The Monopoly Myth: Alex Epstein on Rockefeller and Standard Oil

Cartoonist Horace Taylor depicts Rockefeller.

In my review of Ron Chernow’s Titan, I mentioned the controversy surrounding the so-called monopolistic tactics of John D. Rockefeller.

For example, I said the following:

Rockefeller is often disdained as one of the nineteenth-century robber barons who greedily pursued money and power by sucking up innocent competitors, gouging consumers, and starving employees.

I did not, however, go into too much detail about whether such claims are actually well founded. I did say Rockefeller did things that were “cringe-worthy,” but in the business world many ethical and justifiable things can be uncomfortable to behold no matter how good or necessary they may be.

As a follow-up, I wanted to point you toward this lecture, in which Alex Epstein uses the example of Rockefeller and Standard Oil to debunk what he calls the “Monopoly Myth.”

The gist of the Epstein’s argument is that in a free society a monopoly like Rockefeller’s cannot be maintained without continuing to offer superior value.

For example, many people criticize Rockefeller for gouging consumers through predatory pricing, but such claims are factually inaccurate. It was in Rockefeller’s best interest to keep prices as low as possible. As I mentioned in my review, Rockefeller was not swayed by gobs of money and the instantaneous pleasures it could afford him. Rather, he was restrained by his ultimate goal of achieving maximum efficiency and superiority in the oil industry. In other words, his long-term vision and restraint allowed him to see that if prices got too high, another competitor (or innovator, in the case of Thomas Edison) would have an opportunity to destroy him.

Therefore, when free individuals are competing in a free society, a “bad” monopoly cannot and will not survive. Rockefeller’s monopoly was not in the business of ripping people off. Standard Oil was able to enjoy lasting success and continue to expand its network and improve its efficiency simply because it remained the best option, both in quality and cost.

Such a conversation drifts a bit from the original focus of my review, but I think it helps support my claim that Rockefeller’s business tactics were in the long run a huge benefit to society.

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  • Remnant Culture

    In a free society, monopolies cannot be sustained w/o respecting consumers. Standard Oil is a prime example. #tlot

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