An important example of the monopolizing effects of a program supposedly designed to combat monopoly is the court decision outlawing basing-point pricing. On the free market, price uniformity means uniformity at each consuming center, and not uniformity at each mill. In commodities where freight costs are a large proportion of final price, this distinction becomes important, and many firms adopt such price uniformity, enabling firms further away from a consuming center to “absorb” some freight charges in order to compete with local firms.

Conservation laws restrict the use of depleting resources and force owners to invest in the maintenance of replaceable “natural” resources. The effect of both cases is similar: the restriction of present production for the supposed benefit of future production. This is obvious in the case of depleting resources; factors are also compelled to maintain replaceable resources (such as trees) when they could have more profitably engaged in other forms of production.

A patent68 is a grant of monopoly privilege by the government to first discoverers of certain types of inventions.69 Som

Franchises are generally grants of permission by the government for the use of its streets. Where the franchises are exclusive or restrictive, they are grants of monopoly or quasi-monopoly privilege. Where they are general and not exclusive, however, they cannot be called monopolistic. For the franchise question is complicated by the fact that the government owns the streets and therefore must give permission before anyone uses them.

In contrast to the franchise, which may be made general and nonexclusive (as long as the central organization of force continues to own the streets), the right of eminent domain could not easily be made general. If it were, then chaos would truly ensue. For when the government confers a privilege of eminent domain (as it has done on railroads and many other businesses), it has virtually granted a license for theft. If everyone had the right of eminent domain, every man would be legally empowered to compel the sale of property that he wanted to buy.

Because it is illegal, bribery of government officials receives practically no mention in economic works. Economic science, however, should analyze all aspects of mutual exchange, whether these exchanges are legal or illegal. We have seen above that “bribery” of a private firm is not actually bribery at all, but simply payment of the market price for the product. Bribery of government officials is also a price for the payment of a service. What is this service?

Economic historians often inquire about the extent and importance of monopoly in the economy. Almost all of this inquiry has been misdirected, because the concept of monopoly has never been cogently defined. In this chapter we have traced types of monopoly and quasi monopoly and their economic effects. It is clear that the term “monopoly” properly applies only to governmental grants of privilege, direct and indirect. Truly gauging the extent of monopoly in an economy means studying the degree and extent of monopoly and quasi-monopoly privilege that the government has granted.

The common, erroneous phrasing of Gresham’s Law (“bad money drives out good money”) has often been used to attack the concept of private coinage as unworkable and thereby to defend the State’s age-old monopolization of the minting business. As we have seen, however, Gresham’s Law applies to the effect of government policy, not to the free market.

Tariffs and immigration barriers as a cause of war may be thought far afield from our study, but actually this relationship may be analyzed praxeologically. A tariff imposed by Government A prevents an exporter residing under Government B from making a sale. Furthermore, an immigration barrier imposed by Government A prevents a resident of B from migrating. Both of these impositions are effected by coercion. Tariffs as a prelude to war have often been discussed; less understood is the Lebensraum argument.

Compulsory cartels are a forcing of all producers in an industry into one organization, or virtual organization. Instead of being directly barred from an industry, firms are forced to obey governmentally imposed quotas of maximum output. Such cartels invariably go hand in hand with a governmentally imposed program of minimum price control. When the government comes to realize that minimum price control by itself will lead to unsold surpluses and distress in the industry, it imposes quota restrictions on the output of producers.