From Natural Monopoly to Public Utility: Technological Determinism and the Political Economy of Infrastructure in Progressive-Era America

In present-day debates regarding telecommunication policy, one frequently hears the terms natural monopoly and public utility. This article investigates the origins of these ideas, finding that Richard T. Ely—a celebrated American economist of the late nineteenth century—embedded in the term “natural monopoly” a narrative of technological determinism. By arguing that certain services had monopolizing tendencies hardwired into them, Ely argued for their regulation. Ely’s theory of natural monopoly formed the basis of Wisconsin’s 1907 public utilities law, which served as a model for many other states’ regulatory policies. The modern notion of public utility thus carries with it the technological determinism of Ely’s natural monopoly idea. By tracing the lineage of these two terms, this article recaptures the influence that activists and progressive politicians exercised over the formation of large technological systems during the Second Industrial Revolution.