Antitrust punishes the successful businesses by
branding them "monopolists" regardless of how they achieved that
success
What is antitrust?
Anti-trust are those set of laws which punish successful businesses (or
trusts) for being successful, i.e., dominant. To quote philosopher
Ayn Rand writing in "Antitrust: The Rule of
Unreason" Voice of Reason,
The alleged purpose of the Antitrust laws was to
protect competition; that purpose was based on the socialistic fallacy that
a free, unregulated market will inevitably lead to the establishment of
coercive monopolies. But, in fact, no coercive monopoly has ever been or
ever can be established by means of free trade on a free market. Every
coercive monopoly was created by government intervention into the economy:
by special privileges, such as franchises or subsidies, which closed the
entry of competitors into a given field, by legislative action...The
Antitrust laws were the classic example of a moral inversion prevalent in
the history: an example of the victims, the businessmen, taking the blame
for the evils caused by government, and the government using its own guilt
as a justification for acquiring wider powers, on the pretext of
"correcting" the evils.
What about Rockefeller's Standard Oil?
Standard Oil was punished for dropping the price of oil more then half, by
buying up competitors in order to gain greater economies of scale -- as their
market grew they were able to achieve greater economies of scale, and thus
lower their production costs, and thus lower their prices, while increasing
their profits. Of course, by taking over inefficient refineries and charging
lower prices, their inefficient competitors were unable to compete
successfully (i.e., they were free to enter the market and compete, but
because they were not as productive they could not 'win'), and so under
antitrust 'Standard Oil' was punished for being too successful.
Writes Dominick Armentano [professor of economics at the University of
Hartford],
The little-known truth is that when the government took
Standard Oil to court in 1907, Standard Oil's market share had been declining
for a decade. Far from being a "monopoly," Standard's share of petroleum
refining was approximately 64% at the time of trial. Moreover, there were at
least 147 other domestic oil-refining competitors in the market — and some of
these were large, vertically integrated firms such as Texaco, Gulf Oil, and
Sun. Kerosene outputs had expanded enormously (contrary to usual monopolistic
conduct); and prices for kerosene had fallen from more than $2 per gallon in
the early 1860s to approximately six cents per gallon at the time of the
trial. So much for the myth of the Standard Oil "monopoly."
What is the base of the antitrust laws?
The philosophical foundation of the antitrust laws is the Marxist myth that a
free-market will result in the formation of coercive monopolies. Eventually
through 'historical necessity' they will form one big business which the
'proletariat' will take over with the establishment of communism.
Don't the antitrust laws stop monopolistic
practices?
Absolutely not. Harmful monopolies from the old AT&T monopoly (created by
government regulations), to the U.S. Post Office monopoly were created by the
state. The U.S. Post Office, for example, maintains its monopoly on the
lucrative first class mail market by having the state outlaw its
competition.
Take for example Judge Learned
Hand's indictment of ALCOA. What 'crimes' was ALCOA punished for? To quote
Hand:
"It was not inevitable that it should always
anticipate increases in the demand for ingot and be prepared to supply them.
Nothing compelled it to keep doubling and redoubling its capacity before
others entered the field. It insists that it never excluded competitors; but
we can think of no more effective exclusion than progressively to embrace
each new opportunity as it opened, and to face every new- comer with new
capacity already geared into a great organization, having the advantage of
experience, trade connections and the elite of personnel." [Alan
Greenspan, "Antitrust" published in Ayn Rand's
Capitalism: The Unknown Ideal]
In other words ALCOA was being punished for being too good a
company, too competent in its management, in other words Alcoa's crime is that
it is too competitive.
Regarding the Microsoft case, don't consumers have a right to Windows
without Explorer? Does not Microsoft's bundling of their products (i.e.
Microsoft Internet Explorer and Microsoft Windows) into one package disrupt a
person's right to only have to pay for products he wishes to buy?
No one has a right to buy whatever they wish, one only has the right to buy
what others choose to sell to them. The terms of any trade must be agreeable
to the buyer and the seller, or a sale does not take place. If you
don't like Microsoft's terms, then you are free to go somewhere else (like I
did when I bought an Apple Macintosh and a UNIX server).
There is no right to force Microsoft to create, or sell, a product
called "Windows without Explorer" if Microsoft does not want to. The key right
in this case is the right to property -- which is a legitimate right. The
property rights to Windows and Explorer belongs solely to Microsoft and not
to potential buyers, and certainly not to the U.S. Department of Justice. That
Microsoft does not want to sell the product "Windows without Explorer" does
not violate your rights one iota. There is no such thing as your right to
Microsoft's property. There is only the right to buy products that others wish
to sell to you. If they don't wish to sell you them in the first place, then
you have no right to buy them.
Suggested Reading:
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See the section on Monopolies.
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Alan Greenspan, "Antitrust" published in Ayn
Rand's Capitalism: The Unknown Ideal.
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Capitalism Magazine spotlight on
Antitrust
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