Some such businesses or groups of businesses possess a virtual monopoly of the market, and can control output and prices, so as to secure abnormal dividends.Such control is, to be sure, never absolute, its control of prices being subject to two checks, the restriction of demand which attends every rise of prices, and the increasing probability of competition springing up if profits are too high.But qualified monopolies, earning dividends far larger than are economically necessary to support the required capital, are everywhere in evidence.Trusts, cartels, pools, combines, conferences, and trade agreements of various potency and stringency, pervade the more highly organised industries, substituting the principle of combination for that of competition.In all major branches of the transport trade by land and sea, in large sections of the mining industry, in the iron and steel industry and in many branches of machine-making, in many of the specialised textile trades, in the chemical and other manufactures where special scientific knowledge counts, in many departments of wholesale and retail distribution, and, last not least, in banking, finance and insurance, freedom of investment and of competition have virtually disappeared.To assume that fresh streams of capital, labour and business ability, have liberty to enter these fields of enterprise, and by their equal competition with the businesses already in possession so to increase the output, lower selling prices and keep interest and profits at a bare 'costs' level, is a childish travesty of the known condition of these trades.To affirm that such mobility and liberty of competition is the sole normal 'tendency', and that the monopolistic and combinative forces merely represent friction, is so grave a falsification of the facts as to put out of court the whole method of economic interpretation which is based thereon.Concrete capital has none of the qualities assigned to the abstract capital of these economists.It is neither infinitely divisible, nor absolutely mobile, nor accurately directed, nor legally and economically 'free' to dispose itself in any part of the industrial system where the current interest or profit exceeds the average.Over large tracts of industry combination is more normal and more potent than competition, and where this is not the case, the most competitive trades will be found honeycombed with obstructive clots, businesses enjoying special advantages and earning correspondingly high profits.
§13.Because certain qualities of business ability are requisite, to wit astuteness, keenness of judgment, calculating power, determination, capacity for organisation and executive ability, it is sometimes claimed that the high rates of profit which accrue from such businesses as we have indicated are really the creation, not of monopoly or combination, but of the talents of these entrepreneurs.But even though it be admitted that some such ability is essential to produce or to maintain a successful combination, can the entire profits of such a combination be imputed to this ability or regarded as its natural and proper reward? Take the common instance of the 'forestaller', who stops the supply of some commodity on its way to a market, secures the whole supply at competitive prices from the various contributors, and then sells it at a monopoly price fixed by himself.Are the profits of this corner a product of ability and a reward of ability, and not a 'surplus' representing an artificially contrived scarcity value?
Or take the case of a contracting firm, which persuades all the other firms in a position to compete to come into an arrangement as to a minimum tender.
Are the extra profits due to such an arrangement to be regarded as wages of ability, because some tact was needed to work the thing? But suppose we granted the whole contention, and agreed that the extra dividends paid to shareholders in favoured or protected businesses were really produced by the ability of the entrepreneur or manager, what then? It is not proved that these extra profits are 'costs', not 'surplus'.On the contrary, the fact that they can be taken as extra dividends or bonuses by the owners of the capital, instead of passing in 'wages of ability' to the entrepreneur, is proof positive that they are surplus.For if they were a subsistence wage of ability, or even a 'prize', essential to evoke some special output of skill or energy, they could not be thus diverted from the entrepreneur to the shareholders.In fact, there is no reason to suppose that any very rare or conspicuous ability is evinced in working a successful pool or combine, or even in organising a successful business.Still less is there reason to suppose that the profits attending such an enterprise are in any way proportionate to the skill or energy of the entrepreneur.Everyone is aware that the contrary is the case.Indeed, so far as scientific, professional, and business ability is industrially useful and has a claim to income, enquiry shows that there is no better security for mobility, freedom of competition and equality of payment, than in the case of capital.Inequalities of economic conditions between various classes of our population, involving inequalities of nurture and of education, and of every other sort of 'opportunity'
