Compulsory cartel

A compulsory cartel or forced cartel is a cartel that is established or maintained by an administrative order or by a legal directive. The interference of policies on these associations of entrepreneurs of the same trade varied. It ranged from a mere decision to establish a cartel or to maintain an existing one, to a strict state control.

Disagreement over the nature of compulsory cartels

The understanding of “compulsory cartels” as “cartels” has always been disputed. While the older cartel experts before the 1930s usually insisted in the free entrepreneurial will that constituted a “cartel”, later authors were more tolerant and accepted forced cartels as an exception. In recent times (2007), the economic-historian Jeffrey R. Fear took this stance of the “exception to the rule” that would not contradict the general nature of these organizations. The cartel-historian Holm Arno Leonhardt has positioned himself more differentiated in 2013: Forced cartels that were embedded in a totalitarian planning economy or were by other means unable to realize their own will, should be regarded as organs or appendages of another system. Thus, “compulsory cartels” without a permanent political influence could indeed constitute real “cartels”, while others being under strict control acted mainly as servants of an alien will.

Examples

• German potash syndicate: This was since 1919 a public-law body and was integrated into a control structure with its customers, laborers, traders and instances of administration.
• Japanese steel cartel of the 1930s.
• Rhenish-Westphalian Coal Syndicate, Northwest Germany: This too was since 1919 a public body and integrated into a similar control structure as the German potash syndicate.
• Russian sugar syndicate of the 1890s.

See also

• Coercive monopoly
• Government-granted monopoly

Bibliography

• Fear, Jeffrey R.: Cartels. In: Geoffrey Jones; Jonathan Zeitlin (ed.): The Oxford handbook of business history. Oxford: Univ. Press, 2007, p. 268-293.
• Leonhardt, Holm Arno: Kartelltheorie und Internationale Beziehungen. Theoriegeschichtliche Studien, Hildesheim 2013.
• Korrell, Emil: Zwangskartelle als Mittel gegen ruinöse Konkurrenz. Forchheim 1937.
• Liefmann, Robert: Cartels, Concerns and Trusts, Ontario 2001 [London 1932]