Socialism: An Economic and Sociological Analysis

In an economy based on private ownership in the means of production, specific primary production is the only field liable to monopolization without special protection from the State. Monopolies in certain branches of primary production are possible. Mining, in the widest sense of the word, is their true domain. Where to-day we have monopolistic structures which do not spring from government intervention, they are — apart from such instances as the railway company and the power works — almost exclusively organizations built up on a power to dispose of certain kinds of natural resources. These natural resources must be such as are found in relatively few places, for this alone makes the monopoly possible. A world monopoly of potato farmers or milk producers is unthinkable.1  Potatoes and milk, or at least substitutes for them, can be produced over the greater part of the earth’s surface. World monopolies of oil, mercury, zinc, nickel, and other materials can occasionally be formed if the owners of the rare places where they exist can combine; examples of this are found in the history of recent years.

When such a monopoly is formed the higher monopoly price replaces the competitive price. The income of mine owners rises, production and consumption of their product fall. A quantity of capital and labour which would otherwise have been active in this branch of production is diverted to other fields. If we consider the effects of monopoly from the standpoint of the separate branches of world economy we see only the rise in the monopolists’ income and the corresponding decline in the income of all other branches. Considered, however, from the standpoint of world economy and sub-specie aeternitatis, monopolies would appear to economize consumption of irreplaceable natural resources. People come to deal more thriftily with these precious resources when as in mining, the monopoly price occasionally replaces the competitive price and they are driven to do less digging and more working up. Since in every mine in operation nature’s irreplaceable gift to man is being used up, the less we touch this stock the better we provide for the supply of coming generations. We see now what it means when people detect in monopoly a conflict between social productivity and private profit. True, a socialist community would have no occasion to restrict production as Capitalism does under monopolies, but this would only mean that Socialism would deal less thriftily with irreplaceable natural treasures, that it would sacrifice the future to the present.

When we find that monopoly causes a conflict between profit and productivity which is not to be found anywhere else, we do not necessarily say that the effects of monopoly are pernicious. The naive assumption that the behaviour of the socialist community — as typifying the idea of productivity — constitutes the Absolute Good is quite arbitrary. We have no standard on which to base a valid decision between what is good and what is evil in this context.

If, then, we consider the effects of monopoly without being biased by popular writers on cartels and trusts, we can discover nothing which could justify the assertion that growing monopolization makes the capitalist system intolerable. The monopolist’s scope in a capitalist economy free from state interference is much smaller than this type of writer commonly assumes; and the consequences of monopoly must be judged by other standards than the mere catchwords Price Dictation and the Rule of the Trust Magnates.

• 1It is different, perhaps, with agricultural productions which flourish only on relatively restricted soils; for example, coffee growing.