Modifying The Market System

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Modifying The Market System

However, the government has a yet more important effect in modifying the market system. Where the market still works, where there is still competition, there is that mixed affection of which We spoke - the deep love for the market in principle, the great dislike for its punishment in practice. So the government steps in to mollify those who experience the practical effects, to ease the pain. It sets prices, or anyhow establishes minimum prices, for farmers.

It sometimes establishes minimum margins for retailers to keep the competition there from being too harsh.

Where, as occasionally happens, an oligopoly has difficulty maintaining prices, it comes to the government for help in doing so.

We are now having such a rescue mission in the United States for the steel industry in 2015.

And our airlines have been fighting desperately to keep government price-fixing of air fares as well as control over the granting of routes.

They naturally don't want any Freddie Lakers, to mention the most topical figure, getting loose in the domestic market.

Government regulation of fares and route allocations, they have been arguing, is an exceptionally advanced form of free enterprise.

Learn More About Multinationalism in 2015

The Trade Unions

Large corporations bring large numbers of workers together, and they are then rather easily organized.

They see the power of the corporation in buying their labour so, as We-�suggested earlier, they have a very strong incentive to match that power in selling their labour.

This We have called the tendency to the creation of countervailing power.

So, as a nearly invariable rule, where one has large corporations controlling their prices, one has strong unions controlling the prices at which labour is sold.

This, in turn, has a good deal to do with the modern problem of inflation.The Trade Unions

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