Totalitarianism represents simply the ultimate consummation of
cartelism–the final, full expression of the reactionary forces
stemming from special privilege. In totalitarian states all industrial
enterprise is subservient to the predatory interests and fear-dominated
will of a government which openly flouts the democratic principle of
consent of the governed. In the economic sphere, the investment of
fresh capital, the volume of production, the prices to be charged, the
markets to be served, are determined by arbitrary decrees. Risk-taking,
managerial discretion, bargaining freedom, the essential elements
of the capitalistic system as we have known it, are absent. One can
neither start a new industry, launch a new enterprise, or change one’s
occupation without first obtaining official consent. It is in the
nature of cartels that they should operate in a similar fashion, even
if in their application the devices used for consolidating the vested
interests of established concerns and throttling the dynamic forces
which economic freedom would release may lack something of the rigor
they exhibit under totalitarian “leadership.” In order to maintain
their control over production and prices cartels must determine who may
enter the industry, how they shall operate and where they may sell.

The basic American concept of free enterprise is the antithesis of a
cartelized market. Yet, all too frequently, some of our industrialists
have had the effrontery to attempt to promote a pro-cartel policy by
a specious appeal for free enterprise. The pretension is that freedom
to compete in trade must encompass freedom to suppress competition! As
though the right to start a fire in order to heat a house must include
the right to burn down the house in complete disregard of the peril to
the whole community! The common sense of ordinary men has no difficulty
in distinguishing between the right to start a fire and the “right” to
commit arson.

Unless I am greatly mistaken, the American public will no more tolerate
a cartel-sanctioning abrogation of the antitrust laws in the name of
“free enterprise” than they would countenance a repeal of the laws
against arson in the name of “freedom of self-preservation”–the right
to keep warm!

It is significant, and deserves thoughtful reflection that Germany, the
“classic land of the cartel,” where regimented economic restrictionism
is the accepted “way of life,” has in the course of two generations
farrowed Kaiserism and Hitlerism–the natural offspring of militarism
and cartelism. Even in times of peace, the militarists and industrial
monopolists of Germany found cartel restrictions an excellent means
for conducting covert warfare. In this way industrial “colonies”
were acquired and prospective victims “softened up.” Back in 1883,
Joseph Chamberlain, as a member of the British Cabinet, declared, in
sponsoring a bill designed to forefend the sub-rosa “invasion” tactics
of imperialistic Germany:

“It has been pointed out especially in an interesting memorial
presented on behalf of the chemical industry that under the present law
it would have been possible, for instance, for the German inventor of
the hot blast furnace, if he had chosen to refuse a license in England,
to have destroyed almost the whole iron industry of this country and to
carry the business bodily over to Germany. Although that did not happen
in the case of the hot blast industry, it had actually happened in the
manufacture of artificial colors connected with the coal products, and
the whole of that had gone to Germany because the patentees would not
grant a license in this country.”

A quarter century later, Lloyd George, introducing a more drastic bill
for curbing these insidious depredations on strategically vital British
industries, pointed out:

“Big foreign syndicates have one very effective way of destroying
British industry. They first of all apply for patents on a very
considerable scale. They suggest every possible combination, for
instance, in chemicals, which human ingenuity can possibly think of.
These combinations the syndicates have not tried themselves. They are
not in operation, say, in Germany or elsewhere…. A good many of
these patents have been taken out not for the purpose of working the
patents in this country, _but for the purpose of preventing their being
worked_.”

The “big foreign syndicates” to which George referred were, of course,
the German cartels.

The adroit strategy of stealthily sapping the industrial foundations
of the national security of countries capable of resisting the German
_drang nach_ all-points-of-the-compass has been relentlessly pursued
and resourcefully developed, through thick and thin, decade after
decade. If the cartels are thwarted in the use of the patent system as
a weapon for disarming potential competitors abroad, they may inveigle
the intended victims of German aggression to a ‘simulated’ love-feast
at which the latter are gorged with the poisoned food of production
quotas, technology restrictions, market-territory limitations, and
pricing inhibitions. What these tactics accomplished in the way of
immobilizing French industry is now a familiar story. To cite the
record of only three of the most strategic industries, through cartel
manipulations the Germans succeeded in (a) reducing the relative output
of French steel from substantial equality with German output in 1926
to 40 percent thereof in 1938, (b) retarding the growth of French
aluminum production to a rate which fell short of doubling the output
in the same period, while German production was increasing five-fold,
and (c) restricting the French dyestuffs industry in such fashion that
its output in 1937 was barely two-thirds of what it had been in 1924,
whereas German production, even according to official estimates (none
too reliable though they are) had increased five percent in the same
period.