Wednesday, November 25, 2009

The Visible Hand

As anyone sensible knows, governments are terrible for markets, being more concerned with their own power than the economy. Democracies will tend towards socialism in order to appease the masses while authoritarian governments will tend towards excessive military buildup. What is excessive? While I am no pacifist, all states have excessive military expenditures, particularly the small and insignificant dictatorships of South America, Africa, and Asia. Truth be told, there has not been a dictatorship worth considering since the Soviet Union fell. I must concede that is one thing the Communists did well: being significant.

So yes, governments are terrible for markets, constantly manipulating them and printing money and ruining everything. Democracies, despite their socialist tendencies, tend to be the least damaging though, since the freedom they claim to offer does tend to reflect itself in freer markets and therefore greater prosperity. Just look at America: free and rich as hell.

Unfortunately a new form of government is emerging. Few call it a form of government. And yet, it wields as much power as a government.

It is the corporation.

Their massive size and wealth allow them to manipulate not just markets, but societies and countries. They have the power of a government. And they act somewhat similar as well.

In the small phase they are unstable and tend to go under the radar. They fill niche markets and are little more than potential. In the middle phase they grow and become significant, but not so much that they can entirely ignore social pressure. In this way they act as republics: semi-responsive to the desires of the people. Finally they reach the end phase in which they are so big and so powerful that they can ignore everything other than direct and immediate profit.

In this final phase they amass unimaginable profits, but since they have reached the power of governments, they are just as meddlesome and harmful to markets. They create monopolies which are not necessitated by efficiency or technology. This creates the anti-market situation of consumers being unable to decide to agree or refuse a deal, but instead being compelled to accept or starve. In this final stage the corporation ceases to be a tool of the market, but instead seeks to use the market as its tool, with devastating consequences for all but the corporation.

In the final stage, corporations, the child of the free market, become as harmful as a socialist state because they are a socialist state. And who even realizes it?

The Corporate Union needs a Gorbachev to tear it apart so that markets can thrive once again.

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