Monopoly muscle
George Gale
A free market economy will not work to the general benefit if competition within it is restricted by monopoly. Monopoly distorts the workings of supply and demand in favour of the monopolist who, by controlling the supply, can determine the price. Monopolies will usually be against the general interest, partly because they generate excessive profits (or pay exCessive wages) and thereby incite envy and disaffection in the public at large, and partly because, without competition, the monopolist is .under no compulsion to strive for greater efficiency.
It is not at all surprising that governments presiding over free market economies or even (to use the ugly vogue word) 'pluralist', or mixed, economies, shoulc' from time to time stir themselves against .monopolies, by setting up Monopoly Commissions, making anti-trust legislation, and doing what is possible against the cartels of heavy industry and of the multinational corporations.
But there is another approach to monopoly which is entirely different and which is based on the proposition, if you can't break them, own them. This, under the name of .nationalisation, has been the characteristic response of non-communist socialism. The naive theory is that monopolies will not act against the general, public interest if they are not privately owned but are instead taken into public ownership. It is difficult to understand why this proposition has gained as much political support over the years as it has done.
A government seeking, with as much or as little energy and effect as may be, to break up private monopoly and at the same time upholding, defending and extending public monopoly suffers from economic schizophrenia, which is no condition in which to pursue calm and reasoned policies. Even if such a government knows what its left hand and right hand are doing, this will not help it much if the left hand cracks the whip and the right hand pulls in the rein. What is the poor bloody horse to do?
The situation is further confounded by trade union monopolies. A monopolist does not only monopolise the supply of goods or services; he is also the monopolist employer. This will often give him great advantages, particularly if there is an abundant supply of cheap labour, if no great skills are called for, and if his workers are not well organised and disciplined. But if a monopolist is faced with a highly disciplined and organised labour force, which he cannot replace, then he may well become the victim of his own monopolist power. The muscle of monopoly can very easily shift from the boardroom to the shop floor: and will indeed thus shift if the monopolist is also the state in a pluralist and democratic society. A private monopolist can always go out of business or sit out a strike. The public monopolist, fearful of the electorate and of party political opinion, is not in the same position at all; and if, into the bargain, his monopoly is (as it most likely will be) in the provision of essential services (rail and the public utilities) or essential supplies (coal, steel) he cannot possibly go out of business, and he faces appalling political and economic risks if he attempts to sit out a strike.
And so it is that the Prime Minister told Dr Keable-Elliott and other leaders of the doctors last week, when they met to discuss doctors' pay in the National Health Service, that the miners had 'muscle' which the NHS staff had not. Callaghan's brutal language reflects, no doubt, his fear of the miners; and that fear springs from recollection of the 1974 miners' strike. Dr Keable-Elliott told family doctors this week of his talk with the Prime Minister, saying that Mr Callaghan's attitude was 'adamant' and `unsympathetic', and telling the doctors, 'If the Government is going to listen to muscle and is not going to reward you for doing your job well and efficiently, then you are going to have to think again.' The doctors applauded their leader. But is the Prime Minister's analysis correct? Of the miners' muscle, I suppose there is little doubt, although I believe its strength is often exaggerated. What of the muscle of the doctors? The fact is that the country could endure a miners' strike far more easily than it could a doctors' strike. The closing down , of the National Health Service poses a greater threat than the closing down of the pits. There are alternative fuels. We could switch over to oil more easily than to acupuncture.
But Mr Callaghan has the effrontery to be rude — 'adamant' and 'unsympathetic' to the doctors because he relies upon their decent, professional behaviour. He knows he can place no such reliance upon the miners. It seems to me that if the miners use their muscle and strike to gain benefits which are denied to doctors, then the doctors would be fully entitled to deny to the miners and their families the medical care they would normally be expected to provide, just as the miners were depriving the doctors of their coal and electricity.
The doctors' potential power, it needs to be remembered, also flows from the monopolist nature of the NHS. Their power is equalled by several groups of hospital workers, who have used such powers in the past. A comparatively small number of electricity supply workers could close down the grid and halt the country far more effectively than could the miners. Dockers, transport workers, steel workers, gas workers, they all have power, in varying degrees, to bring the country to a grinding halt. And if we seek the source of their power, we find it resides in monopoly. Sometimes, the supply of labour is divided between various unions; sometimes a monopolist union has various employers. The greatest danger occurs when the muscle is biggest, and that is when you get double monopoly: a monopoly of the supply of labour in a monopoly industry.
Is there, then, an answer? It would seem to me to be clear that the government of the day would be wise to seek to break up all monopolies, public as much as private, and to set its face against all cartels, including those which hitherto it has fixed itself. There is no need, as far as monopoly is concerned, to hand back public enterprises to the private sector. It would be sufficient to break down the various enterprises into smaller, more manageable and competitive parts. The pits, for instance, could be leased to the miners, on a pit by pit basis, or alternatively, by areas corresponding to the actual coalfields.
We need not begrudge the unions the muscle they possess because of their own organisation; but the public need not feel any reluctance to remove from the unions the greatly enlarged muscle-power that has been publicly conferred upon the unions by monopolising the utilities, transport, coal, iron and steel. The creation of private monopolies and cartels needs constantly to be resisted by the government of the day; what is now needed is the breaking-up of the public monopolies. This is not so much a matter of muscle as of will. Without that will, governments are bound to grovel at the merest flexing of union monopolist muscle.
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