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Episode 1: The Dawn of the Progressive Era

In 1890 the US passed the Sherman Antitrust act, which had as its goal the elimination of monopolies or attempts to monopolize. This was the dawn of the Progressive Era (needless to say, this act was passed on behalf of big business, don’t like your HS history classes tell you otherwise).

In 1914 the act was strengthened via the Clayton Antitrust Act. This act exempted unions (and farmer coops) from the original legislation, and the act put a sharper focus on predatory pricing practices of firms.

Summary: Capitalism is prone to monopoly and Bigness. Big Business Bad. We need Progressives to rein them in.

Episode 2: The Golden Age of the Progressive Era

June 1933: Congress passes the National Industrial Recovery Act to establish the National Recovery Administration. Its purpose – to cartelize business and encourage business to work according to the vision of Rex Tugwell by preventing wasteful competition, and to have firms grow large and work with government to promote stability and growth. The goal was to raise prices and wages in lieu of a deflationary problem allowed to persist by poor Fed policy between 1931 and 1933.

May 1933: Congress passes the Agricultural Adjustment Act to establish the Agricultural Adjustment Administration. This was the farm analog to the NRA – which was passed to cartelize the farm sector, to help farmers establish cooperatives, limit production and even destroy crops (in the face of 25% unemployment and widespread poverty and hunger) all for the purpose of raising prices and wages, and all as a way to have big-farma work closely with government to promote prosperity.

We’ll leave for many future posts analyses of each of these laws. The point today is to compare the intellectual ideas behind each.

Summary: Competitive capitalism is not prone to monopoly, and competition from thousands of small entrepreneurial activities is wasteful and harmful to other firms. We need Progressives to establish cartels and monopolies.

I would love to be a Progressive. You get to claim that competition in capitalism causes monopoly, giving you the justification to centrally plan the economy via anti-trust rulings and rules. You did this of course under the guise of “promoting competition.” At the same time you get to claim that competition in capitalism is wasteful, that it is disruptive and puts downward pressure on prices, which is “bad.” This then gives you the justification to centrally plan the economy via National Industrial Policy. Of course you do this in the name of stability and giving everyone a seat at the table.

You cannot have it both ways. The only thing common to these policies is that they are driven by mistrust, even hatred, of voluntary cooperation and open competition. So take your pick – is capitalism evil because it produces monopoly or is it evil because it makes monopoly impossible? Or take both sides, but then have the intellectual decency to be honest about the inconsistency.

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