t is often argued that, in an anarcho-capitalist society greedy people would end up having a lot of power. The facts are quite the contrary. It is a free society which prevents people from acquiring political power and hence misusing it. What the proponents of this theory forget to consider is that greed could apply to politicians and bureaucrats at least as much as it applies to businessmen. They also forget that market is based on contract and government on coercion. First of all, let’s define greed. Greed is an irrational desire for an excess of something. It is worth noting that there could be greed for money and greed for power. It is our task to find out what is more dangerous. What is power? There is political power and economic power. One can acquire power through economic means or political means. Economic power is acquired by serving ones consumers. Political power is acquired through public polls and force. Implicit in the concept of public polls is the idea that the majority have the right to impose their decisions on the majority by the means of force. It should be evident that economic power is not dangerous in any way. If it is argued that businessmen are motivated by a greed for money, it can’t be evaded that politicians and bureaucrats are motivated by power lust.
Ask yourself these questions. Who is more likely to misuse his power?-A politician who acquired power through promising to deliver or the businessman who acquired his power through delivering goods and has to keep on delivering goods if he wants to keep that power? Who is more likely to serve the public? A businessman who has both financial and moral incentives to do so, or a politician who has only a moral responsibility? More importantly, how can a businessmen misuse his power? He can’t, on a large scale, without the help of the government. If it is true that the greed of the businessman is harmful to the society, why is it that the life standards of the people have improved in countries of high economic freedom (which means: countries known as capitalistic countries) since the beginning of the industrial revolution? The answer is that in a free society, there is no conflict between the rightfully understood rational interests of people.
If you look deeply and think you would understand that what is usually considered as resulting from the greed of businessmen is actually the result of government intervention in the economy-Monopolies, for instance. Most of the people are not economists and they are not able to understand the bad consequences of such evil government policies. They are not qualified to do so. But, they are competent enough to decide what all they have to buy from the market and where to buy them. To take a concrete example, when asked to decide between protectionism and free trade, most of the public would opt for protectionism not knowing that it would lead to a decline in their living standards. If they are free to decide whether to buy foreign products of lower prices or domestic products of higher prices, they would buy foreign goods. Why not make things simple and leave things for the market to decide?
One favorite argument of collectivists is that greed would lead to monopolies and concentration of power. But, it is entirely contrary to the truth. It is the free market which puts a rein on the development on monopolies. Let us suppose that a market leader jacks up its prices. The other firms which sell similar products would find that opportunity appealing and they would step in to sell their products at a lower price. On a free market, when a firm jacks up its prices, the available funds on the market would be diverted in to the same industry and that firm would be forced to either go bankrupt or change its policies. Even if a certain firm has near monopolistic power in the market, it would only lead to more productivity and lower prices. From 1888 to 1940, Alcoa had a total monopoly on the manufacture of aluminum in the U.S.A. It maintained this monopoly by selling such an excellent product at such low prices that no other company could compete with it. During its monopoly period, Alcoa reduced aluminum prices from $8 to 20tf a pound and pioneered hundreds of new uses for its product. Isn’t it now obvious that a free market wouldn’t lead to monopolies? If you look at it like that in India, post office is a monopoly. Electricity board is a monopoly. Monopolies happen only when government forcefully monopolizes a certain industry or when the Government grants the monopoly privilege to a certain firm, like that happened in the Railroads in the United States in the 19th Century.
The fear of monopolies is rational, if it is fear of government monopolies. It must seem surprising, but it is Anti-Trust laws, and other government interventions which are designed to check monopolies which lead to monopolies. If IBM decides to get into the Automobile industry and undersell its competitors it is likely that anti-trust laws would check its entry. Laws against insider trading prevent business executives from accumulating capital and becoming competitors to big business. Taxation prevents small businessmen from accumulating capital and competing with big businesses. Protectionism prevents foreign competitors from entering a nation. Government licensing prevents people from entering industries and thus it leads to a society in which people hold a virtual monopoly over services. The same goes for pro labor union legislations which gives a virtual monopoly to its members in a particular profession.
In the whole of human history, no private firm was able to set its price independent of the market. On the other hand, several evil political leaders and philosophies were able to acquire power and misuse it. Yet, it is not political power or dictatorships that people fear. It is the market.