Adam Smith wrote An Inquiry into the Nature and Causes of the Wealth of Nations in 1776 during what has since been called the Scottish Enlightenment.
He’s one heavy duty guy in political economic theory. Everyone claims they have read Smith, but few have bothered.
Conspiracy Theories: I am naturally skeptical about any idea that requires co-ordinated effort over time by several independent organizations. It is not that I don’t think it could happen, it is just that I lack the evidence to justify this belief.
It is, however, my considered opinion that Big Franchising exists and is very active in every substantial franchise market. The reason is very simple: The total gross margins accruing to the individual members are increased by co-operating rather than opposing each other.
- The nominally independent organizations act as if they were one company. In doing, so they achieve their separate business goals.
And the world’s first economist seems to agree.
It appears that a consumer should assume groups of self-interested, profit-maximizing businessmen are actively working against the consumers’ best interests (high quality and service at a low price):
People of the same trace seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings by any law which either could be executed, or would be consistent with liberty and justice.
To pretend that businesspeople will not arrange themselves to defeat unknowing investors is a childlike view of the world.
- My Oz friends: please note how useless the law is in stopping this abuse. Information sharing, yes. Easily captured legal process, no.
The media can be used to keep the sheep asleep.
Avarice, the spur of industry. David Hume (1711 – 1776)