Mises’s 1965 essay treats the fear of inevitable capitalist monopoly as the successor to Marx’s discredited immiseration thesis. Its title’s contrast between Dichtung and Wahrheit names the whole strategy: the “poetry” is that free competition naturally ends in cartels that exploit the masses; the “truth,” for Mises, is that durable monopoly prices are usually the product of public policy, not market freedom.
Monopol an sich bedeutet noch nichts auf dem Markte.
English translation: Monopoly in itself means nothing in the market.
The first conceptual move is to separate monopoly from monopoly price. A patent, copyright, or unique resource position may fail to yield profit if buyers reduce demand too sharply when price rises. Monopoly power therefore depends on demand conditions, not on exclusivity alone. Mises concedes exceptional cases such as diamonds or mercury, but denies that they prove a general tendency of free markets toward monopoly pricing. The real analytical problem is whether a seller can restrict supply profitably and keep others from undermining the restriction.
Die Wahrheit ist, daß die Regierungen durch ihre Eingriffe in das Marktgetriebe bewußt auf die Verdrängung der niedrigeren Wettbewerbspreise eines freien Marktes durch höhere Monopolpreise hinarbeiten.
English translation: The truth is that, through their interventions into the workings of the market, governments deliberately work toward supplanting the lower competitive prices of a free market with higher monopoly prices.
This claim structures the essay’s middle sections. Cartels, Mises argues, are fragile because their essence is not agreement on a high price but agreement on quotas: who must bear the reduced sales needed to maintain that price. Each participant suspects that its assigned share is unjust and has an incentive to cheat. Governments make cartelization possible by separating national markets from the world market through tariffs and other barriers, then by enforcing restrictions private producers cannot sustain.
The American farm program becomes his central exhibit. In an agricultural export country, tariffs alone cannot raise domestic prices; the state must withdraw supplies, subsidize stocks, and police production limits. Mises reads the repeated laws, waste, and bureaucracy as a public cartel for food and cotton. Yet even state power cannot solve the quota problem, because farmers want higher prices without limiting their own output.
Wie überall, scheitert auch hier die Monopolpreispolitik an der Quotenfrage.
English translation: As everywhere else, so here too monopoly-price policy founders on the question of quotas.
The paradox intensifies in Mises’s discussion of antitrust. The same U.S. government that creates monopoly prices in agriculture treats monopoly-fighting as its proudest mission elsewhere. He argues that antitrust often blocks mergers that would increase efficiency rather than produce monopoly prices. In an inflationary setting, it also helps officials shift blame from monetary expansion and deficits to firms accused of raising prices; antitrust becomes an indirect instrument of wage and price control.
Die Antitrust-Gesetze dienen der Regierung als Ersatz für die angestrebte und bisher noch nicht erreichte allgemeine Preiskontrolle.
English translation: The antitrust laws serve the government as a substitute for the general price control it has been striving for but has not yet achieved.
Mises then extends the argument to so-called world monopolies, especially intergovernmental commodity agreements. Official language speaks of avoiding surpluses and stabilizing prices; from the consumer’s standpoint, he says, surpluses are goods people might have used, while stabilization means replacing lower competitive prices with higher cartel prices. The international coffee agreement is his sharpest example: coordination that private firms could be punished for as conspiracy becomes celebrated diplomacy once governments allocate export quotas and enforce them.
The final section turns the economic analysis into a theory of political responsibility. Mises deliberately narrows the question: not whether monopoly is good or bad, but whether existing monopoly prices arise from market freedom or from state action. His answer is categorical.
Die angeblich unaufhaltsame Tendenz zur Verdrängung der Wettbewerbspreise des freien Marktes durch Monopolpreise gibt es nicht.
English translation: The supposedly irresistible tendency for monopoly prices to supplant the competitive prices of the free market does not exist.
The essay’s structure moves from ideological critique, to price theory, to the cartel quota problem, to U.S. farm and antitrust policy, to international commodity control, and finally to liberal political philosophy. Its relevance lies in showing how consumer-protection rhetoric can justify suppressing consumer sovereignty. Against political democracy, where majorities overrule minorities, Mises sets the economic democracy of the market, in which even minority demands can be served when producers find them profitable.
In der freien Marktwirtschaft haben die Verbraucher den Vorrang.
English translation: In the free market economy the consumers have primacy.
For Mises, property in production goods is therefore a social mandate to satisfy consumers cheaply, not a license to dominate them. The closing comparison of planners to Pharaohs and Incas follows from this logic: once officials decide what is produced, by whom, and in what quantities, the monopoly myth has become a justification for replacing exchange-based self-direction with bureaucratic rule.
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