Prosperity Through Competition by Ludwig Erhard

Author:Ludwig Erhard [Erhard, Ludwig]
Language: eng
Format: epub, pdf
ISBN: 978-1-9335-5087-9
Publisher: Frederick A. Praeger
Published: 1958-11-06T16:00:00+00:00

Discussions of Principle Miss the Point

These observations would be incomplete if I did not mention the debate between the supporters of a law of prohibition and a law of misuse. According to my way of thinking this way of putting the question misses the point as much as an attempt at a moral evaluation of the problem. Thus I should like to stress once more that my opposition to cartels does not rest on the idea of deliberately evil aims or practices, which amount to discrimination, but that in my view collective price maintenance must be regarded as a grievance—even if these can be defended morally and mathematically. Thus any law on misuse would not be practicable.

I go so far as to say that the fixing of prices at too low a level can be as damaging economically as prices which are put too high. The only economically ‘proper’ and defensible market price cannot be defined. It emerges above all from the equilibrating function of price in a free market.

According to my view the total prohibition law is always logical. It makes the only possible deduction from the negative quality of every kind of law of misuse, yet allowing for those exceptions which may appear to be economically necessary.

The supporters of cartels make the big mistake (surely not by accident—which displays their weakness) that they measure the effects of cartel or anti-cartel measures only by the private economic results of the undertakings involved, leaving entirely on one side the general economic view. It is just those tight cartels that are successful in their aims which, viewed from a general economic point of view, must be regarded as the most damaging.

The cartelization law based on the principle of a prohibition of cartels must in no event be changed, or else it will become a farce which would render the whole policy of the Federal Government ridiculous in the eyes of the public. Also I believe that the cartelization law is a useful, if not altogether the best, means to silence the political attacks on the business economy.

The businessman is unassailable if free competition makes the function of the free businessman indispensable, and if as a result of free competition and the resulting progress, a price is reached which offers the best possibilities to the consumer. The attitude of the consumer towards our economic order will become increasingly more favourable if the citizen can be certain that through a free market he can be master of his fate, and that he is not exposed to anonymous economic forces and powers.

The supporters of cartels who demand a law of supervision or misuse are basically far more dogmatic than the supporters of the law of prohibition, since they rule out any refutation of objections. They persist even when it is pointed out to them that a law of misuse misses the point of the real national economic problem. I do not accuse cartels of misuse in a criminal or a moral sense. The ‘misuse’ is expressed in the fixing and immovability of prices—i.

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