4 ms·
In more extreme cases, look at John D. Rockefeller's Standard Oil. Rockefeller used to be the wealthiest person in the world (according to some, if you inflatio
by volski 16y ago
In more extreme cases, look at John D. Rockefeller's Standard Oil. Rockefeller used to be the wealthiest person in the world (according to some, if you inflation adjust his money, he may have been the wealthiest person in the last 200 years). His company was broken into parts in order to promote competition.
John D. Rockefeller actually ended up being a lot richer because the courts broke up Standard Oil[1]. He went from having a controlling stake in the most powerful company in oil, to having a controlling stake in most of the powerful companies in the whole oil industry (ExxonMobil, Chevron, BP, Shell). I just wanted to clarify that point because the order in which your statement was crafted kind of made it seem like the courts broke up his wealth when they actually expanded it.
1.Rockefeller, who had rarely sold shares, held over 25% of Standard’s stock at the time of the breakup. He, as well as all stockholders, received proportionate shares in each of the 34 companies...The companies’ combined net worth rose fivefold and Rockefeller’s personal wealth jumped to $900,000,000.http://en.wikipedia.org/wiki/John_D._Rockefeller http://en.wikipedia.org/wiki/John_D._Rockefeller
- napierzaza 16y agoI agree with your statement, while at the same time it was the monopoly that got him to the position he was in. It's hard not to make money once you're at that point. I don't think he could have gotten that rich if actual competition existed and he was investing in hundreds of companies. He didn't do any manoeuvring to get his stakes in all those separate companies, unless you count back room deals.
- lzw 16y agoA monopoly is someone who owns an entire market. In the history of america, the only monopolies that have existed were government granted ones, like the US Postal Service. The government passed a law prohibiting the offering of first class mail. At the time they did this, there was a thriving and growing and diverse mail delivery system made up of thousands of small businesses and private contractors. Standard Oil was never a monopoly, and never had monopoly pricing power. Standard oil was only ever able to get large because they quickly and constantly drove down the price of gasoline. There is this tendency for americans to call businesses that are not monopolies under the definition to be monopolies to justify using violence against them (it is violence when a company is forcibly broken up or forced to not engage in "anti-competitive" (by which they really mean "competitive") activities.) The reality is, none of these businesses were monopolies, and as much as I hate microsoft, they weren't a monopoly. Existing laws would have been sufficient for enforcement against microsoft for their crimes, which included fraud and misrepresentation. But the "anti-trust" laws are all about preserving government power and are used only against businesses that become big enough to wield influence and thus attract opponents in government... usually opponents in government in the pocket of competing businesses. The US would be a better country and have a more robust economy, if Standard Oil had never been broken up. This and the "anti-trust" movement is a triumph of socialism over capitalism.
- Tycho 16y agoWhat di you make of the DeBeers 10 year diamond monopoly? If all the supposed monopolies out there, this seems the hardest to debunk. I read one economist say they were really a cartel with government protection, but he didn't cite any evidence. DeBeers seem to have controlled the trade through their own shrewdness. Only point I can think against it is there's nothing to stop people reselling diamond rings so it's wrong to say they control the market.
- lzw 16y agoThe only way a cartel can work is via government enforcement. Cartels can try to fix prices, but as soon as they do, if the price is above the free-market price, members of the cartel will try to gain marketshare by selling under the table at a lower price. Cartels are not sustainable in a free market for this reason. I can't comment on DeBeers because I do not know enough of the history of the situation. I will say, though, that diamonds are essentially worthless, and it is primarily by brilliant propaganda / advertising that people continue to buy them.
- jakarta 16y agoYou do a great job at ignoring the facts. Standard Oil was able to use anti-competitive forces against competitors. They specifically were able to extract better rates for the transportation of oil with the railroad companies which helped give them a more competitive cost structure than peers. Because of the high cost of capital required at the time, many peers were driven out of business and were forced to sell to Rockefeller.
- lzw 16y agoI love how ideological nonsense that bears no releationship to historical facts is considered "facts" and by not goose stepping along with your fascist ideology you feel justified in calling me ignorant. When its painfully obvious that all you are able to contribute to the conversation is a poor repetition of your vague memories of the propaganda you were told about the situation, when in reality, vertical integration, including the purchasing of transportation systems gave standard oil a competitive advantage. This is known as competition, and is not "anti-competitive". In fact, if you use the phrase "anti-competitive" seriously, you should lose the right to post on this website because you reveal yourself to be an unthinking socialist, and if you ever managed to start a company, you would surely fuck it up by following your ideology over reality.