory agencies -- competing for favors
         from the public trough at the expense of everybody else.
         This has been shown to be true of the Interstate Commerce
         Commission, the Federal Reserve System, the Food and Drug
         Administration, the Federal Trade Commission, the
         Export-Import Bank, the Commodity Credit Corporation of the
         U.S. Department of Agriculture, the foreign aid programs,
         occupational licensure, and even the antitrust laws.  In case
         after case, the regulation or agency served the special
         interests by promoting oligopoly and monopoly and retarded
         competition and market alternatives to the detriment of
         consumers.

              It would seem, then, that the way to avoid such abuses
         is not by giving even more power to the political regulators
 
 
 
 
 
 
 

                                                                     15
 

         who, after all, are already comfortably in bed with the
         vested business interests.  The way to prevent such
         regulatory-industrial complexes and oligarchal establishments
         is through a disestablishmentarian divorce, to be achieved by
         a Separation of Market and State -- that is, a strict
         adherence to a policy of laissez faire:  "hands off" all
         peaceful market affairs by asny level of government.

              If the government were constitutionally and legally
         forbidden to intervene on behalf of anyone, then Rockefeller,
         Haammer, or any other would-be monopolist would have no more
         influence over government than anyone else, and would have to
         compete in the marketplace like everybody else.

              Moreover, if government had not already been in the
         business of intervening through regulations, controls,
         bureaucratic agencies, special taxes, and so on, there would
         have been no one in government to act as "pull peddlers" --
         since there would have been no political favors to dispense,
         no privileges to peddle in exchange for campaign
         contributions; so, the oligarchy based on political pull
         would not have emerged.

              It is only the government's ability to positively
         intervene -- and the widespread sanction of interventionism
         as legitimate -- which makes pressure groups, lobbies, and
         political factions so powerful and important in politics.
         Otherwise, they wouldn't cluster around Washington like flies
         around a garbage can. (Isn't this what a very disillusioned
         David Stockman meant by 'the triumph of politics'?) Making it
         illegal for government to regulate or otherwise intervene in
         production and trade would be much more effective in
         combatting political abuses and corruption than any
         restrictions on campaign financing or other superficial
         reforms.

              With government constitutionally prohibited from
         meddling in the private affairs and economic dealings of
         peaceful people, and restricted to protecting everyone's
         person and property from criminal violation, then no
         conspiracy of would-be monopolists or special-interest
         hustlers could use political power as a legal tool to obtain
         special privileges, exploitative monopolies, or plunder from
         the taxpayers.  Without government intervention, they would
         lose their power base, and the chain of privilege could be
         broken.  A policy of non-interventionism -- never really
         tried on a national scale -- could be the ultimate solution
         to the problem of coercive monopolies and coercive power
         elites.

              As former Congressman Ron Paul of Texas has cogently
         observed, "The free market is not only the most productive
         system, it is also the only system consistent with individual
         liberty.  It is also the only one that stops special
         interests from oppressing taxpayers and consumers.
 
 
 
 
 
 
 

                                                                     16
 

              "In an economy characterized by government intervention,
         the powerful use the government to their own ends.  The only
         cure is not more government, but getting politicians and
         bureaucrats out of the economy."19

              In sum, then, if coercive power elites and exploitative
         monopolies are bred from the interaction and collusion
         between special business interests and interventionist
         politics, then a policy of laissez faire -- a separation of
         market and state -- would seem to be the ultimate cure or
         best solution.
 


                                                                     17
 
 
 
 

                                                NOTES AND REFERENCES

     1. Wayne Leeman, "The Limitations of Price Cutting As A Barrier to Local
     Entry," Journal of Political Economy. December, 1956; Robert Masters,
     "An Alternative Concept of Competition," The IREC Review Vol. II No. 5.;
     John S. McGee,  "Predatory Price-Cutting:  The Standard Oil (N.J.)
     Case," The Journal of Law and Economics. (October, 1958, pp. 137-169);
     Yale Brozen, "Is Government the Source of Monopoly?" The Intercollegiate
     Review. (vol. V no. 2, pp. 67-78).   We have even seen this in a
     relative way on an international scale with the breakdown in
     effectiveness of the OPEC cartel in recent years.  Seeking to gain even
     more revenues, various members refused to limit production and sold oil
     at prices below that set by the cartel. Indeed, it has been suggested
     that OPEC never would have had much power to keep oil prices high in the
     first place if there had not been domestic price controls and a myriad
     of regulations and controls imposed on energy industries.  Cf. George
     Reisman, The Government Against the Economy, (Appleton, 1979).

     2.  The terms "monopoly" and "competition" are somewhat vague and elusive
     in that they are hard to define outside of rather narrow, artificial,
     and more-or-less arbitrary assumptions.  Acknowledging the problems of
     ambiguity in these concepts, the term "monopoly" is used in this article
     loosely to mean a situation in which one seller fully dominates his
     particular market because competition is barred from that field.

     3.  Gabriel Kolko, The Triumph of Conservatism, (Quadrangle Books, 1967,
     pp. 4-5.)

     4.  Ibid, p. 3.

     5.  Antony Sutton, Wall Street and FDR, (Arlington House, 1975).

     6.  Ralph Nader, The Monopoly Makers:  Ralph Nader's Study Group Report
     on Regulations and Competition.  (Grossman Publishers, 1973).

     7.  Milton Friedman, on Donahue, a TV program originating in Chicago.

     8.  Gary Allen, The Rockefeller File, (Concord Press, 1974).

     9.  Ludwig von Mises, Human Action, (Chicago, 3ed Rev. Edition, 1966),
     pp. 808-809.

     10.  Murray Rothbard, "Bankers Conspire," MoneyWorld (Winter, 1987);
     Antony Sutton, Wall Street and FDR (Arlington House, 1975); Sutton, Wall
     Street and the Bolshevik Revolution (Arlington House, 1974(; Sutton,
     Wall Street and the Rise of Hitler (76 Press, 1976).

     11.  Carroll Quigley, Tragedy and Hope (Macmillan, 1966), pp. 950-951.

     12. Ibid.

     13. Ibid.

     14. Ibid.
 
 
 
 
 
 

                                                                     18

     15. Dan Smoot, The Invisible Government. (Belmont, Mass., Western
     Islands, 1967).

     16.  Smoot, Op. cit.; Cf., Frederick Lewis Allen, Morgan the Great.
     (Life magazine, April 25, 1949); Quigley, op cit. Cleon Skousen, The
     Naked Capitalist (1970); Gary Allen, None Dare Call It Conspiracy,
     (Concord Press, 1971); Gary Allen, The Rockefeller File, (Concord Press,
     1974). G. William Domhoff, The Powers That Be:  Processes of Ruling
     Class Domination in America. (New York, Vintage Books, 1978); G. William
     Domhoff, Who Rules America?  (Englewood Cliffs, N.J., Prentice-Hall,
     1967).

     17.  Murray Rothbard, "The Conspiracy Theory of History Revisited,"
     Reason (April 1977).

     18.  Ibid.

     19.  Ron Paul, from a May 1981 press release issued by the office of
     Congressman Ron Paul.
 
 
 

 
                                                                     19
 
 
 
 BIBLIOGRAPHY


         Allen, Frederick Lewis.  Morgan the Great.  Life magazine,
              April 25, 1949.

         Allen, Gary.  None Dare Call It Conspiracy.  Seal Beach,
              Calif.:  Concord Press, 1971.

         Allen, Gary.  The Rockefeller File.  Seal Beach, Calif.:
              Concord Press, 1974.

         Birmingham, Stephen.  Our Crowd.  New York:  Dell Books,
              1967.

         Brozen, Yale.  "Is Government the Source of Monopoly?" The
              Intercollegiate Review. vol. V no. 2, pp. 67-78.

         Domhoff, G. William.  The Powers That Be:  Processes of
              Ruling Class Domination in America.  New York, Vintage
              Books, 1978.

         Domhoff, G. William.  Who Rules America?  Englewood Cliffs,
              N.J.:  Prentice-Hall, 1967.

         Hansl, Proctor.  Years of Plunder  New York:  Smith & Haas,
              1935.

         Kolko, Gabriel.  Railroads and Regulations 1877-1916.
              Princeton University Presss, 1965.

         Kolko, Gabriel.  The Triumph of Conservatism.  Chicago:
              Quadrangle Books, 1967.

         Leeman, Wayne.  "The Limitations of Price Cutting As A
              Barrier to Local Entry," Journal of Political Economy.
              December, 1956.

         Lundberg, Ferdinand.  America's 60 Families.  New York:
              Vanguard, 1938.

         Lundberg, Ferdinand.  The Rich and the Super Rich.  New York:
              Lyle Stuart, 1968.
 
 
 
 
 
 
 

                                                                     20
 
 

         Masters, Robert.  "An Alternative Concept of Competition,"
              The IREC Review Vol. II No. 5.

         McGee, John S.  "Predatory Price-Cutting:  The Standard Oil
              (N.J.) Case," The Journal of Law and Economics. October,
              1958, pp. 137-169.

         Mills, C. Wright. The Power Elite.  New York:  Oxford
              University Press, 1956.

         Myers, Gustavus.  History of the Great American Fortunes.
              New York:  Random House, 1936.

         Nader, Ralph.  The Big Boys:  Power and Position in American
              Business.  New York:  Pantheon Books, 1986.

         Nader, Ralph.  The Monopoly Makers:  Ralph Nader's Study
              Group Report on Regulations and Competition.  Grossman
              Publishers, 1973.

         Navarro, Peter. The Policy Game.  New York:  John Wiley &
              Sons, Inc., 1984.

         Quigley, Carroll.  Tragedy and Hope:  A History of the World
              in Our Time.  New York:  Macmillan, 1966.

         Quirk, William J.  "A Cross of Paper," The New Republic,
              January 19, 1980.

         Skousen, W. Cleon.  The Naked Capitalist.
 

(c) Copyright 1987 & 1999 Sam Wells


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