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Controls breed controls, Monopolies breed monopolies

As Mises explained, controls breed controls. ((“interventionism cannot work as a permanent system of society’s economic organization. The various measures recommended must necessarily bring about results which—from the point of view of their own advocates and the governments resorting to them—are more unsatisfactory than the previous state of affairs which they were designed to alter. If the government neither acquiesces in this outcome nor derives from it the conclusion that it is advisable to abstain from all such measures, it is forced to supplement its first steps by more and more interference until it has abolished private control of the means of production entirely and thus established socialism. The conduct of economic affairs, i.e., the determination of the purposes for which the factors of production should be employed, can ultimately be directed either by buying and abstention from buying on the part of consumers, or by government decrees. There is no middle way. Control is indivisible.” Mises, Economic Freedom and Interventionism, ch. 10.)) But monopolies also breed monopolies.

First the state is granted arrogates to itself a monopoly in dispensing justice. ((Hoppe defines the state as: “What must an agent be able to do to qualify as a state? This agent must be able to insist that all conflicts among the inhabitants of a given territory be brought to him for ultimate decision-making or be subject to his final review. In particular, this agent must be able to insist that all conflicts involving himself be adjudicated by him or his agent. And implied in the power to exclude all others from acting as ultimate judge, as the second defining characteristic of a state, is the agent’s power to tax: to unilaterally determine the price that justice seekers must pay for his services. Based on this definition of a state, it is easy to understand why a desire to control a state might exist. For whoever is a monopolist of final arbitration within a given territory can make laws. And he who can legislate can also tax. Surely, this is an enviable position.” See The Nature of the State and Why Libertarians Hate It.)) Then, it uses this position to grant monopolies, such as patent and copyright, to favored recipients. These recipients are thus able to charge monopoly prices, and to establish oligopolized industries relatively immune from competition. This allows them to afford the purchase of more state monopolies (such as expensive patents) that smaller upstarts, newcomers, and competitors cannot, further entrenching their monopoly position. ((See, e.g., my posts <a title="Permanent link to Microsoft Copyrights –> Patent Dominance” href=”../2011/06/microsoft-copyrights-patent-dominance/” rel=”bookmark”>Microsoft Copyrights –> Patent Dominance; The Schizo Feds: Patent Monopolies and the FTC.)) Barriers to entry are maintained, allowing the entrenched, established firms to reap monopoly profits. A portion of these profits are returned to the state in the form of legal bribes (campaign contributions) which keep the legislators from rocking the boat. And so the cycle continues.

This is not too surprising to libertarians used to seeing state corruption. What is surprising is the spectacle of some libertarians bending over backward to try to justify this, in the name of intellectual “property.”


Stephan Kinsella

Stephan Kinsella is an attorney in Houston, director of the Center for the Study of Innovative Freedom, and editor of Libertarian Papers.

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