Culturalism · Federal Government · investing · Personal Finance

Corporations Don’t Want To Compete

The common line in conservative and libertarian circles is that corporations are suffering. All they truly want is to operate in the free market without government intrusion, but the State is a harsh mistress. So they are left to solemnly trudge on, tears at the corners of their eyes, wishing and wondering if someday a change might materialize.

While this remains a touching and heart-plucking image, it simply fails to measure up in the real world. Despite the protests of economic liberals, very few firms (at least the larger ones) actually desire substantial market competition, which can easily cut into their profits and require continuous innovation. They find it far easier to establish a dominant position from where effective opposition can be limited, if not entirely stomped out.

In case skeptical souls raise complaints, let us go directly to the source. Peter Thiel, the brilliant co-founder of PayPal, flat out admitted in his excellent book Zero To One that creating monopolies is the way to get rich. Corporations follow his lead quite dutifully, buying up smaller competitors before things get too large, and lobbying for regulations to help protect themselves against new blood. After all, the more market share one firm controls, the less ability tiny rivals have to threaten margins by offering cheaper products.

With this in mind, the primary beneficiaries of free market economics would be startups and small companies, not the towering juggernauts operating today. Of course the problem does not end there. So long as we operate within the bounds of a system where power can be influenced by corporate money through the Legislative and Executive branches, the lobbying for price controls and regulations shall continue. Thus even a genuinely “lolbertarian” system exalting no regulations would eventually be subverted if the reins of power were democratic (or the national leadership could somehow be groomed by big money).

Indeed, were we to establish a system like the aforementioned one, officials would still have to contend with the question of mergers and acquisitions, moves which themselves can diminish market freedom. The debate would then rise as to whether antitrust laws are an acceptable form of regulation to preserve a less-regulated model. Yet does such a position invalidate the purity of the free market model?

The jury is out with their competing opinions, but Corporate America knows exactly where it wants to be.

2 thoughts on “Corporations Don’t Want To Compete

  1. This is something I’ve been thinking about recently. One big issue that I see in modern economics is the government-sanctioned monopolies handed out through patents. What could be a chance for competition (and in turn happy consumers) is turned into this same monopolization of a product that Thiel encouraged entrepreneurs to pursue.

    In the realm of technology, most major competing companies will innovate the same features, but patents are granted only to the first file as the inventor. When patent rights are purchased from the holder by the competitors, it is found that the technology has already been discovered by the competitors in 90% of instances. The only reason for them to have the patent rights is to not get sued.

    “At least it’s not the government oppressing me!”

    Like

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