Monopoly: Defined

One of the many difficulties in debating the statist is clear communication.  Many economic terms have never been well defined and therefore the definition of such terms has been assumed.  To add to the confusion, in some cases, multiple definitions exist.  Additionally, definitions of words have evolved or have been outright co-opted with the intent of blurring their meaning.  So which definition holds?  To be prudent, one must point to the definition in use and must continually ask others to clarify the meaning of their words.

The use of the word monopoly is but one example.  In fact, in attempting his discussion of monopoly price in Man, Economy and State, Rothbard writes “Before investigating the theory of monopoly price, we must begin by defining monopoly.  Despite the fact that monopoly problems occupy an enormous quantity of economic writings, little or no clarity of definition exists.  There is, in fact, enormous vagueness and confusion on the subject.  Very few economists have formulated a coherent, meaningful definition.”[1]  In the very next paragraph he adds “A common example of a confused definition is: ‘Monopoly exists when a firm has control over its price.’  This definition is a mixture of confusion and absurdity.”[2]

For clarity, when I use the word monopoly, I use it in concert with the definition put forth by Murray Rothbard in Man, Economy and State.  His definition is “…monopoly is a grant of special privilege by the State, reserving a certain area of production to one particular individual or group.”[3]  Libertarians object to this grant as it is incompatible with market freedom.

I note the above for two purposes.  To document the use of the term monopoly in discussion and to respond in part to a comment posed by a listener to the Annoying Peasant Radio Show.  The comment stated in part “Monopoly is defined as having the means to control a market, but it is not illegal to compete with them.”  I would first point out that this is not a definition of monopoly to which I ascribe, and further, I recognize Rothbard as the authority on the subject.

Any writing of Murray Rothbard is worthwhile to read to discover the coherency of the libertarian philosophy (as well as to uncover the contradictions of the State).  For the beginner, Economics in One Lesson by Henry Hazlitt is highly recommended.  To find a plethora of recommendations I refer the reader to Tom Woods’ Liberty Classroom (http://www.libertyclassroom.com/learn-austrian-economics/).


[1] Murray Rothbard, Man, Economy and State, page 661

[2] Murray Rothbard, Man, Economy and State, page 662

[3] Murray Rothbard, Man, Economy and State, page 669

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