Hist of Capital 20: German Cartels

Economists teach us that competitive markets are the best of innovation and growth of economies. But the economic history of Germany reveals that they achieved their industrialisation under a system of tariffs and cartels. What explains this paradox?

Steven Webb explains that German policies were designed to curb market instability, lowering risk of investment, and promiting vertical integration of the supply chain.

Steven Webb, "Tariffs, Cartels, Technology, and Growth in the German Steel Industry, 1879 to 1914," Journal of Economic History 40 (June 1980), pp. 309-29.

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