Cartels or Competition? The Economics of International Controls by Business and Government

Cartels or Competition? The Economics of International Controls by Business and Government

Cartels or Competition? The Economics of International Controls by Business and Government

Cartels or Competition? The Economics of International Controls by Business and Government

Excerpt

Some economists have regarded international cartels primarily as instruments for shaping commercial policy among trading nations, and they have concluded that when conceived in this way the cartel problem is not very important. Others have viewed the cartel problem as a new form of the age-old monopoly problem. To them the problem is primarily that of protecting consumers from exploitation by organized groups of producers with power to control the market. The present study adopts a broader conception of the cartel problem than either of these. It treats cartels primarily as instruments for allocating productive resources and regulating their use; and it appraises the economic significance of the cartel movement in this light.

The basic issue as we view it does not revolve around the direct effects of cartels on the terms and volume of international trade. Nor is it primarily a question of whether and how far cartel restrictions can be kept from hurting the immediate interests of consumers. At bottom, the issue is whether centrally planned and directed programs for the production and distribution of goods, industry by industry, provide a more promising method of effecting economic adjustments and promoting economic stability than that of competition in free markets. Another question is whether the two methods are mutually exclusive.

Events since the war have underlined the importance of these issues. With the defeat of the Axis countries and the founding of the United Nations, at first the way appeared open to concerted intergovernmental action to restore something like free competition in world markets and to prevent the reintroduction of cartel controls. But the steady deterioration of international relations since the coming of the peace that is no peace has changed the whole picture. Today the cartel problem from the American standpoint is mainly a . . .

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