The United States is not a free-market or true “capitalist” society but rather a crony capitalist/welfare-state society. That is, many big businesses don’t compete to please the consumer but instead for coercive government privilege.
It is well documented that monopoly can’t exist in a free-market society; the forces of competition will always introduce new competitors to any particular field, especially when there is large amounts of money to be acquired. However, some astute businessmen notice that they can strangle their competition in the womb through government. They lobby for legislation that creates artificial barriers to entry, insane regulations for how productive processes must be run, subsidies, special taxes, or other inventive hurdles. It is far easier to “go political” and join the government in its parasitic extraction of wealth from the economy. A monopolist’s dream is to have a government grant it an exclusive monopoly over an industry.
There are many examples of crony capitalism in action. However, one historical example proves particularly interesting, for it shines a light on just how far monopolists are willing to go to acquire such government privilege. The event in question is the Bolshevik Revolution in Russia. Much evidence points to the fact that big business firms in the US—centered around the J. D. Rockefeller and J. P. Morgan conglomerates—helped bankroll the Bolsheviks using their massive funds and influence. While the jury is out whether the Bolsheviks would have succeeded in their takeover of Russia and the subsequent creation of the Soviet Union without this assistance, these big business firms absolutely played a part.
Why would these “capitalist” business firms help fund the Marxist Bolshevik revolutionaries? Were they secretly wooed by the false promises of communism? Most likely, no; some firms that aided the Bolsheviks also aided their enemies, presumably so they could have influence within whichever party was victorious. As monopoly capitalists, they realized that an inefficient economy run by totalitarian socialist central planning provided the perfect captive market for them, assuming they are on good terms with the socialist power-brokers. In this situation, the monopolists can easily achieve “protection” from the totalitarian government and take advantage of the consumers who are forced to buy from them because there is no alternative. This arrangement is especially advantageous when the captive market in question is as large as Russia. Therefore, the alliance between these two groups of seemingly enemies is actually not hard to imagine.
This situation is in the same line as the creation of the Federal Reserve System. As Murray Rothbard details in his history of the Federal Reserve, these same monopolist interests—centered largely around the Morgans and Rockefellers—pushed through the parasitic Federal Reserve System. This gave them a banking monopoly at home in the US similar, in principle, to the monopoly they worked to obtain in Russia. It is worth noting that monopoly “capitalists” are the enemies of laissez-faire capitalists who follow the tradition of Murray Rothbard, Ludwig von Mises, etc. The monopolists may run businesses, but they still owe their wealth to government power, not pleasing the consumer.
Hellbound and Down 