Freeman

ARTICLE

Combinations in Restraint of Trade

JUNE 01, 1969 by PAUL L. POIROT

If one could poll all past and present economists, perhaps the point upon which they’d most nearly agree is that combinations in restraint of trade are eco­nomically unsound. Not even Karl Marx would have defended a mo­nopoly or cartel.

Unfortunately, there is no depth to such convictions; the agreement on the matter is strictly superfi­cial. "Workers of the world unite," thundered Marx; and combina­tions in restraint of trade have constituted the core of social re­form from that day to this.

Trade is the lifeblood of civi­lized society. This is not to suggest a social organism to which the in­dividual human being must bow and scrape, but an operating meth­od that allows each peaceful per­son to choose and act freely. The free market, in other words, is a means for social cooperation, as­sociation for mutual gain. Its functioning depends not upon our being perfect or all-wise or self­less or equal but upon our being human—not upon our similarities but upon our differences—not upon what we own or hold in com­mon but upon our independent likes and dislikes and that which each can identify and claim as his own private property.

It is neither necessary nor de­sirable that there be equality in the possession of things, though certain emergency situations may give rise to such rationing—a band of pilgrims stranded on a rock in the dead of winter; sur­vivors on a raft in a hostile sea; a faithful few standing by for the coming of a New Jerusalem—or a higher stage of socialism.

Whatever one’s conclusion about the efficacy of such emergency ra­tioning for purposes of survival, the historical record affords no comfort to the advocates of collectivism as a continuing way of life. That "wave of the future" is a failure. It plugs every avenue to progress and leads only to the dead level of mediocrity. No indi­vidual is permitted to gain or lose, succeed or fail—as though evolu­tion could occur without birth and death.

Keynes was under no illusion as to the consequences of the inter­vention he advocated. "In the long run," he said, "we are all dead." Forced equalization as a method for survival in the short run leaves man without means or purpose for the long run. No one bothers to specialize or save or attend to the processes of continuing production—unless he is allowed to retain and enjoy the fruits of such effort. Compulsory collectivism is indeed a conspiracy, a combination in re­straint of trade.

Destroy the Machinery

We smile knowingly, and sadly, at the reports of the destruction of machinery by workers in the textile mills in the early stages of the industrial revolution. They thought their jobs and means of livelihood were being threatened by the new spinning jennies and looms. Today we know very well the futility of trying to earn a living spinning thread by hand or trying to weave without the latest power loom equipment. We know how shortsighted were the early factory workers with their silly combinations in restraint of trade. The very idea of breaking up the machinery that would enable them to produce more efficiently!

Or do we only pretend to un­derstand what they did not, while persisting in their foolish ways to destroy the property and disrupt the trade upon which our own lives depend?

Is a twentieth-century strike by workers in any particular industry any less a combination in restraint of trade than was the destructive action of their unenlightened fore­bears in the textile mills a century or two earlier? What else is an employee strike than a concerted action to immobilize and render ineffective the capital and tools of their trade and the managerial talent developed and accumulated over the ages?

Are twentieth-century rioters in our cities any less destructive of life and property than were their eighteenth-century counter­parts among the rabble of Paris? Are modern tariffs, boycotts, em­bargoes, and controls over prices, wages, and rents any less disrup­tive of trade than were similar combinations in restraint of trade in previous centuries?

Are the youths of all ages who lead and follow in today’s student revolts against the cumulative wisdom and traditions of civilization less detrimental to human progress than were the Huns and Vandals who sacked and burned ancient Rome? Was there ever a more dis­ruptive combination in restraint of education than the striking United Federation of Teachers in New York City?

How may future historians de­scribe our Age of Inflation other than an international conspiracy in restraint of trade, a gigantic counterfeiting operation designed to transfer savings by stealth from private ownership and con­trol to public disposition and wasteful consumption?

At a time when human life throughout the world is more de­pendent upon the blessings of spe­cialization and trade than ever before, we seem to have hit an all-time high in various combinations in restraint of trade—as though determined to destroy ourselves in the process of plundering others.

How does one counteract a com­bination in restraint of trade—or violence in any form, for that matter? In the first place, and to the extent that he has a choice, he can withdraw his support of such harmful actions. This may be as simple a matter as clearing his mind of illusions about the nature of people and things, visualizing the numerous peaceful alternatives to this or that outbreak of vio­lence, and putting his trust in one of those alternatives.

There is no point in charging a picket line for the pleasure of knocking heads with those who have no other objective. But one may peacefully withdraw his sup­port of picketing and other forms of violence. He need not profess in public to be in favor of a right to strike; the alternative is to up­hold the right to work, to serve oneself by serving others. One’s right to work for an employer who provides the tools and manages the enterprise and markets the prod­uct includes permission to vacate that job if the wage is unsatisfac­tory; but it does not entitle the employee who quits to destroy the tools and plant and sales organiza­tion and other assets of the busi­ness when he leaves it. Nor does it entitle him to draw automati­cally upon taxpayers to cover the wages lost by not working.

The Guaranteed Life Brings Stagnation

Imagine, if you can, a business enterprise operated on the princi­ple of a guaranteed position in the market, a guaranteed cost-free supply of capital and raw ma­terials, a guaranteed steady stream of customers using ration coupons but otherwise obliged to pay nothing for any product or service, a guaranteed annual wage to every employee, with full tenure and seniority provisions and a right to strike indefinitely with unemployment compensation for the duration.

What you have just tried to imagine are the terms and condi­tions of a full-fledged welfare state, otherwise known as social­ism, with you as the guarantor, otherwise known as the taxpayer.

Scarcely anyone can stretch his imagination enough to accept so­cialism when carried to its ulti­mate logical conclusion. Yet, there are many who imagine that one of these terms or conditions can be imposed—one step taken—with­out leading inevitably to the next, and the next, and the same even­tual dead end. Every strike action condoned, every picket line re­spected, every special privilege al­lowed one person or group at the expense of others against their wishes, every act of coercion against peaceful members of so­ciety is destructive of that society and leads to its disintegration. Un­less the life of the peaceful person and his property are respected and defended, he cannot be counted upon as either a supplier of, or paying customer for, goods and services; the advantages of spe­cialization and trade will be for­feited, the stage set for the four horsemen of the Apocalypse: war, strife, famine, and pestilence.

If one seriously proposes to do something about a social condition he deplores—let us say, for in­stance, the fact that not everyone can afford everything his heart desires—then it behooves him to advocate a cure that does not ag­gravate and accentuate that very problem. It is not helpful to bolster and strengthen the demand for a scarce resource in ways that dis­courage the production or other­wise diminish available supplies of that scarce resource. If lack of trade is the problem, then combi­nations in restraint of trade can­not be a right answer. The alter­native is a combination in promo­tion of trade, and the process is through efficient and profitable production of goods and services. He who supplies in the market those things others most want, as evidenced by their willingness to buy, not only serves them. He thereby conserves scarce resources in the only meaningful sense of the term by turning those re­sources to their most economical use. And whether or not it was his intention, he best serves himself in the process, improving his pros­pects to fulfill whatever purpose he has in mind for his own life. That kind of social cooperation or combination in promotion of trade is practically all that anyone can do to win the respect and support and good will of his fellow men.  

ASSOCIATED ISSUE

June 1969

ABOUT

PAUL L. POIROT

Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.

comments powered by Disqus

EMAIL UPDATES

* indicates required
Sign me up for...

CURRENT ISSUE

September 2014

For centuries, hierarchical models dominated human organizations. Kings, warlords, and emperors could rally groups--but also oppress them. Non-hierarchical forms of organization, though, are increasingly defining our lives. It's no secret how this shift has benefited out social lives, including dating, and it's becoming more commonplace even in the corporate world. But it has also now come even to organizations bent on domination rather than human flourishing, as the Islamic State shows. If even destructive groups rely on this form of entrepreneurial organization, then hierarchy's time could truly be coming to an end.
Download Free PDF

PAST ISSUES

SUBSCRIBE

RENEW YOUR SUBSCRIPTION