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
Part of the advantages will go to the consumer whenever there is a
motive on the part of the large establishment to increase supply in
order to get a larger profit or to forestall new competition. As the
improvements become matters of public knowledge, most of the new
economic methods can and will be adopted by new enterprisers, and other
large aggregations of capital will be induced to come in to reap the
benefits. The effect, of course, is an increase in supply and a lowering
of prices. The fiat of the trust to prices to remain fixed while supply
increases is as vain as a mortal's commands to the waves to be still.
The undesigned result of the economies of large production, therefore,
where control is not great, is to lower the prices and to diffuse the
benefits among the public.
[Sidenote: Social burden of monopoly profits]
4. _If the trust succeeds in raising its prices it gains at the expense
of the community._ If a producer has some monopoly power, recognizes and
uses it, his gain does not correspond with an increase in production. It
is taken from those who buy these products, it is deducted from the
psychic incomes of other members of society. This raising of prices
actually reduces technical production, for the output is limited in
order to secure the higher price. The probably less urgent wants of the
receivers of monopoly incomes are gratified in place of the probably
more urgent wants of the average purchaser. The result is a decreased
social income, with an increase of the inequality of distribution. There
is an analogy here with the effects of trade-unions. If the trade-union
succeeds in forcing prices higher than the competitive prices, it gains
at the expense of the other portion of the community. But while its
gains appear to be more largely at the expense of the richer elements of
society, the gains of the trust are more likely at the expense of the
poorer elements. If the success of organized labor means to some extent
a leveling up of income, the success of the trust means a still further
inequality. Hence a difference in public sympathy in the two cases.
[Sidenote: The praise and blame for trust prices]
Public-domain text, read in full here on John Shaqi.
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