Mr. Moderate

One of the features of the economic system in most western countries is a set of laws against certain practices designed to create monopoly power by business organizations. The root reason for such laws existing can be found in Lord Acton’s dictum:

Power tends to corrupt, and absolute power corrupts absolutely.

A monopoly, by definition, exerts substantial economic power, and generally absolute (or nearly-absolute) power, over some segment of the marketplace for some set of goods and/or services. The motivation for creating a monopoly is usually economic, and the great wealth which can be obtained through monopoly practices is, as Lord Acton observed, a factor leading to moral corruption.

Recognizing this plain fact of human nature, modern civilized nations create laws that limit the ability of monopolies to form themselves. In the United States, such laws are generally called “anti-trust laws” because in their original forms they were intended to break up the large business trusts that had formed near the end of the 19th century. The most famous such trust was probably the Standard Oil Company controlled by John D. Rockefeller, Sr.

Monopolies are not always considered to be bad ideas. For instance, patent laws have granted monopolies for limited lengths of time in order to foster public disclosure of useful inventions. So-called “public utilities” are granted regional monopolies on the providing of a utility service in return for close regulation by a governmental entity. The justification for such monopolies is that it would be an even worse idea to encourage multiple public utilities to compete for business than it would be to have a regulated monopoly.

The motivating factor for laws of this type should be to encourage and enforce what is in the best interests of the public at large. Profits are not necessarily bad, but unfair profits gained from unfair dealing are a bad thing for the public at large. The main idea to remember is that the controlling issue is not what is best for the businesses, but what is best for the public.