Big Business vs. capitalism

Tom Blumer reminds us of what has long been known, that big businesses often oppose free market economics, preferring to squelch competition and gain advantages through government subsidies:

That business leaders are frequently all too willing to sell out the core principles of the free market system in the name of perceived and often illusory short-term profits is not exactly news. Adam Smith wrote over 200 years ago that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

Too many businesses, when they reach a certain size and gain confidence that they are no longer just a few missteps away from serious financial problems, often put more energy into cementing their current market positions through anticompetitive means than into growing or expanding their enterprises. If they become big enough, they often turn into institutions inexplicably perceived as “indispensable,” which then enables them to lobby for unfair breaks from governments. Thus, at the local and state level, supposedly indispensable businesses that are sometimes as small as a few hundred employees receive tax abatements and other incentives.

via Pajamas Media » Big Business as an Opponent of Free Markets.

Not only did Adam Smith warn of this tendency, Karl Marx believed it was one of capitalism’s “internal contradictions” that would bring it crumbling down. Both Democrats and Republicans often blur over this fact, at the expense of the small businesses that are really on the front lines of the free market.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • Peter Leavitt

    True wealth is the product of product of entrepreneurs and technology along with private investment that creates efficient businesses which in the long run defeat and destroy old line businesses that become sclerotic and seek help through anti-competitive measures, often aided by unimaginative, self-serving, and parasitic government. The process is well known as “crony-capitalism.”

    The creative destruction wrought by entrepreneurs is painful for established businesses and their employees who turn to the government for help. The political class, always interested in expanding its power, “help” the established companies and in the process weaken the overall economy. In recent years the Republican political class has been almost as bad the Democrat one in this process.

    Basically, weak individual people and businesses are glad to sell their souls to become dependent on government largesse. It’s happening in spades just now with the monstrosity of Obamacare.

  • Peter Leavitt

    True wealth is the product of product of entrepreneurs and technology along with private investment that creates efficient businesses which in the long run defeat and destroy old line businesses that become sclerotic and seek help through anti-competitive measures, often aided by unimaginative, self-serving, and parasitic government. The process is well known as “crony-capitalism.”

    The creative destruction wrought by entrepreneurs is painful for established businesses and their employees who turn to the government for help. The political class, always interested in expanding its power, “help” the established companies and in the process weaken the overall economy. In recent years the Republican political class has been almost as bad the Democrat one in this process.

    Basically, weak individual people and businesses are glad to sell their souls to become dependent on government largesse. It’s happening in spades just now with the monstrosity of Obamacare.

  • Joe
  • Joe
  • John C

    Organized religion is dependent on government largesse through tax exemption. I suppose you wouldn’t describe organized religion as weak and glad to sell its soul, would you Peter?
    The free market has never been free.

  • John C

    Organized religion is dependent on government largesse through tax exemption. I suppose you wouldn’t describe organized religion as weak and glad to sell its soul, would you Peter?
    The free market has never been free.

  • Tickletext

    Big business and big government love one another. In Democracy in America (book 1, chapter 6), Tocqueville describes tyranny in democracy as the rise of “an immense and tutelary power, which takes upon itself alone to secure [men's] gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?”

    Tocqueville then makes the point that the Leviathan government basically insinuates itself into the DNA of society, that the social fabric changes to mimic the structure and ethos of Leviathan:

    After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

    When big business comes to mimic big government, as it often does, it is no friend to freedom and is certainly the enemy of communities, despite its claims to be the arbiter of our happiness. Conservatives must hammer home the point.

  • Tickletext

    Big business and big government love one another. In Democracy in America (book 1, chapter 6), Tocqueville describes tyranny in democracy as the rise of “an immense and tutelary power, which takes upon itself alone to secure [men's] gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing. For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, facilitates their pleasures, manages their principal concerns, directs their industry, regulates the descent of property, and subdivides their inheritances: what remains, but to spare them all the care of thinking and all the trouble of living?”

    Tocqueville then makes the point that the Leviathan government basically insinuates itself into the DNA of society, that the social fabric changes to mimic the structure and ethos of Leviathan:

    After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

    When big business comes to mimic big government, as it often does, it is no friend to freedom and is certainly the enemy of communities, despite its claims to be the arbiter of our happiness. Conservatives must hammer home the point.

  • Joe

    John C – your statement assumes that the gov’t right to tax is supreme. Chruches are not dependant on tax breaks. Instead, they have avoid intrusive gov’t via an exemption for the intrusion.

  • Joe

    John C – your statement assumes that the gov’t right to tax is supreme. Chruches are not dependant on tax breaks. Instead, they have avoid intrusive gov’t via an exemption for the intrusion.

  • Peter Leavitt

    Government sensibly doesn’t tax churches, private schools, and universities, as they provide great potential cultural and moral benefit to society. Some churches, private schools, and universities do of their own accord make payments in lieu of taxes.

    The notion that serious religions sell their soul through their tax-exemption is risible.

  • Peter Leavitt

    Government sensibly doesn’t tax churches, private schools, and universities, as they provide great potential cultural and moral benefit to society. Some churches, private schools, and universities do of their own accord make payments in lieu of taxes.

    The notion that serious religions sell their soul through their tax-exemption is risible.

  • Tickletext

    I was going to mention that when Leviathan insinuates itself and extends its benevolent grasp into society, the church is bound to be affected (or is found to have already been affected and is hence susceptible to undue influence). With its incredible resources for advertising and other forms of influence, big business plays a profound role in shaping the imagination of the American consumer. In some respects the church seems to have lost faith in the power of the Gospel to form the imagination, and in the power of the imagination to bear witness to the Gospel. Is it any wonder, then, that over time some (not all) parts of the church become envious of the powers of marketing, and then consciously and unconsciously emulate the Leviathan model of big business/big government?

  • Tickletext

    I was going to mention that when Leviathan insinuates itself and extends its benevolent grasp into society, the church is bound to be affected (or is found to have already been affected and is hence susceptible to undue influence). With its incredible resources for advertising and other forms of influence, big business plays a profound role in shaping the imagination of the American consumer. In some respects the church seems to have lost faith in the power of the Gospel to form the imagination, and in the power of the imagination to bear witness to the Gospel. Is it any wonder, then, that over time some (not all) parts of the church become envious of the powers of marketing, and then consciously and unconsciously emulate the Leviathan model of big business/big government?

  • Peter Leavitt

    Ticletext, any church that is unduly affected by “leviathan” principalities and powers isn’t really a church. Churches represent transcendent reality that, while appreciative of material Creation, respects humility and love as opposed to glitz and power.

    If anything, the church with its spiritual focus best looks upon temporal marketing and other ephemeral power as of chaff. The trouble is that many, especially Protestant, churches, lack confidence in what Luther termed the Right-Hand kingdom.

  • Peter Leavitt

    Ticletext, any church that is unduly affected by “leviathan” principalities and powers isn’t really a church. Churches represent transcendent reality that, while appreciative of material Creation, respects humility and love as opposed to glitz and power.

    If anything, the church with its spiritual focus best looks upon temporal marketing and other ephemeral power as of chaff. The trouble is that many, especially Protestant, churches, lack confidence in what Luther termed the Right-Hand kingdom.

  • Tickletext

    I fully concur about the church’s imperative to charity, but I’m not sure I’d say marketing is chaff or evil in itself. Surely it has some vocational legitimacy when restricted to its proper sphere in the marketplace of genuinely good and valuable products and services. But problems arise when the church becomes so theologically depleted as to leave a void in the cultural imagination, leaving us to seek fulfillment in other areas. Within the context of such voids marketing can become a tool of evil, tempting us to forget the needs of our neighbor and give ourselves over to the pleasant manipulation of our desires and imagination.

  • Tickletext

    I fully concur about the church’s imperative to charity, but I’m not sure I’d say marketing is chaff or evil in itself. Surely it has some vocational legitimacy when restricted to its proper sphere in the marketplace of genuinely good and valuable products and services. But problems arise when the church becomes so theologically depleted as to leave a void in the cultural imagination, leaving us to seek fulfillment in other areas. Within the context of such voids marketing can become a tool of evil, tempting us to forget the needs of our neighbor and give ourselves over to the pleasant manipulation of our desires and imagination.

  • John C

    To repeat , the market ain’t free.
    Unless you’re living in a cave, we all benefit from government largesse. Modern societies require stable markets especially in the provision of food and fuel and this is usually accomplished through subsidy and taxation regimes. Have a chat with a farmer sometime.

  • John C

    To repeat , the market ain’t free.
    Unless you’re living in a cave, we all benefit from government largesse. Modern societies require stable markets especially in the provision of food and fuel and this is usually accomplished through subsidy and taxation regimes. Have a chat with a farmer sometime.

  • Steven Peterson

    @John C – a farmer in the US or a farmer in New Zealand? NZ got rid of ag subsidies and there weren’t riots in the streets due to food shortages or excessive prices. If it is true the modern societies need stable markets, why would the government necessarily be the one institution to provide it? The government has not created stable prices – we have 2-5% inflation on a regular basis, such that today’s dollar is worth about 3 cents of the 1910 dollar. Back to ag subsidies – if they are so necessary, why do only a few farmers/ranchers get most of the money? Subsidies go to the well connected, i.e. the politically “indispensable.” Low food prices have more to do with the logistics and sourcing abilities of the large grocery chains, grocery wholesalers and marketers.

  • Steven Peterson

    @John C – a farmer in the US or a farmer in New Zealand? NZ got rid of ag subsidies and there weren’t riots in the streets due to food shortages or excessive prices. If it is true the modern societies need stable markets, why would the government necessarily be the one institution to provide it? The government has not created stable prices – we have 2-5% inflation on a regular basis, such that today’s dollar is worth about 3 cents of the 1910 dollar. Back to ag subsidies – if they are so necessary, why do only a few farmers/ranchers get most of the money? Subsidies go to the well connected, i.e. the politically “indispensable.” Low food prices have more to do with the logistics and sourcing abilities of the large grocery chains, grocery wholesalers and marketers.

  • John C

    There may no be no riots in the streets Steven but half the population of NZ is living in Australia — according to a former NZ Prime Minister, this raises the IQ level of both countries.
    A 2 to 5% percent inflation level is is moderate and even exemplary.
    Govenments have responsibility for stable markets because when they fail, we have the opportunity to turf them out.
    I will also add that NZ was regarded as the laboratory for the Thatcher/Reagan model of deregulation and it has failed.
    The increase in food production is due mainly through the development of petroleum based fertiliser — the cost in soil and waterways degregation yet to be fully understood and restoration to be funded by the taxpayer.

  • John C

    There may no be no riots in the streets Steven but half the population of NZ is living in Australia — according to a former NZ Prime Minister, this raises the IQ level of both countries.
    A 2 to 5% percent inflation level is is moderate and even exemplary.
    Govenments have responsibility for stable markets because when they fail, we have the opportunity to turf them out.
    I will also add that NZ was regarded as the laboratory for the Thatcher/Reagan model of deregulation and it has failed.
    The increase in food production is due mainly through the development of petroleum based fertiliser — the cost in soil and waterways degregation yet to be fully understood and restoration to be funded by the taxpayer.

  • Peter Leavitt

    New Zealand is doing fine economically. Its unemployment rate, normally about 3.5 %, is presently due to the world recession at 6%, well below that of the OECD and U.S. average. Sensibly, New Zealand doesn’t subsidize farmers; its economy benefits from this. Farmers who are dependent on government largesse weaken both themselves and the overall economy.

    John C, what is your source for your remark that “half the population of New Zealand is living in Australia?

    I have traveled extensively in New Zealand and regard it as a first-class nation. The people are hard-working and sensible; the government is slowly but surely recovering from the illusions of intrusive government. It is a great country for capital investment, mainly due to a fairly strict rule of law and the genral honesty of its businessmen.

  • Peter Leavitt

    New Zealand is doing fine economically. Its unemployment rate, normally about 3.5 %, is presently due to the world recession at 6%, well below that of the OECD and U.S. average. Sensibly, New Zealand doesn’t subsidize farmers; its economy benefits from this. Farmers who are dependent on government largesse weaken both themselves and the overall economy.

    John C, what is your source for your remark that “half the population of New Zealand is living in Australia?

    I have traveled extensively in New Zealand and regard it as a first-class nation. The people are hard-working and sensible; the government is slowly but surely recovering from the illusions of intrusive government. It is a great country for capital investment, mainly due to a fairly strict rule of law and the genral honesty of its businessmen.


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