Rothbard on the Myth of the "Free Market Cartel"Submitted by Marc Clair on Mon, 10/29/2012 - 09:46
One of the most common critiques I hear about anarcho-capitalism or just free markets in general is the idea that, without government, cartels will emerge to control certain sectors of the market and collude to keep out competition. This is funny to me as the only cartels I know have either been directly created by government (The Federal Reserve banking cartel, for starters), or have emerged amidst the violence of a black market created solely by government prohibition (the mafia and modern day drug cartels). Nonetheless, such myths can often be difficult to refute if one isn’t fully equipped with a good answer.
Enter Mr. Libertarian himself, Murray Rothbard. In this week’s edition of “Mondays with Murray”, we take a look at an excerpt from a Rothbard speech where he discusses this very myth, and effectively blows it out of the water. No cheating and skipping ahead now, take the 5 minutes to give it a listen!
Murray busts through this myth by actually discussing how some companies did attempt to create cartels in the late 19th Century, during an era where the economy was so free and robust that the prices of goods and services were falling across the board. This, of course, is a sign of a very healthy economy. But some of the less efficient companies instead began to merge and create cartels in attempts to fix prices and lock out competition. So it is true that the objector to anarch0-capitalism that companies may attempt to form cartels.
The problem with this theory? These attempts to cartelize were complete failures.