Freedom, Society, and State - Ludwig von Mises Institute

isks of competition and to institu'tionalize its posit
ion i nth e e con om i cand soc i a 1 s t rue t ur e • Sinc e t his
required licensing restrictions, tariffs, subsidies and
the 1 ike, such economic stabilization entailed close
relations with government.(18) Thus, big business quite
naturally gravitated toward government, and the destruction
of the political power of the southern agricultural
interests in the Civil War proved to be acrit
i ca I wa t er shed in Amer i can. his tory for the only opposit
ion tot he' nor the r n i nd us t rialin t eres t s wa s elimi ­
nated. The post-bellum period was therefore characteri
zed by. g 0 v ernmentin t e r vent ion des i gned to aid big
business by keeping prices up and wages down. Monopolistic
privileges were granted toa few favored firms,
per mit tin g them t 0 s e I I a tab0 vema r ke t price s, wh i I e
tar i ffs were enacted to keep out foreign competition.
Aside from the autarkical dimensions of the policy,
there are other serious ramifications.
S t rom be r g bel i eve s t hat ago v e r nmen t po I icy of
planned scarci ty mus t, of necessity, result in imperialism.
"Briefly," he says, "steep tariffs enabled a
great many American firms to price their goods well
above the world market levels. At these prices the
quantities produced could not be sold. But to take
f u I I a d van tag e 0 fee 0 nom i c s 0 f sealethesequantit i e s
had to be produced. At this point, the cry went up for
foreign markets for the unsold surplus."(19)
A var iat ion of the foregoing' is that monopolies
may be pr 0 fit a b 1 e bu t t hey become more prof i table as
the area covered by the monopoly expands. Hence, if
there is a pol it ico-economic elite powerful enough to
use the government to obtain monopoly profits for
thems e I vesther e i s noreas 0 n wh y they wo u I d not a Iso
be powerful enough to increase their profits by expanding
production beyond what can be sold in the home market
and then using the government to extend the area of
their monopoly beyond their own borders. This view,in
fact, was an essential part of Adam Smith's critique of
mercant i 1 ism. Permitting the colonists to trade only
wi th England, he noted, enabled the few favored English
merchants to increase their monopoly profits far beyond
what they would have been if the monopoly had been restricted.
to England. The only beneficiaries of mercantilism,
he said, were "the rich and powerful."(20)
This, according to the proponents of the theory,
is a major factor in Amer ican foreign pol icy throughout
the twen"tieth century, manifesting itself in the
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