“Capitalism is the best. It’s free enterprise. Barter. Gimbels, if I get really rank with the clerk, ‘Well I don’t like this’, how I can resolve it? If it really gets ridiculous, I go, ‘Frig it, man, I walk.’ What can this guy do at Gimbels, even if he was the president of Gimbels? He can always reject me from that store, but I can always go to Macy’s. He can’t really hurt me. Communism is like one big phone company. Government control, man. And if I get too rank with that phone company, where can I go? I’ll end up like a schmuck with a dixie cup on a thread.” —Lenny Bruce
A common refrain among people unfamiliar with libertarian theory is that corporations are the problem and government is the solution—that government needs to tightly regulate private business to rein in corporate greed. This view is fundamentally confused. It entails that private business—which derives its means by voluntary exchange—is the problem, while government—which derives its means through violence—is the solution.
First, greed is a universal feature of human nature that’s here to stay. Businessmen have always been and will always be greedy. And the rest of us are greedy too, in the sense of being self-interested. That includes the agents of the government. Since government can use violence to achieve its ends, we should be much more worried about predation by greedy politicians and bureaucrats.
Of course, businessmen are not angels. Like all people, they can be jerks and criminals. Adam Smith’s great insight was that businessmen benefit others not out of benevolence, but by their own greedy pursuits in a free market. Under the institution of free market competition, private predation can be minimized and the social benefits of greed can be maximized. But this cannot be achieved with a government in existence.
Greedy businessmen don’t passively submit to regulations, they lobby and do whatever they can to gain control of the regulatory body. Once they have access to the political means, they use it as a tool to hinder their competition, to the detriment of everybody else. Gabriel Kolko has shown that even the Progressive Era regulations were pushed through by big business to restrict competition. Where there is government, businesses will fight to control it for their benefit. Under government, the corporation becomes an exploiter.
In fact, free market competition is the best kind of “regulation”. Where there is competition, people have choice and can avoid businesses they don’t like. And businesses have incentives to publicize the misbehavior of their competitors. Competition is simply the best check on private predation. Furthermore, it can be supplemented by other voluntary measures, like boycotts, to seal any cracks. There is no reason to introduce legalized violence in the form of a government.
Government is not the solution, it is the root problem. Government brings with it the problem of public predation, and creates the avenues for systematic private predation. Advocating more government as the solution to private predation is like trying to put out a fire by dousing it with gasoline. Without government, private predation can be restrained through market competition. In other words, government is the ultimate cause and corporations are the proximate cause of the problems. Don’t be a branch-striker. Strike the root.
[Further reading: Roderick Long, Can We Escape the Ruling Class]
