How Big Would "Big Business" Get Without Government?

[Jonathanr]

Thought I'd throw this one out there for discussion:

How big would big business be able to get within a voluntary society? Would the Rockefellers, Morgans, Carnegie et al have achieved their 'greatness' if they didn't have access to political favor (which I'm sure they did)?

How much did political favor contribute to their wealth?

Within a purely voluntary society, could a defacto government bureaucracy form from a privately held monopoly position? Would a monopoly position form at all?

I have no answers myself right now, but I'll post anything I discover.

[Dionysus]

I spoke to this very issue in another thread. Here is the link.

[RealSkinny]

I'm not sure that government really matters. I haven't looked into this too much, but I can't think up a reason why you couldn't contract to have a corporation that operates exactly as they do today. The only difference is anything that is currently prescribed by law for corporations would be written into the contract. For example, I believe it is currently law that maintains shareholders are not liable for the actions of the corporation. Without government, you would just add this disclaimer into all contracts the corporation enters. "Shareholders will not be liable for the debts or obligations of the corporation." Shareholders could make similar contracts with the Corporation requiring it to indemnify them in the event something goes wrong with the disclaimer. If you just add in a few more details about company management and derivative actions, you more or less have a standard limited liability corporation, right?

I'm not sure political favor makes much difference in this context. Obviously it helps when the government has the ability to regulate corporations, but in the absence of government you don't have to worry about that. All you really need to concern yourself with is making a quality product that people will continue to buy.

As for presence of monopolies... If there's no law against it, then why not?

[NonEntity]

RealSkinny Wrote:As for presence of monopolies... If there's no law against it, then why not?

This is analogous to saying, "I don't see any reason why we can't have a field without weeds."

It is simply inherent in the nature of life that "nature abhors a vacuum." A monopoly cannot exist, or if it does exist cannot continue long to exist, because there will always be some living entity which will attempt to get a foothold in the market. Most may fail, but the sheer numbers show that some will succeed. Add to that the fact that with size comes some level of bureaucratic inefficiency and you have an absolute guarantee that competition will arise unless it is forcefully excluded. Which is why big business LOVES government.

- NonE

[sscharliem]

Governments are a monopoly themselves, that's why they are so inefficient. Monopolies by their nature are inefficient because there's no incentive like there is in a copetitive market to be efficient and profitable.

So sure, a monopoly could exist for a short time, but because of the inefficient nature of a monopoly, it would automatically create an opportunity for someone to bring to the market a better product.

It would be like someone waiving a giant flag and saying "attention - my product is shoddy, and there's an income opportunity here" - so I'm worried about monopolies in the least.

[Nomos]

RealSkinny Wrote:As for presence of monopolies... If there's no law against it, then why not?

There actually are "laws" against monopolies, they're known as the "anti-trust" laws.

[NonEntity]

Nomos Wrote:There actually are "laws" against monopolies, they're known as the "anti-trust" laws.

[right](emphasis mine)[/right]

Oh. I didn't know that. I thought those laws were in regard to listening to lawyers and politicians. My mistake.

- NonE :winkwink:

[RealSkinny]

NonEntity Wrote:

RealSkinny Wrote:As for presence of monopolies... If there's no law against it, then why not?

This is analogous to saying, "I don't see any reason why we can't have a field without weeds."

It is simply inherent in the nature of life that "nature abhors a vacuum." A monopoly cannot exist, or if it does exist cannot continue long to exist, because there will always be some living entity which will attempt to get a foothold in the market.

I tend to agree. I think if a company gets a monopoly, you'll have one of two situations unfold. Either the monopoly will continue to keep competitors out of the market by offering high quality products at low prices, or they'll jack up the prices and cut back on the quality of their product, thereby opening up room in the market for someone to step in and offer higher quality products/lower prices, eliminating the monopoly.

In the first situation we're all getting a great product for a low price, so who really cares? And if they stop offering a great product for a good price, they lose their monopoly, so once again, does anyone really care?

[RealSkinny]

Nomos Wrote:

RealSkinny Wrote:As for presence of monopolies... If there's no law against it, then why not?

There actually are "laws" against monopolies, they're known as the "anti-trust" laws.

I thought the question was asking directly about a hypothetical world where there's no government to apply such restrictions on business... My mistake?

[Nomos]

This is an interesting (short, 4pgs.) article. The Trust— From the Socialist Standpoint

I found it interesting because of certain observations stated.

The Trust— From the Socialist Standpoint Wrote:What is the trust?

The trust is essentially a tool of production. The difference between the trust and the oldest style of privately owned tool, seen now only in museums, is a difference, not of kind, but of degree.

Man is a tool-using animal.

The collective power, however, of the tool is gathered by a bitter experience. In the course of its growth, the tool encounters a serious obstacle, that threatens it with nullification. Its aim, the increase of the store of wealth, is for a time balked. The tool is a weapon against the foe of the race—poverty. The wastefulness of competition turns the weapon’s edge against itself. Only a long and bitter experience taught the lesson and suggested the remedy—concentration. The discovery once made, it points and paves the way to further improvements. First is born the partnership of two individuals; then follows the partnership of two or more partnerships—the corporation; next appears the partnership of several corporations—the trust.

The trust is that doubly developed instrument of production that combines both the highest individual and the highest collective development so far reached. It brings the productivity of human effort up to the highest point so far attained by the individual perfection of the tool.

As such, the trust raises man to giant’s stature over nature; it is a weapon that makes for civilization.

[RealSkinny]

Interesting article, but does a trust really work with the same efficiency when it's created artificially and put into public hands? The author is suggesting the trust is the most advanced economic tool, comparing its development from partnership to trust with the development of any other tool that begins in primitive stages and becomes more advanced, but a trust doesn't really form that way in a socialist society, does it? In the free market, you have numerous businesses in competition, and those that succeed with the best products combine to form larger corporations. The car manufacturer with the most profit merges with the best steel manufacturer to improve efficiency and create the best cars for the lowest prices. The result is a trust that's evolved from the most efficient corporations, but in a socialist society, the trust is built artificially by the government, right? There's no opportunity for the market to discover the best and most efficient corporations to include in the final product. We don't have the evolution process that the author relied on so heavily in his analogy.

Can we really say the socialist trust is on the same tier as the capitalist trust?