Formation of Monopolies

Perfect competition is not a natural state. Suppliers are usually, naturally, not perfectly equal; with one, perhaps, providing an inferior product at a lower price due to the lack of skill, access, or tools necessary to perfect the product.

Whatever the causes of imperfect competition, disparities allow for accumulation of wealth.

Accumulation of wealth has spawned societies and civilization.

Accumulation allows an entity to both ignore and compel other entities. With a large stock of food, you can ignore food-selling entities. With a large stock of food, in a famine, you can compel other people. But, these are just simple cases. With some accumulation of desirables, if you desired some land which an owner wished not to sell, you can covertly compel neighbors or relations or officials to make owning that land unpleasant.

In this way, and due to people’s capacity to form cooperatives, groups can form that show dominance through coercion, and the rising of such groups, without any sophisticated mechanism against them, will not be naturally sufficiently opposed to prevent their dominance. And, in this way, monopolies and cartels form.

This concept that monopolies and cartels tend to form naturally, is, perhaps, the biggest missed point of Adam Smith’s “The Wealth of Nations”. In fact, only two points were stressed in The Wealth of Nations, and they where:
– Government regulations on trade tend to fail for not-obvious reasons
– Monopolies tend to form in markets

And, the fact that “liberty movement” “members” or “austrian economists” make reference to “The Wealth of Nation” only to invoke the idea of “The Invisible Hand” show the insanity of these people.

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