The Government-vs.-Business Canard

The prevailing left-liberal position, as articulated by figures like Naomi Klein, is that big government is needed to hold big business in check, if not break it entirely. The argument primarily against reducing government power, as I understand it, is that autocratic big business would replace whatever reduction in government power were achieved. A conjoined argument is that governments are somewhat more responsive in a democratic process to people’s interests since corporations by law are mandated to maximize shareholder wealth; therefore, it is more desirable, given the alternative, that government would have a stronger say than a weaker one.

Even on its face, the notion that a reduction in the regulatory power of government would inversely increase the power of businesses is mistaken. If businesses thought they could maintain, let alone increase, their market monopolies and cartels in the absence of government intervention, businesses would not put so much effort into supporting greater controls on the market and maintaining existing regulatory privileges, which inevitably come with strings of their own. Those privileges are only attainable through government’s unique authority on the legal use of force. Just as railroad corporations were able to use the United States military to steal Native American land and slave owners employed the Fugitive Slave Act, government intervention multiplies the influence of corrupt businesses and makes their exploitation more efficient, because those businesses do not have to pay for the full costs of their dirty deeds; the costs of enforcement are socialized among taxpayers.

What left-liberals, for the most part, do not realize is that big business and big government are not opposed, but symbiotically aligned to support one another. A portion of a businesses’ ill-gotten gains are diverted back to the politicians who support those government interventions, which in turn funds more interventions. Without any callous intent, well-intentioned laws are implemented in ways so that any reforms reinforce the regulator’s and regulated’s co-dependence, as alternative decentralized business models challenging the exigency of that relationship are choked off.

In actuality, government props up existing oligopolies by erecting barriers to entry (with the use of occupational licenses, monopoly protection, capital start-up requirements, zoning regulations, enforcement of so-called intellectual property and abandoned property rights, business permits and legal tender laws) and by aiding existing businesses (with the use of transportation and other subsidies, fiat currency, bailouts, restrictions on organized labor, price controls, purchase and loan guarantees, bankruptcy and limited liability protections, capital-favored accounting and tax practices, regulatory favoritism, “Open Door Imperialism,” protectionist trade policies, eminent domain seizures and general cronyism) in ways that suppress inexpensive market alternatives like self-organizing mutuals and co-ops for community services and decentralized production models for private goods and services. Concentrated corporate power exists because government protects it, and does so deliberately. Governments benefit from this concentration of wealth because it leaves most helpless to resist the tyrannous seizure of property, the expansion of government authority and restrictions on free speech, privacy and self-defense.

The reason for all those interventions is because big businesses cannot compete on the open market. A big business suffers, albeit on a smaller scale, from the same inherent structural flaw that doomed state socialism, as identified by the Misesian calculation argument: the informational diseconomy of scale. Together with the invention of electrical machinery, the total cost of production for most goods on an open market would be more expensive in centralized factory production than it would in home-based or community-run workshops.

The second half of the left-liberal argument is at best a fantasy. A government is not necessarily more responsive to the will of anyone. Residents who live in the country without the government’s permission and other foreign permanent residents cannot vote; neither can most felons. When people interact with government-supported businesses, at least they get something in return. Of those who vote every two years, only half the people get their way. Even when an election turns in their favor, voters have no guarantees. Politicians do the bidding of people who fund their elections and who take care of their family and friends. Seeing how each is dependent upon the other, regulatory bodies understandably become captured by the regulated. Seeing how big businesses have been so successful in capturing the regulatory state for their own benefit, this should be apparent by now. According to noted liberal historian Gabriel Kolko, virtually every aspect of the Progressive Era regulatory state was enacted at the behest of corporations to cement the private trusts that could not be sustained in the presence of a modicum of competition. The core problem with a government is that the costs of enforcing special privileges are dispersed among all taxpayers, but the benefits of enforcement are directed to a very few. Eternal vigilance or not, the game is stacked in favor of people who want to exploit that asymmetrical relationship for their own good, effectively making unjust laws a well-funded private good and just laws an underfunded public good that comes about precisely because of the existence of government power. There is no way of getting around that fact except to reduce the role of government or eliminate it altogether.

When politicians do propose a solution to a problem they enabled, it is not in their interests actually to solve the problem. They can always blame the opposition for not fully implementing their solution, which provides for them a fundraising issue in the next election. That is why troops remained in Iraq and Guantanamo Bay was kept open despite clear Democrat majorities to put an end to those crimes. When Republicans ran the show, nothing changed. As Noam Chomsky said in his recent book, “[Republicans] don’t want a small government any more than Reagan did. They want a huge, massively intrusive government, but one that works for them. They hate free markets.” The solution offered by left-liberals to these problems is to implement campaign finance reforms that provide public funding of candidates. As history has shown, campaign finance laws further entrench politicians and make them less accountable. For those libertarians who do not seem much difference between politically motivated corporate power and political power, in and of itself, they are opposed to monopolistic power in general, regardless of who wields it. We want to be free.

The last point that businesses are primarily focused on short-term profits and maximizing shareholder wealth is entirely a consequence of government meddling. Publically traded companies are required to report earnings quarterly, and their shareholder mandates and corporate governance structure are prescribed by law.

It is not some accident that big businesses act through the government, because they are virtually indistinguishable. To quote Kevin Carson, “Far from the system of ‘countervailing power’ hypothesized by [John Kenneth] Galbraith, the large for-profit corporation, large government agency, and large non-profit in fact cluster together into coalitions.” Government magnifies those in power. It entrenches them, shields them, and they in return become a tool of the government. Quoting Chomsky elsewhere, “Any form of concentrated power, whatever it is, is not going to want to be subjected to popular democratic control or, for that matter, to market discipline. Powerful sectors, including corporate wealth, are naturally opposed to functioning democracy, just as they’re opposed to functioning markets, for themselves, at least.” There is nothing egalitarian or progressive about bestowing one class of people with authority over another. The ironic thing in my eyes is that well-meaning left-liberals, not libertarians, are the stooges for big business.

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