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
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
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
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
for the estabolishment of the Interstate Commerce Commission
and other major agencies of governmental intervention on the
"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)
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
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
". . . 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
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
"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 --
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
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
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
"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
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
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
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
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
"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.
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
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
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
"At the center were a group of less than a dozen
investment banks, which were, at the height of their powers,
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
"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
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
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
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
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.
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
"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
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
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
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
It would seem, then, that the way to avoid such abuses
is not by giving even more power to the political regulators
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
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
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.
"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
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,
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),
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.
15. Dan Smoot, The Invisible Government. (Belmont,
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,
17. Murray Rothbard, "The Conspiracy
Theory of History Revisited,"
Reason (April 1977).
19. Ron Paul, from a May 1981 press release
issued by the office of
Congressman Ron Paul.
Allen, Frederick Lewis.
Morgan the Great. Life magazine,
April 25, 1949.
None Dare Call It Conspiracy. Seal Beach,
Calif.: Concord Press, 1971.
The Rockefeller File. Seal Beach, Calif.:
Concord Press, 1974.
Our Crowd. New York: Dell Books,
"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
Domhoff, G. William.
Who Rules America? Englewood Cliffs,
N.J.: Prentice-Hall, 1967.
Years of Plunder New York: Smith & Haas,
Railroads and Regulations 1877-1916.
Princeton University Presss, 1965.
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Quadrangle Books, 1967.
"The Limitations of Price Cutting As A
Barrier to Local Entry," Journal of Political Economy.
America's 60 Families. New York:
The Rich and the Super Rich. New York:
Lyle Stuart, 1968.
"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.
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New York: Random House, 1936.
The Big Boys: Power and Position in American
Business. New York: Pantheon Books, 1986.
The Monopoly Makers: Ralph Nader's Study
Group Report on Regulations and Competition. Grossman
Navarro, Peter. The
Policy Game. New York: John Wiley &
Sons, Inc., 1984.
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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