When I tell people about libertarian ideas, they agree with me that government is bad and can’t be trusted. It’s really, really bad and can’t be trusted. However, they ask, why should we trust corporations more than we trust the government? If the government is prone to mess up, aren’t corporations, too?
These are very common arguments, although not really applicable to the subject at hand. Corporations that exist today don’t exist in a libertarian society– they exist in a society composed of corporatism, which does not favor those entrepreneurs who make their customers happy and run a good business, but instead favors those businesses that can afford to hire the best lobbyists in DC and cuddle up to lawmakers with campaign donations before bills are passed.
Sure, some business owners are thieves, charlatans, greedy Scrooges who don’t care about the “common man” and only care about the wallets of the masses of people they’re supposed to be catering to. However, most business owners are hardworking individuals who happened to have a good idea that people liked and have been able to run with it, and their business continually depends on people liking them enough to fork over their money. Capitalism (capitalism without government handouts, that is) rewards those who are not just greedy and are not thieves, because customers can choose who they want to do business with, and their dollars will follow accordingly– and most people don’t want to do business with people they don’t like or trust.
A few real-world examples I can think of– mass boycotts of Walmart for what people perceive as unfair labor practices, a friend of mine who won’t sign up with Earthlink because the owner is a Scientologist, union members who won’t buy cars from Toyota or Honda because those carmakers don’t have unions, AFA members who boycott Ford because Ford gives benefits to gay partners. If enough people boycott these companies for these reasons in a libertarian society, the company would go out of business. It must satisfy the customer. Unfortunately, we don’t live in a libertarian society, and these companies could all stay in business without pleasing the customer due to the massive government handouts they all receive. They don’t have to conduct the most basic rite of capitalism– pleasing the customer.
In a true free market, just as somewhat exists today, capitalism would assign value to those who are not greedy, not thieves, and provide a good product, along with other factors that customers may deem important, which could be almost anything– labor practices, environmental policies, foreign subsidiaries and holdings, policies toward certain groups of people, work environment, whether the company has unions or not, religion or controversies involving the owner, lawsuits, whether employees are allowed to have guns in their cars at work, and endless other aspects of things that groups of people will decide to care about.
In a capitalistic society, customers do not assign value to a company or owner that is greedy, unless they weigh other factors (price, policies, etc.) above that factor. The market is self-regulating, and the bottom line is that you must please the customer to stay in business, just as any Mom-and-Pop shop must do.
So, greed and corruption would not be rewarded unless customers decided to reward it.
Tags: evil corporations, corporations, libertarianism, corporations libertarian, libertarian society
The main issue I feel with these views is that they are divorced from reality and they ignore history.
The majority of us go to Walmart despite its huge subsidies, extremely low wages and its effects on urban sprawl and local economies. Taking Big Government away is just going to make Corporation jobs easier, they don’t have to grease as many wheels.
Pure Capitalism leads to monopolies. Simply look at the woes of our Industrial revolution and the horrendous conditions people were forced to work under with pittance for pay. To say that people in pure capitalistic societies have choice is a fallacy. It’s like saying you have a true choice in who gives you electricity. Despite the fact the the devil himself may be profiting from you buying electricity, you will buy it if he’s the only one around. Big Corporations will ensure that they are the top dog, just like Rockefeller did.
In certain cases certain industries do need subsidies to survive which are critical the the security of the US. For instance steel. The US cannot depend 100% on foreign steel in case of war. All other subsidies, where its clear the corporations are just greasing wheels for profit or are able to post profit, should be eliminated.
At the same time Governments should be able to place limits on what Corporations should be and not be able to do. There should be national standards also so cars made in California are at the same standards in New York in case they go cross country.
Remember the Articles of Confederation failed. The purpose of the Constitution is not to replace it with the Articles of Confederation again, but to improve upon it.
Paul Tsai
February 13th, 2008
“Pure Capitalism leads to monopolies.” That is simply not true. I’d ask you to name for me a monopoly that wasn’t created as a direct result of policies from the government– I don’t think it’s possible, and a non-government-created monopoly is pretty much non-existent. If you can think of an example to prove me wrong, I’m all ears.
In a true free market, or “pure capitalism,” if you will, there can be no monopoly unless that monopoly is providing the most satisfactory service for customers at the lowest price, in which case, there need be no competition because consumers would be entirely happy. If a monopoly isn’t providing good service, there will be a competitor that springs up that does so. If a competitor isn’t providing the lowest price, a new business will start up to undercut that price. Try starting a new car company or a new cable company today– by the time you meet all the government regulations, you’re probably billions in the hole without a dime to your company’s name yet. How’s that for a good business model or for helping competition? That’s why car and cable companies don’t have to provide a product that matches customers’ needs– they have no reason to! They know their government will bail them out in the end, anyway, even if they do a lousy job (especially applicable to the car industry).
“It’s like saying you have a true choice in who gives you electricity.”
Why not have a choice in who gives you electricity? Right there is an area in which free markets could thrive. Everyone only has ONE choice for electricity, a local monopoly created by government contract and price-setting. Let’s give people a choice, and prices would come down and service would increase.
I’m not sure about the US steel situation, but if that is the case, why not just institute large subsidies at wartime? We are not going to have a WWII-style rationing by the American public to win a war anytime soon, and for now we do have lots of allies, including India, which have very large steel industries. Finally, and most importantly, when the free market is allowed to work it can create wonders. It created steel, and it can probably create a better, cheaper alternative if the market demands it– BUT it can’t do that if the steel industry is being continually subsidized by taxpayers… new technologies can’t compete with government subsidies. That’s what worries me in the area of alternative energies.
“There should be national standards also so cars made in California are at the same standards in New York in case they go cross country.”
I don’t understand why there should be national standards at all. By default, if a law is made in California regulating something, companies will make all their products in the US coincide with those regulations. You see it all the time on tags for products. No one is going to buy a car that doesn’t meet safety tests. Beyond that, I’m not sure what standards any cars should have.
What you’re proposing, though (for example, national standards for cars) does not abide by the Constitution. The Constitution says all other matters shall be left to the states that aren’t specified in the Constitution. It does not mention cars (or the equivalent in those days, horse and carriage standards!), and the spirit of the Constitution as laid out by the Founders does not go hand-in-hand with national standards for everything.
libertariangirl
February 13th, 2008
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February 25th, 2008
““Pure Capitalism leads to monopolies.” That is simply not true. I’d ask you to name for me a monopoly that wasn’t created as a direct result of policies from the government– I don’t think it’s possible, and a non-government-created monopoly is pretty much non-existent. If you can think of an example to prove me wrong, I’m all ears.”
I do not believe that Standard Oil did anything illegal. Neither did Andrew Carnegie, anti-competitive sure, but not illegal. Once a company’s revenue grows, so does its influence. I can use this influence to purchase the suppliers of the materials it alters to make into its product, such as Andrew Carnegie purchasing iron and coal mines, the railroads to transport it to the steel mills. This was extremely efficient, and a person starting up a business would never be able to compete with someone who never had to buy any materials, only pay to have them gathered.
There is also the case of Standard Oil, which was horizontal integration, where a company buys up all of its competitors. Once it buys up all of its large competitors, it is assured market share. Any new companies will be bought up by this company, for practically nothing compared to the value of the large company. If Standard Oil had not been broken up, it is estimated that it would have been worth one trillion today. With that money it would have easily been able to bully its way into even greater dominance on the markets.
Ben
December 24th, 2008
I would love to see true capitalism, but I am also concerned about monopolies. As Ben mentioned regarding Standard Oil, my example would be Microsoft, who started buying up all the competition or offering a free version of their competitors product, so their competitor never got a foot hold.
I guess the issue is regarding companies that get so large that the barrier to entry to compete becomes too high.
Elton
April 2nd, 2009
Did Standard Oil really “bully” itself into the top of the markets? From what I understand, they revolutionized the kerosene and oil industries at that time by simply making such a better and more efficient product that they increased the sales of oil exponentially. In the government’s case, not a single consumer unrelated to a rival company was quoted as complaining about being harmed by the company. We all could wish for such monopolies.
Microsoft has had many advantages, but even sitting in the catbird seat they have lost out to Google, Firefox, Apple and Linux in many ways. If people are completely happy with a product, a monopoly will naturally occur as people gravitate towards that product (think Ipods and IPhones and their ubiquity; they just work/look better than similar products that do many of the same things, so people want them). Price is not the only determining factor in a purchase. If people can compete on any level, through innovation, design or a better product, there will be no natural monopoly. No one could design a better product than Standard Oil could at that time.
libertariangirl
April 4th, 2009
May I just say what a relief to discover someone who really understands just what they’re writing on on the internet. You certainly know how to get an issue to light and make it worthwhile. More people really should read this and understand this side of the story. I cant imagine you are not more well known because you certainly have the gift.
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