Decartelization is the transition of a national economy from

monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

control by groups of large businesses, known as

cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mos ...

s, to a

free market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any o ...

economy. This change rarely arises naturally, and is generally the result of regulation by a governing body with monopoly of power to decide what structures it likes. A modern example of decartelization is the economic restructuring of

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...

after the fall of the

Third Reich Nazi Germany (lit. "National Socialist State"), ' (lit. "Nazi State") for short; also ' (lit. "National Socialist Germany") (officially known as the German Reich from 1933 until 1943, and the Greater German Reich from 1943 to 1945) was ...

in 1945. To truly understand the term "decartelization" requires familiarity with the term "cartel". A cartel is a formal (explicit) agreement among firms. Cartels usually occur in an oligopolistic industry (

oligopoly An oligopoly (from Greek ὀλίγος, ''oligos'' "few" and πωλεῖν, ''polein'' "to sell") is a market structure in which a market or industry is dominated by a small number of large sellers or producers. Oligopolies often result from ...

), where there are a small number of sellers, and usually involve homogeneous products (see

Homogeneity and heterogeneity Homogeneity and heterogeneity are concepts often used in the sciences and statistics relating to the uniformity of a substance or organism. A material or image that is homogeneous is uniform in composition or character (i.e. color, shape, siz ...

). Cartel members may agree on such matters as

price fixing Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...

, total

industry Industry may refer to: Economics * Industry (economics), a generally categorized branch of economic activity * Industry (manufacturing), a specific branch of economic activity, typically in factories with machinery * The wider industrial sector ...

output, market shares, allocation of customers, allocation of

territories A territory is an area of land, sea, or space, particularly belonging or connected to a country, person, or animal. In international politics, a territory is usually either the total area from which a state may extract power resources or a ...

bid rigging Bid rigging is a fraudulent scheme in procurement auctions resulting in non-competitive bids and can be performed by corrupt officials, by firms in an orchestrated act of collusion, or between officials and firms. This form of collusion is illegal ...

, establishment of common sales agencies ( sales agents), and the

division of property Division of property, also known as equitable distribution, is a judicial division of property rights and obligations between spouses during divorce. It may be done by agreement, through a property settlement, or by judicial decree. Distributio ...

or profits or combination of these. The aim of such collusion is to increase individual member's profits by reducing competition.

Competition law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...

s forbid cartels. Identifying and breaking up cartels is an important part of competition policy in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to

collude Collusion is a deceitful agreement or secret cooperation between two or more parties to limit open competition by deceiving, misleading or defrauding others of their legal right. Collusion is not always considered illegal. It can be used to att ...

on paper.

Historical background

Examples of alleged and legal cartels: *

American Telephone & Telegraph AT&T Corporation, originally the American Telephone and Telegraph Company, is the subsidiary of AT&T Inc. that provides voice, video, data, and Internet telecommunications and professional services to businesses, consumers, and government agen ...

(AT&T) controlled all telephone systems in the United States via a network of subsidiaries, the

Bell System The Bell System was a system of telecommunication companies, led by the Bell Telephone Company and later by the American Telephone and Telegraph Company (AT&T), that dominated the telephone services industry in North America for over one hundr ...

, which was broken up in 1982. *

De Beers De Beers Group is an international corporation that specializes in diamond mining, diamond exploitation, diamond retail, diamond trading and industrial diamond manufacturing sectors. The company is active in open-pit, large-scale alluvial and c ...

settled charges of price fixing in the diamond trade in the 2000s. (See De Beers antitrust litigation.)

Debate

The general debate with decartelization is a national economy controlled by monopolies and cartels, versus a free market economy. With a free market economy, the pros are very clear. It encourages individual initiatives; it determines price of goods through

competition Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indivi ...

, and motivates people to work towards

financial independence Financial independence is the status of having enough income or wealth sufficient to pay one's living expenses for the rest of one's life without having to be employed or dependent on others.Cummuta, John. The Myths & Realities of Achieving Fina ...

. Most individuals would prefer a free market economy, where there are many buyers and sellers in each market, and the prices are determined based on competition alone. The problem is, it is not up to the individuals. In most cases of cartels, these secret arrangements are done "under the radar", and these major companies know how to cover their tracks. It is very difficult to prove that companies have formed a cartel; therefore it is very difficult to dismantle one. In the case with the

in Germany, the people had no choice. During the war, there was a school called , the "social conscience free market". Members of this school hated

totalitarianism Totalitarianism is a form of government and a political system that prohibits all opposition parties, outlaws individual and group opposition to the state and its claims, and exercises an extremely high if not complete degree of control and reg ...

and had propounded their views at some risk during the Nazis' rule. Wrote

Henry Wallich Henry Christopher Wallich (; June 10, 1914 – September 15, 1988) was a German American economist who served as a member of the Federal Reserve Board of Governors from 1974 to 1986. He previously served as a member of the Council of the Economic ...

, "During the Nazi Reich period the school represented a kind of intellectual resistance movement, requiring great personal courage as well as independence of mind." The school's members believed in free markets, along with some slight degree of progression in the

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

system and government action to limit monopoly.

References

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External links

* http://eh.net/bookreviews/library/0934 * http://www.ushmm.org/wlc/article.php?lang=en&ModuleId=10005141 * https://books.google.com/books?id=bNa982ALww0C&pg=PA287&lpg=PA287&dq=decartelization&source=web&ots=H-l6keX60O&sig=phk9iVFEXfiRia__qz010KU_IXE&hl=en#PPA286,M1 Cartels Competition (economics) Monopoly (economics)