2. The Theory of Anti-Monopolistic Policy

The theory of monopoly goes deeper than the Marxian theory of concentration. According to it, free competition, the life blood of a society based on private ownership in the means of production, is weakened by the steady growth of monopoly. The disadvantages bred within the economy by the unlimited rule of private monopolies are, however, so great that society has no choice but to transform private monopoly by socialization into state ownership. However great an evil Socialism might be, it would be less harmful than private monopoly. Should it prove impossible to counteract the tendency towards monopoly in ever widening fields of production, then private ownership in the means of production is already doomed.1

It is clear that this doctrine calls for a searching investigation: first, as to whether evolution is really in the direction of monopoly control, and secondly as to what are the economic effects of such monopoly. Here one has to proceed with special care. The time at which this doctrine was first expounded was generally not favourable to the theoretical study of such problems. The emotional judgment of appearances rather than the cool examination of the essence of things was the order of the day. Even the arguments of such an outstanding economist as J. B. Clark are imbued with the popular hatred of the trusts. Utterances typical of contemporary politicians are to be found in the report of the German Socialization Commission of February 15th, 1919, where it was affirmed as ‘indisputable’ that the monopolistic position of the German coal industry ‘constitutes an independent power which is incompatible with the nature of the modern state, and not merely the socialist one’. It was, in the opinion of the Commission, ‘unnecessary to discuss anew the question whether and to what degree this power is misused to the detriment of the remaining members of society, those to whom it is raw material, the consumers, and the workers; its existence suffices to make evident the necessity for completely abolishing it’.2

• 1Clark, Essentials of Economic Theory, p. 374 et seq., 397.
• 2Report of the Sozialisierungskommission über die Frage der Sozialisierung des Kohlenbergbaus vom 31 Juli 1920 (Appendix: Vorläufiger Bericht vom 15 Februar 1919), op. cit. p. 33.