A Letter to the Editor

Ludwig von Mises, the economist born in Vienna and living in New York, had devoted a chapter to the problem of cartels and monopolies in his book on liberalism published in 1927. What Mises wrote twenty-eight years ago is as topical today as ever — and especially important for the German cartel debate! For this reason the editor asked Herr von Mises for permission to reprint this chapter¹. L. von Mises replies as follows: “Most esteemed Dr Muthesius! You ask me whether I would consent to a reprinting, in your excellent monthly journal, of my remarks on cartels and monopolies published twenty-eight years ago. The affirmative answer does not come easily to me. What I was able to say about cartels and monopolies in 1927 in my book ‘Liberalism’ represents only one stage in my endeavours to put a better doctrine in place of the inadequate treatment of the relevant problems by all varieties of the ‘historical school’ and of socialism of the chair (Kathedersozialismus). Moreover, in that book I had to be brief and to forgo examining many sides of the problem. A complete treatment of the nature of monopoly can be carried out only within the framework of a comprehensive economic theory. I have attempted to offer such a theory in my book ‘Human Action’. I am perfectly aware that my remarks from 1927 cannot satisfy the readers of your monthly journal in 1955. In response I can only refer them to ‘Human Action’. There I believe I have said everything that is to be said about these problems. If policy did not lay the groundwork for the emergence of what in the United States is called conspiracies to bring about a restraint of trade, there would be no monopoly problem worth mentioning. The politicians preach the crusade against the cartels while doing everything to make cartelization possible. The American anti-trust laws today serve chiefly the campaign against big business, that is, against those enterprises whose mass production supplies the consumer with all the things that abroad are described as the hallmark of American luxury. The demagogy of the Department of Justice showed itself in the finest light some years ago, when an enterprise that sells foodstuffs through numerous branches was placed under investigation. The firm’s share of total American turnover in these goods amounted to 7 per cent and had been steadily declining in recent years. What was chiefly held against it was that it undercut the prices of the ‘home-grown’ grocer. That must indeed appear unforgivable in the eyes of a government whose policy raises the prices of all agricultural products considerably. Governments are not content with creating the preconditions for the formation of national cartels. Through international cooperation they bring about the emergence of world monopolies. Perhaps many German libraries lack the collection of these agreements that the International Labour Office published in 1943. The study of this volume is quite instructive. It also shows how the Moscow government, which constantly issues calls to struggle against monopoly capitalism, is by no means hostile to such agreements. That the efforts to revive these Commodity Control Agreements have today become rather weak is not to the credit of the statesmen. It is a success owing to the work of a few economists. I do not wish to comment on the question whether Germany today needs a cartel law. But I am of the opinion that sincere opponents of monopoly should first advocate the abolition of all measures of the command economy. Only the repeal of protective tariffs, of restrictions on payment transactions with foreign countries, and of many other interventions in the Liberty of market dealings can solve the monopoly problem — and many other pseudo-problems of the economy. I wish your brave struggle for a free economy every success. Yours most faithfully, Ludwig Mises.”