The Principles of Economics, with Applications to Practical ProblemsFetter, Frank A. (Frank Albert)
General
The Principles of Economics, with Applications to Practical Problems
Fetter, Frank A. (Frank Albert)
Economics
3. _The ability of superior material agents and of skilled workers to
secure higher returns than do poor ones does not constitute monopoly._
The free competition assumed in abstract discussions of value, does not
mean equal capacity or efficiency, but the legal freedom and personal
willingness to move a productive agent into the highest industrial place
it is capable of holding. The rocky field does not compete with the
fertile one in the sense that it can yield the same uses. The field fit
only for potatoes does not compete with those rare and favored
localities that can raise the best wines. The gardener earning two
dollars a day does not compete with the skilled physician with an income
of twenty thousand dollars a year, for he has not the economic capacity
to do so; but he is _free_ to compete (as is the owner of the rocky
field) unless law, caste, class legislation, social prejudice, or some
other objective factor forbids. Anything, however, that prevents the
labor or capital of buyers or sellers from application for which they
are fitted, defeats free competition. To use the term monopoly of any
and every limitation of economic ability is to extend it to every case
of value. To use it of the high wages of skilled workmen, where no union
to suppress competition exists among them, is to make it a colorless
synonym of scarcity. It should be confined to a narrower and more
exclusive use. Some special kinds of limitation should be connected with
the idea of monopoly.
[Sidenote: Monopoly consists in unified control]
4. _The limitation connected with monopoly is not that of economic
capacity but that of ownership and control._ The derivation of the word
from the Greek points to the general thought: _monos_, alone, _poléo_,
to sell, a single seller, the sole source of supply in a given market.
The term was first used in England of special grants or patents of
monopoly from the crown to make or deal in specified articles, such as
soap, candles, etc. The political power of the state created and
defended the monopoly. This policy is pursued in a limited degree to-day
for the encouragement of invention, in the granting of patents and
copyrights. In the current definition, "The exclusive right, power, or
privilege of dealing in some article or trading in some market," the
term "dealing in" is well chosen, for it is broad enough to cover cases
of buying as well as selling, and includes power derived from political
as well as from other sources. But the term "exclusive" is too absolute,
allows of no gradations, and makes the definition applicable only in the
rarest cases.
[Sidenote: Definition of monopoly]
[Sidenote: Monopoly limits supply]
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