|
POWER ELITES & MONOPOLY POWER
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
2
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
8
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
9
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.
10
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,
11
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
12
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
Related Articles
"Robber Barons" and Exploitative Monopolies which system fosters them and which
system most discourages them?
Socialism? The Regulatory Mixed Economy?
Laissez Faire?
Return to Home Page
|
|
