Fritz Machlup on Harold G. Fox’s Monopolies and Patents (1948)

Fritz Machlup’s scholarly book review examines Harold G. Fox’s Monopolies and Patents (1947), concentrating on the 208-page historical first part, “History of Monopolies and Patents of Invention.” He gives little attention to the second part, “Invention and the Patent Law,” which he considers less relevant to the journal’s readers. The review moves from Fox’s purpose and geographical scope to his economic interpretation of English monopolies, then challenges his account of opposition to patents before acknowledging the book’s documentary merits. Its central objection is methodological: Fox turns a history of institutions into a justification of their necessity and indefinite survival.

Machlup initially recognizes Fox’s unusual combination of experience as a patent lawyer, business executive, and author on industrial property. Yet these qualifications do not ensure impartial inquiry. Fox begins from concern about attacks on the patent system and seeks historical confirmation of its legitimacy. As Machlup reconstructs the argument, Fox treats patent legislation as a necessity of civilized existence, patent monopolies as a major contribution to progress, and the circumstances that produced them as grounds for their uninterrupted continuation. Machlup punctures this progression with a brief observation:

Most historians would probably be surprised to learn that history could prove all that.

The issue is not simply Fox’s favorable verdict on patents. It is the movement from historical emergence to permanent justification: an institution’s development is made to establish both its indispensability and its future validity. Machlup consequently reads the book as advocacy conducted through economic history, rather than an inquiry whose conclusions remain open to the evidence.

The narrow geographical coverage compounds this problem. Apart from a few pages on the ancient world and some Canadian and American developments, Fox’s history is overwhelmingly English. Machlup regards the omission of continental European patent systems as a serious defect. Fox’s celebration of England as the birthplace of patents gives that national history explanatory weight it cannot adequately sustain. The omission becomes especially consequential when Fox makes general claims about the absence of earlier opposition to inventors’ exclusive privileges.

Machlup next examines Fox’s rehabilitation of notorious monopolies granted by the English Crown. Fox repeatedly appeals to beneficial intentions: regulating inns and alehouses, serving the realm through the gold and silver patent, introducing domestic salt manufacture, or securing national self-sufficiency. For Machlup, these motives do not settle the economic consequences of monopolies associated with corruption, exploitation, and oppression. Fox’s suggestion that monopoly ordinarily provides the best assurance of adequate supply particularly exposes the weakness of his reasoning. The appeal to what manufacturers would testify substitutes the perspective of interested beneficiaries for an assessment of public economic effects.

The same problem governs Fox’s larger claim that the industrial revolution followed inevitably from the patent system and that early monopoly policy successfully promoted new industries. Machlup contrasts these confident judgments with Fox’s admission that he lacks sufficient economic expertise to assess monopolies arising from economic forces:

He does not say why, under these circumstances, he considers himself competent to evaluate the economic effects of monopolies which took their origins from patent grants.

This distinction between monopolies arising through economic processes and those conferred by law supplies no evident exemption from economic scrutiny. Machlup also points to evidence Fox himself acknowledges that some monopolies were harmful. He invokes Hermann Levy’s contrary assessment of the English monopoly system and recalls an earlier criticism of the patent lawyer Kohler’s attribution of England’s industrial pre-eminence to patents. Legal authority, in this reading, cannot establish the causal contribution of monopoly privileges to industrial development.

Machlup carefully limits his own claim: he has evaluated the economics of Fox’s account of English monopolies, not verified that history as a whole. On the history of patents of invention, however, he identifies a specific factual failure. Fox presents criticism of inventors’ exclusive privileges as a recent phenomenon and associates contemporary critics with political ambition and hostility to private property. Machlup counters:

In the nineteenth century there was an almost uninterrupted flow of arguments in opposition to the system of patents on inventions.

The repeal of the Dutch patent law in 1869 is his sharpest example. He also points to nineteenth-century debates in England, France, Holland, and Germany. Arguments for and against patents have, he maintains, remained substantially unchanged for more than a century. The alleged novelty of opposition therefore cannot justify dismissing contemporary critics as radicals or opportunists. Machlup’s broader diagnosis is that defenders unable to secure sufficient support from economic theory turn instead to natural law, social ethics, and selectively interpreted history.

The review closes with a substantial qualification:

If readers are able to ignore the many instances of grossly biased evaluation, they will find that Mr. Fox has presented us with one of the most detailed and best-documented English histories of the subject.

Machlup thus separates documentary achievement from explanatory validity. His review does not offer a comprehensive alternative history or establish a general verdict against patents. Its lasting relevance lies in showing why historical persistence, benevolent intentions, and professional expertise cannot by themselves demonstrate an institution’s economic benefits or justify its continued existence.