Simons proposed nationalizing concentrated industries to promote, not limit, free markets

Evidence

Simons, however, did not make such a seemingly anti-free market proposal on conventional socialist interventionist grounds, but rather on a purely classical liberal basis. Like Hayek, Simons believed that the liberal safeguard of freedom is the most important objective for public policy, and denounced political control unless it was unavoidably necessary to promote a freer market. Yet unlike most post-1946 Chicago School economists, Simons deeply distrusted nearly all concentrations of power as inimical to both political and economic success: “Thus, the great enemy of democracy is monopoly, in all its forms: gigantic corporations, trade associations and other agencies for price control, trade-unions—or, in general, organization and concentration of power within functional classes” (Simons 1948, 43). Concentrations of power posed a threat to the “heart of the contract,” and thus to relative prices, which should adjust freely to reach competitive equilibrium. Because the “heart of the contract” is the sine qua non of freedom, “A monopolist is … an implicit thief because his possession of market power leads to the exchange of commodities at prices that do not reflect underlying social scarcities” (De Long 1990, 606). … The role of government, therefore, should be to maintain a propitious market milieu—a legal and institutional framework, a correct level of currency, a definition of private property, an initial allocation of endowments—where competition, the agency of control, can function effectively. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 721

Categorization

• XREF: Links to the broader question in this reading of how early Chicago School liberalism diverged from post-1946 Chicago; contrasts with common textbook accounts that flatten all Chicago economists into anti-monopoly-regulation neoclassicals. Connects to Mirowski’s and Burgin’s accounts of the Mont Pèlerin network’s internal disagreements. — connects to: Henry Simons favored Procrustean bright-line antitrust rules over judicial discretion — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 1137
• QUESTION: Simons’s monopoly theory implicitly anticipates later public-choice and contestability critiques, yet the anti-monopoly position was later largely jettisoned by Chicago — worth tracing when this shift occurred and why.

Broader Connections

• Henry Simons favored Procrustean bright-line antitrust rules over judicial discretion #corroborates (0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 1137