Competition Is The Cornerstone Of Capitalism

The free marketplace represents a superlative model of capitalism, since it denotes the most proficient and profitable way of production. In a free market, economic actors are capable of conducting business devoid of political interferences, such as the burden of a minimum wage, or trade in tariffs. Without these limits, economic actors are abridged to a state of clean competition, driving costs downstairs and resulting in senior quality and lower price products.

One of the main goals of the Progressive Era was to eliminate monopolies (trust-busting). Monopolies were threatening smaller businesses and treating consumers and affiliates unfairly. Theodore Roosevelt, the first president during the Progressive Era, felt very strongly about trust-busting and wanted to eliminate all “bad trusts”, while keeping the beneficial “good trusts.” In document 1, the political cartoon depicts Roosevelt’s beliefs and actions towards trusts and shows him killing the bears representing “bad trusts” and taking control of the bears representing “good trusts” by putting them on a leash. Following Roosevelt’s presidency, the theme of trust-busting continued with Woodrow Wilson taking office. During his first term as president, Wilson passed the Clayton Antitrust Act, which

Andrew Carnegie and John D. Rockefeller were two of the early industrialists. Both of them were greedy criminals who exploited the country and its workers. Anyone who owned a large business in those days found it was possible to make more money by abusing the workers and competitors. Industrialists abused workers by forcing them to work longer hours for lower pay; they abused competitors by using predatory practices to either drive them out of business or acquire them. A business can do those things easily if it is a monopoly. Since a monopoly is the only supplier in a market, it prevents free market forces from setting prices. Price-fixing is an example: monopolies can keep the price high, because they know the buyer has no choice. In addition, monopolies can supply inferior products (which costs them less), again because the buyer has no alternative. As a result, monopolies have no incentive to improve their products or services, and the high prices cause inflation. This is bad for all consumers, because there will be no innovation. The early industrialists engaged in these monopolistic practices, sometimes in criminal ways, and that was bad for society.

In the Michael Moore documentary Capitalism a Love Story examples what capitalism is and how it hurt so many citizens. Capitalism is a way of organizing an economy so that the things that are used to make and transport products are owned by individual people and companies rather than by the government. The documentary teaches viewers the impact that big corporations have on americans. At the beginning of the film Moore is showing middle class people get there houses taken from them because of capitalism.

During the building of the Transcontinental Railroad, the railroads themselves created a large market for the steel and iron industries.4 The steel and oil industries were booming and corruption was rampant. Andrew Carnegie had cornered the market in the steel industry and John D. Rockefeller had cornered the oil market. Rockefeller bought up his competition after essentially putting them out of business by flooding the market with refined oil bringing down prices and profits. He was determined to pay no one a profit because he wanted it all for himself. He created a plan called vertical integration which consolidated his businesses into one by creating The Standard Oil Trust.5 These two men became known as barons and got rich beyond belief. In 1890, the Government enacted the Sherman Anti-Trust Act to prevent large firms from controlling one single industry and finally put a stop to these monopolies and trusts, 6 but it was not rigorously enforced until the 1900’s. This act was designed to restore competition and

Up until the 1880s, the United States economy followed the policy of laissez-faire (the idea that the government should have no involvement in the economy), and this led to competition which led to good prices of goods for the average consumer. However with the growth of many large companies that controlled the market, prices of goods raised due to the lack of competition. With consumers becoming frustrated and prices constantly rising, the government was forced to regulate the control of monopolies in the market.

With the Sherman Antitrust Act in 1890, the government set out to limit the power of large corporations who were monopolizing good and controlling the economy. Small businesses struggled to stay afloat in the midst of these economic superpowers. The aim of the Sherman Antitrust Act was to make monopolization illegal. This was significant because it made the American economy rich with competition and increased monetary circulation. This in turn made the economy more favorable for smaller businesses.

When Woodrow Wilson was inaugurated in 1913, he stated in his address that, “We shall deal with our economic system as it is and as it may be modified, not as it might be if we had a clean sheet of paper to write upon” (First Inaugural Address, online). He did just that when he passed the Clayton Antitrust Act in October 1914. The Sherman Antitrust Act was passed in 1890, but it was very vague in the way it described monopolies (Clayton Antitrust Act, online). Big business took advantage of the loopholes, which diminished competition (Clayton Antitrust Act, online). Although Roosevelt and Taft successfully busted about 150 trusts, big businesses continued to grow and our entire economic system remained in the hands of a few men (Taft Biography, online; T. Roosevelt – Section 8, online; Clayton Antitrust, online). Wilson requested Congress to modify the Sherman Antitrust Act, and the Clayton Antitrust Act was born (Clayton Antitrust, online). It is “An Act To supplement existing laws against unlawful restraints and monopolies, and for other purposes” (HR 15657, online). The Sherman Act simply declared monopolies illegal, while the Clayton Act declared activities linked with monopolies to be illegal (Clayton Antitrust Act, online). Such activities include mergers and acquisitions that are intended “substantially to lessen competition, or to tend to create a monopoly” (HR 15657, online). The Federal Trade Commission Act, passed about a month before the Clayton Act, banned

*It was justified to the full extent to characterized the industrial leaders of the late nineteenth century as "robber barons". People high up in business such as Andrew Carnegie and Rockefeller were proven to be robber barons by most working class and middle class Americans. They earned their wealth through questionable ways and through intimidation. They tried to ease their robber baron reputation by donating large amounts of money to various public buildings and causes. However, this attempt failed when many citizens realized that these donations gave society no long term benefits.

Capitalists controlled prices, created ways to increase self profit, and dominated the work field they were in. For example, John D. Rockefeller was in lead of the oil industry through the invention of a trust (Keene, 78). Trusts were ways to combine companies in the same industry under one single head. The government did enact policies like the Sherman Anti- Trust Act, but the vague wording of the document was not enough. The controversial issue of trusts made Americans fear capitalism; these trusts would enable industries to eliminate competition therefore, making prices escalate (Document J). Federal Government should have distributed power evenly to avoid this unfair system that made it almost impossible for middle class citizens to make

In 1907, an economic/political reform cartoon was printed in the Washington Post. It illustrates Teddy Roosevelt holding a rifle while attacking bad trusts. TR was also known as the “trust-buster”. This cartoon demonstrates the bad trusts are a threat to society, and the government must be more powerful than big businesses. In 1914, the Clayton Antitrust Act was developed, “ That it should be unlawful for any person engaged in commerce, in the course of such commerce , either directly or indirectly to discriminate in price..( Document E)” This document price discrimination is unlawful, and monopolies were illegal. It also infers that conflict of interest was an issue as well, and shouldn’t be allowed because it caused greater

As Document E illustrates, the Clayton Antitrust Bill claims it unlawful to "lessen competition or tend to create a monopoly in any line of commerce". Although Presidents Roosevelt and Wilson established reforms to stop monopoly, they still had many holes in their trust-busting campaign which severely limited the full effects of trust-busting. Similar to antitrust reforms, women's rights reforms had significant, but limited

“We demand that big business give the people a square deal; in return we must insist that when any one engaged in big business honestly endeavors to do right he shall himself be given a square deal.” (Teddy Roosevelt). Teddy Roosevelt emphasized the fact that big business had not been giving its workers or its consumers a fair deal and that big business had been taking power away from the people. The Gilded Age began an era of big business that negatively affected the working class men, women and family. During the rise of big business the power between individuals started to greatly differ as the rich got more power and the poor got less, with the rich’s newly found wealth their trusts were able to control whole industries and finally the

The antitrust laws are the basis of this national policy. These laws, enforced by both the federal and state governments, require companies to compete in the marketplace. The Sherman Act, the first federal "antitrust law," was enacted in 1890, at a time when there was enormous concern about "trusts" -- combinations of companies that were able to control entire industries. Since then, other laws have been enacted to supplement the Sherman Act, including the Federal Trade Commission Act and the Clayton Act (1914). With some revisions, these laws still are in effect today. They have the same basic objective: making sure there are strong economic incentives for businesses to operate efficiently, keep prices down, and keep quality up.

The Sherman Anti-trust Act in1890 aimed to stop monopolies from their unfair practices: The standard oil company being one of the government’s first attempts to stop. The government’s actions demonstrated their attitude towards monopolies. “ In 1887, congress passed the Interstate Commerce Act, which outlawed railroad rebates and kickbacks and also established the Interstate Commerce Commission to ensure that railroad companies obeyed the new laws” (“Sherman”). Both the Sherman Anti-trust and Interstate Commerce Acts were established to minimize the control monopolies had over the economy.