The Standard Oil monopoly, by the Linux Information Project (LINFO)
Another major disadvantage of monopolies is their tendency to stifle innovation. Not only do they lose much of their motivation to develop and deploy new and improved technologies as a result of the loss of competition, but monopolies also often make vigorous efforts to prevent existing or potential competitors from bringing their innovations to market because of the threat that it poses to their dominance. Although it is easy for monopolists to create the illusion that they are major innovators, technological advance in monopolistic industries is often substantially less than what would occur in a more competitive environment. Innovation is generally regarded as one of the keys (if not the key) to economic growth, and thus its suppression will likely have a deleterious effect on the economy as a whole, even though such effect might not be readily apparent to the general public.
The argument has also been made that the excessive prices and other harmful effects of monopolies are justified because of the great charitable activities of monopolists-turned-philanthropists such as Rockefeller. However, there is scant evidence to support this. Although the scale of Rockefeller’s charitable activities was certainly impressive, it was likely small in comparison to the total costs imposed on the economy and society from the anti-competitive business practices of Standard Oil. These costs were not all obvious because they were widely scattered, often hidden and difficult to quantify, in sharp contrast to the highly conspicuous and well publicized philanthropic activities.
Historians of the future will likely continue to view the dissolution of the Standard Oil Trust as an important milestone in the unending struggle to restore and preserve free competition in the U.S. economy. Yet, they might also be far more concerned than their predecessors about the failure of the market mechanism, and of society as a whole, to address an issue of at least equally great importance: namely, the inexorable rush to consume and deplete what increasingly appears to be a very finite resource virtually regardless of its consequences.