Why Monopoly Is Never a Problem Unless the State Is Involved

Numerous misunderstandings and mythologies surround the meaning of capitalism and competition, but few match the confusions over the meaning and relevance of “monopoly” in the workings of the market economy. When looked at dispassionately, factually, and historically, monopoly has almost always represented a problem in society only when created or protected by government intervention.

Critics of capitalism have proposed to nationalize “monopolistic” industries, to break them up into smaller “competitive” firms, or to regulate their pricing policies and influence the output they produce. A noticeable amount of the criticism of the existence of, or supposed “threats” from, monopoly is connected with the particular way economists have come to think about “competition” and “monopoly,” especially as found in a textbook.