Swarajya, May 25, 1963
Between ourselves, honest voter, these private monopolies created by the pernicious system of permits, licences, quotas and controls (to be extended now even to foreign capital which voluntarily comes into the private sector) make the Congress Party's rich friends richer, and the poor poorer. It is a close conspiracy; we have a battle between money and liberty, between dharma and atheism, between freedom and communism clothed in Congress robes.
The Socialist argument is that economic freedom leads to private monopolies. In an unhampered market, the individual, it is urged, would not be truly free, but would be victimized by unscrupulous private monopolists, It is on this ground the socialist State interferes, and law after law is passed authorizing State intervention in the people’s economy. The fact however is that the unhampered market always tends to be a competitive market. It is the intervention of Government that prevents its being fully competitive. Initial monopolies in free enterprise are shod-lived. It is only when, in one way or another, political influences are brought into the field or corrupt officials intervene and give positive assistance and protection to a private industry, that a monopoly is created kee in out fair competition. The State led by some political group often comes in to help keep out competition on the ostensible plea of preventing a breakdown or helping an industry in the abstract. It is in this insidious way that private monopolies are nourished by political party regimes, and rich men become richer at the expense of consumers.
Collusions and combinations are not so easy or so common, as may be alleged, in Order to justify State intervention. Competition rather than collusion is the natural tendency. Competition is the distinguishing characteristic of the unregulated market economy. The urge to make profit for oneself overcomes any loyalty to collusive agreements.
It is unlikely that a firm, or group of firms, can acquire market power except by efficiency in serving the consumers. If quality goes down or an attempt is made to raise prices to an unreasonable level, others are sure to intervene and compete in the market. The process may not be perfect or instantaneous, but there are powerful forces in modern times, always at work, to create an effective competitive process intervening. There may be imperfections and lags, but government intervention will cause new and other damage rather than remedy the imperfections; that is to say, the remedy will be worse than the disease.
If we accept the definition of ‘monopoly’ as a government grant of exclusive trading privileges, every permit or licence or quota for import, or for production or distribution, under the present regime creates a monopoly, large or small, and to that extent interferes with the right of the consumer to have the benefit of a competitive market to serve him. Pledged to the establishment of the socialist State, contemptuous of unchangeable psychological and economic laws governing individual activities, and believing that these laws do not apply to individuals when they are given an office and a salary in the bureaucracy, men in places of power in the present regime have discarded their old faith in the prudence, frugality, wisdom and self-reliance that govern the life and work of those engaged in private enterprise. They have by constant repetition hypnotized themselves to believing that all wealth-producers are, or will become, dishonest thieves if left to themselves, and that production is best done when it is done by a corps of inexperienced and indifferent officials placed on a salary basis without reference to turn-out or profit or loss, the only check on management being that of a more inexperienced minister.
Mr. Michael Oakeshott, Professor of Political Science at the London School of Economics since 1951, who succeeded Harold Laski has given, in his book Rationalism in Politics, a definition of good government as well as of conservation in the following words:
“Governing is a specific and limited activity—namely, provision and custody of general rules of conduct, which are understood, not as plans for imposing substantive activities, but as instruments enabling people to pursue the activities of their own choice with the minimum of frustration, and therefore something that it is appropriate to be conservative about.”
This, from one who occupies Harold Laski’s chair must command respect even in quarters dominated by Leftist illusions.
