Free Enterprise & Monopolies
“Monopolistic Control by governments or enterprises stifles freedom
of choice and consequentially, the attractiveness brought about by
competition.” – SOC
Not all Monopolies are necessarily bad. The threat to society is not necessary the monopoly itself,
but the stifling of competition. Competition brings improvement for all, but
can also be devastating for individuals and communities. Often governments
enforce monopolistic control through the imposition of import tariffs
and taxes. In that regard, one has to ask if anyone has a right to stifle another
persons efforts to improve? Surely to better oneself and the lot of others is a
|DEFINITION: Capitalism provides a direct reward for accomplishment to
those who do the work.
(However, sometimes the reward goes to those who own the work and not those who
do the work, as in the case of monopolies).
The key is to
provide infrastructure which allows those who do work to form their own
companies and receive the reward.
The key to understanding Free Enterprise, is understanding
the harm a monopolies can bring, whether through monopolistic control
implemented by a government, or oppressive control exerted by a large
corporation on their smaller competitors.
Generally, by definition, the large an enterprise, the more
levels of management and control necessary in that enterprise, and
consequentially, the greater the opportunity for lack of control, corruption and
waste. The tendency to bad inefficiencies in an organization, increases once a
critical organization size is surpassed. (Note the Founding Fathers
aversion to large centralized control and the frightening rate of centralization
by the Federalist government in the U.S. Consider the impact of "Host Centric"
control on the efficiency of the U.S.)
Size, or volume, in many instances, significantly
influences economies of scale. The more widgets one makes, generally, the
lower the cost per widget. However, large volume production has a tendency to
require large capital outlay in materials and/or production equipment and
manpower, creating a higher barrier to entry in a volume market, and
subsequently stifling competition. In a free-market environment, however, the
larger the profit margins, the greater the attractiveness to competition.
In other words, when a monopoly is making huge profits, there will be a tendency
for many competitors to be born.
Fear of competition tends to bred monopolistic behavior in
governments and enterprises alike. Trade wars where governments stifle
competition in efforts to protect their communities through the artificial
imposition of limitations and taxes on imported goods, show us classical
examples of the net effect of such monopolistic behavior. Governments also
often seek to create monopolies and eliminate competition by paying for a share of
goods exported from their community.
Time tends to sway the balance of production towards the
most competitive manufacturer despite monopolistic control. The steel and auto
industries bear classic examples of ineffective efforts by nations to protect
their industries. Over time, the enterprise protected from competition by
government regulation tends to get left so far behind improvements made by
competitors, that when consumers get their hands on the competitors vastly
improved products, as they eventually will get their hands on, regardless of
regulation, the complete collapse of the protected enterprise is suddenly
When governments do not interfere in free markets, people
within communities tend to be vigilant in maintaining their competitive
advantages. The need to improve is not only accepted by such individuals, but
it is encouraged and expected. When governments interfere with free markets by
imposing artificial tariffs on imports or by paying down the price of exports,
people in their communities tend to loose their competitive vigilance and
eventually fall behind into natural decay.
The natural decay of corporations, in effect, provides a
natural re-distribution of wealth that is significantly more fair and effective
than Communist seizure of corporations or pseudo Communistic principles of
taxing of corporations. Free-market or natural distribution encourages the
survival of the fittest and overall improvement of society.