My impression is that non economists tend to believe the Marxist propaganda which postulates that capitalism i.e. the free market, does indeed lead to monopoly. I think they believe so because they have been exposed to a lot of Marxist propaganda. The size of the huge corporate champions of the business world tends to enforce such beliefs. Socialists have convinced them that the large corporate size is equivalent to economic monopoly, which is actually something very wrong. Think of a small island where the government has issued only one taxi license. Is this taxi a monopoly? Of course it is, since it is the only provider of a particular service. Therefore the relationship between company size and monopoly is not as simple as it seems.
Since large corporations have been the victims of such intensive socialist propaganda, there is no point in examining the issue of monopoly, if we don’t first examine large corporations irrespective of ownership. That is without examining if they privately or publicly run. After all under both forms of ownership the aim is to produce as much wealth as possible. After I examine company size, I turn my attention to the issue of ownership and monopoly. So what is it that determines the size of corporations? Which is the right size? Is it better for a company to be small, medium or large? After all a bakery wants to produce as much bread as possible whether it is publicly or privately run. Therefore the most important issue is how more bread can be produced. Is it better for the consumer if one or many small companies exist? How many bakeries should exist in a market? What should the optimal market structure be? By market structure I mean the number and size of companies in a specific market.
Economic monopoly is a major issue in economic and political discussions and I want to make a small contribution on the subject. Even though I have postgraduate studies in economics I am not a specialist, and this document is a common sense rather than an academic approach on the subject, and it is written for the general reader with no economic knowledge. English is not my first language and you will have to excuse my syntax.
The essay is mainly a critique to both the traditional Marxist approach on monopolies, and to the more modern academic approach, the so called “neoclassical theory of competition and monopoly”. According to the traditional Marxist approach, capitalism leads to economic monopolies. Poor people become poorer, and capital is concentrated in fewer and fewer hands, and at the end of this process capital ends up in the hands of a small…
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