20 lines
1.5 KiB
Markdown
20 lines
1.5 KiB
Markdown
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# Violent Policy
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## Definition
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A "violent policy" refers to government interventions that forcibly distort market prices by preventing them from naturally gravitating toward their equilibrium level. These policies include monopolies, trade restrictions, exclusive privileges, statutes of apprenticeship, and poor laws that artificially constrain competition and supply.
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## Source Chapter
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Book 1, Chapter 7
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## Context
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Smith introduces this concept while explaining how market prices naturally fluctuate around the natural price due to supply and demand dynamics. He argues that when governments implement policies that restrict competition or artificially limit supply, they prevent the market from reaching its natural equilibrium, creating persistent price distortions that harm economic efficiency.
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## Economic Domain
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Regulation
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## Smith's Original Wording
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"The monopolists, by keeping the market constantly understocked, by never fully supplying the effectual demand, sell their commodities much above the natural price, and raise their emoluments, whether they consist in wages or profit, greatly above their natural rate."
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## Modern Interpretation
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This concept maps directly to modern critiques of rent-seeking behavior and regulatory capture, where special interests lobby for government policies that create artificial scarcity, maintain barriers to entry, and extract economic rents above competitive market levels. Contemporary examples include occupational licensing, protectionist trade policies, and regulations that favor incumbent firms over new market entrants.
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