Montreal, October 15, 2011 • No 293


Bradley Doucet is QL's English Editor. A writer living in Montreal, he has studied philosophy and economics, and is currently completing a novel on the pursuit of happiness.





by Bradley Doucet


          Liberty is won and preserved not primarily with guns, but with ideas. Spreading freedom requires that we spread an understanding of the benefits freedom brings, that we explain to whoever will listen how freedom is really in everyone's best interest. In making the case for a truly free society, however, we will inevitably come up against a wide array of illiberal beliefs that keep others from embracing our vision of a better world. The more we seek to understand those beliefs, the better we will be able to counter them and address the concerns that underlie them. In this ongoing series, I address some of the issues we can expect to face, along with brief outlines of the kinds of responses I think can be helpful.


BELIEF # 33: Corporations have too much power

October 15, 2011

          As the ongoing Occupy Wall Street movement enters its fifth week and spreads to cities around the world this weekend, it is worth examining one of the central beliefs animating the disparate group of protestors, namely that corporations have too much power. While this belief is not exactly mistaken, it fails to get at the real root of the problem, which is that governments have too much power.

          It is true that certain large corporations enjoy unjustifiable benefits like protection from foreign competition, unnaturally high barriers to entry for local competitors, outright monopoly privileges, preferential tax treatment, taxpayer subsidies, and so on. Banks in particular have the ability to manufacture profits practically out of thin air thanks to fiat money, fractional reserve banking, and legal tender laws. (See my review of Chris Leithner’s recent book, The Evil Princes of Martin Place, for a fuller discussion of some of the ways in which modern banking is broken.)

          But where does this power come from? It comes from governments. It is governments that enjoy a monopoly on the use of force. Government actors use this power legitimately when they protect individuals from such dangers as theft, fraud, assault, murder, and foreign invasion. They use it illegitimately when they grant special privileges to influential businesses.

          The problem with focusing on corporate power instead of the more fundamental problem of government power is that it can too easily lead to the promotion of unproductive or even counterproductive solutions. Trying to regulate banks to prevent them from gambling away our wealth will never work when governments use their monopoly on force to maintain the current fraudulent banking system and to bail them out with our taxes. Trying to regulate corporations is pointless when corporations themselves inevitably grab hold of the reins of regulating bodies. Campaign finance laws are worse than worthless when it comes to trying to “get the money out of politics.” When governments have goodies and privileges to hand out, the wealthiest, most connected, most entrenched elites will inevitably get their hands on most of those goodies and privileges.

          The only feasible solution to the collusion of corporations and government (known as “corporatism” or “crony capitalism”) is for governments not to have goodies and privileges to hand out. They must be restricted to using their power to protect individuals from the dangers enumerated above. In a scenario in which the only thing governments do is enforce simple rules against things like theft, fraud, and murder, corporations would be stripped of all of their power. They could only succeed in such a scenario through voluntary exchange, by offering goods and services that people want at a price they are willing and able to pay, a price that would reflect all the competitive pressures of the free market.

          As Steven Horwitz wrote this week on The Freeman’s website, “in freed markets the power would rest with the 99 percent of us who buy the products, not the 1 percent who sell them. In freed markets the power really would be with the people—ours to grant or withdraw as we see fit. It’s bailouts, subsidies, and monopolies that give the 1 percent power over the rest of us.”

          Crony capitalism need not continue forever. We can have a system in which power really does reside with the people. But this will only happen if enough of us understand the real root of the problem and demand a real solution: a drastic reduction in government power.





32. Libertarians are Scrooges
31. We are all children
30. It's wrong to profit from the misery of others
29. States must set standards
28. Governments Can Create Jobs
27. Guilty until proven innocent
26. Life is a zero-sum game
25. Immigration must be restricted
24. The world is a scary place
23. We are all sinners
22. Persuasion is force

21. Bankruptcies are bad for the economy
20. War is good for the economy
19. We don't care enough
18. Capitalism caused the Great Depression
17. Democracy is a cure-all
16. Self-sacrifice is good
15. Everyone is selfish—and that's bad
14. Free markets are utopian
13. Change is bad
12. You're either with us or against us
11. The environment is steadily deteriorating

10. Resources are limited
09. It's a small world
08. Morality must be enforced
07. The truth is obvious
06. Good intentions are enough
05. Charity must be enforced
04. We are our brothers' keepers
03. Theft can be justified
02. Order comes from above
01. Government is good