John Kenneth Galbraith`S New Industrial State John Kenneth Galbraith in The New Industrial State argued that U.S. anti- trust legislation is a result of outdated arguments about the need to preserve free enterprise and the competitive market. Galbraith stated, that large corporations in modern economies may need to limit competition in order to achieve efficiency and compete with foreign imports in the new global economy. I agree with this statement. When a corporation becomes big and starts to grow and expand they will soon gain control of their market.
Once a company has gained control of their market, within their nation, they can focus their attention on competing in the global market for their product. More effort can now be directed towards, achieving efficiency, and the improvement of their particular product. And since their only competition is foreign competition they can spend less money on advertising and other cost consuming practices of competition. A monopoly is a market situation in which there is only one seller of a particular good or service. When companies exercise monopoly power they act as if they were monopolies. Government regulation of big business/monopoly power arose because of the following accusations: monopolies raise prices, monopolies reduce output and living standards, monopolies are inefficient and wasteful, monopolies are intensive to consumer demand, monopolies engage in unfair competition, monopolies help bring on recessions and they threaten our political system.
The current antitrust laws were written without respect to the foreign market. When these laws were created the foreign market was not as big as it is today, nor was the USs involvement in it. The USs economy was just starting to develop and to boom. The antitrust laws were needed to nurture and to boost the growing economy. Now that our economy is flourishing, and no longer needs to be nurtured, these laws are hindering further growth.
They need to be reviewed, and revised in order to better suit our current economy. The purposes of these laws are no longer true. Monopolies can no longer raise prices with regards only to the ease with which buyers can find substitutes products. They still have to worry about the foreign products being sold for less. Therefore, prices will not be higher, output and living standards will not be affected, they will not become inefficient and wasteful, they will not be intensive to consumer demand and they will not help to bring on recessions.
The series of antitrust laws that were enacted because of accusations against monopoly power are, the Interstate Commerce Act (1887), the Sherman Antitrust Act (1890), the Clayton Antitrust and Federal Trade Commission Acts (1914), the Robinson-Patman Act (1936), and the Celler-Kefauver Antimerger Act (1950). One law that I would drop, had I the power, would be the Celler-Kefauver Antimerger Act, which prohibited mergers that would result in the creation of a monopoly. The reason that I would drop this law is because, as I stated previously, I do not believe that monopolies will have negative effects on our economy today. I would also drop the Interstate Commerce Act, which restricted monopoly power of railroads by creating the nations first regulatory agency, the Interstate Commerce Commission (ICC), whose duties are now being performed by other federal agencies. This law, I would drop, because competition for such an expensive product can cause the losing business or businesses to lose a massive amount of money and may help bring a recession.
I would revise the Sherman Antitrust Act and the Clayton Antitrust and Federal Trade Commissions Acts which, declared that every contract, combinationor conspiracy in restraint of trade is illegal., provided penalties for companies that violated these laws by attempting to limit competition, described specific practices as a restraint of trade, exempted labor unions from the provisions of the antitrust laws, and created a regulatory agency, the Federal Trade Commission (FTC), to enact the antitrust laws. Restraint of trade, I would allow to remain illegal, but I would not describe monopoly power, or attempting to limit competition as a restraint of trade. I would allow the FTC to remain in action, but only to prevent unfair trade practices, which does not include limiting competition, and false or misleading advertising. The ideas of John Kenneth Galbraith are, in my opinion, true. The antitrust legislation in the US is outdated and based on outdated arguments. In our current economy we have more foreign competition than ever. In order to be efficient, and compete with foreign imports companies must limit competition.
We now have to compete within the new global economy and not just our domestic one. As times and economies change, so should our laws relating to it. Economics Essays.