What is it with me and bashing evil corporations of late (not necessarily on this blog, though I’m sure if you look through the archives…)? I hope it’s not habit-forming.
Well, could be that some of them, at least at some point in their history, became what they are with special thanks to the government. Could also be that some of them have been grandfathered in and are protected from competition from those who haven’t been grandfathered in. Might also have a little something to do with the fact that some of them have benefitted from foreign policy meddling and institutionalized theft committed by the state. But other than that, I have few complaints. Here’s a comment I left (since edited) at the end of a survey that sparked this article:
“I like surveys that have political and societal relevance. I believe in the desirability and functionality of free markets. And Exxon Mobil is a great company all things considered. However, they could not have gotten to where they are today without a little outside help. Some of this came from the consumer, to be sure. But some of it came from the state through the virtual cartel status granted to all major [US, Dutch, and British, at least] oil companies going back at least to the 1953 [CIA instigated] Iranian Coup… [This] greatly benefitted the Seven Sisters oil companies (a number of which [were Standard Oil descendants that later] merged to become Exxon Mobil) and is one of the main causes of unease in the Middle East and around the world today. They, like all oil companies, great and small, foreign and domestic, have also benefitted from oil’s status as de facto commodity backing for the US dollar. The world reserve currency known as the Federal Reserve Note is denominated in crude oil. The oil companies have a vested interest in maintaining this corrupt arrangement.”
What say you? Are some/most/all big corporations what they are today more thanks to competition or more thanks to monopoly? Here’s one for extra points: what about “small business,”? Aren’t they also protected from competition, in certain industries more than others, by regulations that keep newcomers out and by subsidies that keep competing technologies down?
For the record, anti-trust legislation actually has the effect of restraining competition, thereby securing monopoly, so when I say “bust the trusts” I don’t advocate anti-trust legislation, I simply want to let free market competition give some of these bigger guys a run for “their” money! The burden of proof is on them to show that they would really be as big as they are today were they under a system of laissez-faire capitalism. I guess you could say I’m with the left-libertarians on this one (except for the fact that I dared to use the word “capitalism”).
Also, Brandon and I had our little chat on conspiracy theories. The collusion of big businesses (usually involving the state at some level) to form cartels (take note that Standard Oil, known to us today as Exxon Mobil and Chevron, was owned by John D. Rockefeller, who also had a hand in creating the Federal Reserve; I wouldn’t say everything that has happened in regards to these two was meticulously plotted, but I wouldn’t call it mere coincidence, either) happens to be one of the ones that I subscribe to. I think Adam Smith can back me up on this one. And unlike some who use the quote to support anti-trust legislation, I’ll give you more than just the first two sentences in order to show why such laws are not the best conclusion:
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.
12 thoughts on “Standard Oil, Like a Phoenix Rising from the Ashes (Bust the Trusts! The Right Way for Once!)”
Those are some dope looking comics. Where’d you find ’em?
Also, a quick note on conspiracies. When Smith was writing he was doing so looooong before the advent of public choice theory (although he basically founded it). I guess you could say there is a conspiracy of sorts when it comes to using the state to better yourself at the expense of others.
On the other hand, I think we would all agree that there is cabal of bankers plotting to take over the world by forcing “the system” to collapse. Are we all in agreement on this?
Oh, I’ve seen ’em around. Cabal of bankers? Sounds sinister. Are you sure they’re not actually trying to prop up the current system (and are failing because, well, the current system sucks). I mean, it has served them pretty well, hasn’t it?
Ah shit. Hahah!
I was confused by your response, and then I realized I had made a typo. It should read like this: “I think we would all agree that there is no cabal of bankers…”
There! Now that sounds more like the Brandon I know.
PS it’s nice to see you reading your Mr. Smith. Excellent work!
Good information about Standard Oil. Rockefeller sold his company’s shares after the Sherman Anti-Trust Act hit him in 1911, and doubled his wealth. Rockefeller moved on to bigger and better things. He was no longer a greedy capitalist, but a world social engineer.
Thanks for the info and I’m glad you’ve joined the team here at Notes on Liberty! Have you ever read John Chamberlain’s The Enterprising Americans? It sheds some positive light on Standard Oil, which was at least at first an example of how the market can adapt to new technologies. I would be curious to find out who successfully used the Sherman Anti-Trust Act against Standard Oil. Was it the government or was it a competitor, perhaps? I know that it is more often private businesses that bring charges against other businesses under Anti-Trust than it is government. If I had to guess I would suspect J. P. Morgan, who was later an ally to the Rockefeller interests during the creation of the Fed.
From my research it appears that many of the republicans formed the progressive wing, which promoted the square deal to appease labor unions and poor farmers, to avoid recent issues like Southern secession and Draft Riots. Remember in these days that striking workers used to actually get violent, and vandalize factories. Not like today where things like this are dealt with entirely through labor lawyers and corporate lawyers.
Honestly, I think Rockefeller allowed the legislation to break up his company. It happened during the Taft Administration, who ran on a progressive platform in 08, but a conservative one in 12. It appears Rockefeller didn’t care anymore. He was going to collect the money and invest with JP Morgan and Kuhn-Loeb in tinkering with the world economic systems. He basically crossed the threshold from being a Romney/Walton to being a George Soros.
Anybody notice how oftentimes billionaires are liberals while millionaires are republicans? Yankee old money republicans were known to be very liberal before Reagan represented the party, and got Bush to be the quintessential Ivy League blue-blood hiding in a Texas good ol’ boy suit.
I would agree that there is no cabal of bankers. That does not mean that there is open & free competition. Why form a cabal when tacit collusion gets the job done? Just as an example
Click to access Morais_Ruiz.pdf
There was also the Libor scandal, but I don’t know too much about it.
Yes, but tacit collusion only goes so far (think of the Prisoner’s Dilemma). That’s why banking establishments are forever pushing for more regulations.
Think about it this way: regulations often have to go through the legislative process, where they are subjected to the lobbying efforts of special interests (Madison’s “factions”). If you have enough clout to engage in lobbying, as many big banks do, you can actually capture the rent associated with whatever regulations come out of the legislative process.
Many libertarians (including yours truly) argue that the Federal Reserve system itself is a pristine example of regulatory capture. A truly open and competitive banking sector, something I think we can all agree would be fairer than any other system, can only function without the presence of a central bank. Abolishing a central bank overnight would be a bad idea, of course, but slowly peeling away legislation that protects central banks from competition would introduce an element of dynamism and fairness that I think the US economy is sorely lacking.
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