Written by Martin van Staden – originally published on “The Journal of Liberty”
In an often shared meme today I read the obvious and regular response of libertarians against the allegation that we support big corporations, market monopolies and all this, to the detriment and exclusion of the poor or even the middle class. In fact, we support the free market, where due to the fact that the State can no longer endow monopolies, they will most likely not exist; and where they do, they can only come about in a legitimate, bona fide manner. We do not believe any company should be regarded as “too big to fail” and thus qualify for a taxpayer bailout. We do not believe that corporations should enjoy any favors from the political bureaucracy, in the same manner we do not believe that the poor should either. You see, we are consistent like that.
But a line of argument I do not often see is that we fail to remind these social democrats (for lack of a better, non-condescending term) that they are in fact the ones who support big corporations. They actually support the biggest corporation, but we will get to that later. First, let’s analyze why it is that social democrats oppose “big corporations”.
They can lead to monopolies.
Social democrats will say that the presence of big corporations is bad for small businesses because it is impossible for small businesses to compete. Big corporations form cartels with their competitors, thus also spelling a bad deal for consumers. If these corporations are not constrained by law or policy, eventually, they will dominate entire facets of human life. In fact, a common cited example is the fact that only handful of big corporations own the vast majority of news television and paper outlets (in both the United States and South Africa). How can it be a good thing for a few rich elites to control what we see on the news?
They don’t reciprocate value.
Of course, the founder of a company had to make a conscious decision to establish it and invest the initial capital. However, it is the employees, the workers, who turn an idea into fruition. They produce the product. They are the owner’s most valuable asset. Yet they are paid dismally, while the owner and his executives make bucket loads of money. The argument that they signed an employment contract is flawed, because there is no real “choice” in the matter. With reference to the point made above, it will likely be that one big corporation dominates a particular industry in a particular area. Therefore, there is no choice for the employee to “go next door”.
What’s more is that big corporations often do not reciprocate value to the consumers. When they dominate an entire industry, and are formed in a cartel, what use is there for them to provide good products and services to consumers? They want to minimize cost while maximizing profit. A great example is those products which fail right after they have reached their return by guarantee date.
They exploit employees.
Besides not reciprocating value with their employees, the executives also don’t implement good working conditions for workers, and often abuse workers from their position of authority. When employees need a higher wage due to rising inflation or the cost of living increasing, employers will often not negotiate. Those who defend the employers say that the workers signed an agreement, but that is ivory towerish. The real world is much more brutal, and employees cannot simply leave their job.
They put financial greed above the social good.
Big corporate executives are in it only for the money. They intend to amass wealth on an abnormal scale without regard for society. When they create products or deliver services, they do it for personal enrichment and not for the benefit of the people around them. A good example is the extreme costs of hiring an attorney. They do not want to use their skills to defend the rights of the poor, but rather to enrich themselves. Doctors, too, charge too much for the poor to have effective access to their services, while knowing that what they provide is a human right.
They are not accountable or transparent.
Businesses are often under no legal obligation to share their operational information with the public, even though what they do daily affects the public at large. The bureaucracy of the modern corporation is secretive, closed and complicated. It is also unaccountable. People adversely affected by the pollution of large factories have no recourse. At least politicians are under an obligation to be transparent, and they can always be removed from office if the people are unhappy with their conduct.
These are but some of the objections that social democrats have against the existence of big corporations which have the right to pursue their own goals. They believe the law must extensively limit what corporations can and cannot do.
Which brings us to the allegation I made earlier that social democrats in fact support big corporations themselves, unlike libertarians or capitalists. It can actually be said that they support one large consortium of corporations, and that consortium is called government. Allow me to illustrate why the government is in fact a corporation, with reference to the above criticisms of “big corporations”.
It is a monopoly, ab initio, and grants monopolies.
The government is a monopoly. In fact, it is the monopoly. The monopoly on force and violence has long been within the exclusive purview of the government. It is the only institution which can “legitimately” and unilaterally initiate force against another party, even if that other party has not initiated force against it. The remainder of society only has a right to defensive force.
Other than that, the government is the only institution with the “right” to grant and endow monopolies. In South Africa, Eskom, our electricity supplier, has a government monopoly. In many US states, local governments are the only ones with a right to supply permits and licenses. Without government, there would be few, if any, monopolies.
It does not reciprocate value.
The government does not reciprocate value at all. A pauper living in Alexandra, South Africa, or a slum in Detroit, Michigan, receives exactly the same public services as a tycoon living in Sandton, South Africa, or the in the Hamptons, New York. This is not a system of reciprocating value, and if it was, the pauper would receive much less police protection, and much less fire protection, than the tycoon. In fact, for the amount of tax the tycoon pays, a police officer and a fire truck should be permanently parked outside his mansion walls.
More than that, citizens are sometimes forced to wait for hours in line at the Department of Home Affairs in South Africa, or at DMVs in the United States, to obtain a permit, passport or license. We pay the tax, adhere to the laws, respect the institutions, and then after waiting for hours in which we could have been productive, we are handed a piece of paper worth no more than a few dollars, sometimes with a horrible attitude from the clerk. If that government department were a private company, it would have sunk ages ago.
It exploits citizens.
This is an understatement. People cried racism when Eric Garner was strangled to death by police officers in New York. But that is missing the bigger picture. Garner was engaging in an “illegal” trade – the selling of loose cigarettes. Armed men trained in hand to hand combat were sent to deal with this problem, and Garner ended up dead. No, it is not the fault of police brutality or police racism, but the fault of a system that is inherently exploitative, and inherently does not care for individual citizens. The government has been the single most effective killer of its own citizens throughout human history.
This is not even mentioning the hundreds of thousands and millions of people who have had to spend years locked in a cage because they injected something into themselves, wanted to sell something consensually to others, or simply avoided paying massive amounts of tax. Avoiding tax is an activity that should be celebrated in the same manner which we celebrate avoiding giving up all our money to a robber.
It places political power above its core mandate.
The government usually defines what the “social good” is. In South Africa, the “social good” now includes excluding white persons and persons of mixed race from the civil service and big businesses. In some countries, the “social good” includes prohibiting men and women from becoming actors of a specific brand.
This is all in violation of the core mandate of the government, that being to protect life, liberty and property. This is the “social contract” that social democrats enjoy citing. But the social contract means nothing if the government itself keeps adding clauses. The concept of this contract is that we citizens sacrifice some of our freedoms in order to be protected by the government from violence. It most certainly does not include the government deciding what we can and cannot eat, drink, inject, watch, think, say or believe. Neither does it include the government telling us how to conduct our businesses or manage our wealth.
In no other institution than government is there a more concentrated brand of power. Those among us who aspire to control, manipulate, and in essence own the masses, will inevitably be attracted to the government. They do not reach their position of power or influence by creating value for others, but by climbing the ranks of an institution which utilizes force in the pursuance of all its goals.
It is not accountable or transparent.
It’s a fallacy to believe that the government is accountable or transparent. As John Kane-Berman said at an event on 16 March, the political franchise is limited based on age and can be exercised only once every few years. But the market franchise has no age limit and is exercised continuously, day and night, across borders. When you are unhappy with a certain product, you simply do not buy it again. If you are unhappy with a certain service, you simply do not use it again, or go to a competitor – immediately.
With the political franchise, you must wait for years, and hope that those around you are equally unhappy with the service provided by your elected representative, for you to get rid of him. And even if you do get rid of that particular individual, the government as an institution cannot sink. A business, in contrast, can. It does not matter how unhappy people are with their governments – with polls having variously shown that a majority of Americans are unhappy with the service of their government – it cannot fail or be disestablished. Indeed, in South Africa’s Apartheid era, the vast majority of citizens did not even recognize the government as a legitimate institution. Yet, it remained effective and existent because of its nature. If the “South African government” of 1948 had been a company, it would have closed down within a year.
So it is clear that social democrats are in fact more corporatist than libertarians. Whereas we libertarians favor a free market where being successful must be done through winning the favor of your fellow individuals by way of cooperation and competition, the social democrat believes, as a meme puts it, that his ideas are so good that they must be implemented through force. They favor the biggest, most brutal and deadly corporation that has ever existed.
Avoiding Serfdom 