Topic: Regulation
Free Markets and Business-On-Business Violence This article examines the argument against minarchism or anarchism that says that business-on-business violence will be commonplace, in the absence of a strong, energetic government.by Steven McDuffie
(libertarian)
Tuesday, April 28, 2009
Note: This article is one-half of an email debate I had with a friend of mine from an Eastern European country. What follows is a stand-alone article. It is not necessary to read my friend's email to grasp the meaning of this article.
Free Markets and Business-on-Business Violence I am not sure what you mean by "magically free", and then later when you mentioned "markets just magically sorting themselves out". I don't know anyone who thinks like this. Markets have built-in mechanisms whereby sifting occurs. No economist that I have read or met thinks that there is anything magic about the free market.
Regarding the business-to-business violence that you witnessed and/or are directly or indirectly aware of: there is (or was) some kind of government apparatus in play in those countries. Business-to-business violence happens or has happened under an interventionist government paradigm (actually, that's redundant, since government is, by nature, interventionist). Even if the government was weak, it still existed. It's not unlikely that any company engaged in violently suppressing competition would have the guns of a corrupt government assisting or protecting them in some way. Even if the government wasn't directly assisting these violent companies, the victims might not be anxious to take revenge because of whatever government apparatus exists. I have been to many, many 3rd world countries, and though they had bumbling and/or corrupt governments, they still arrested, tried, convicted and jailed people. It might very well be the case that the violent company was less frightened of the government than the victim company.
I am also going to presume that in the Ukraine and in Poland there are either strict gun laws, or that there is an outright ban on gun ownership. If that is the case, then it is precisely the violent companies that will have the guns, because people intending to do violence in the first place will not hesitate to also violate gun laws. And it will be the case that, by and large, the victims will be disarmed. They will have few options for retribution, outside of breaking the law themselves or calling on whatever government apparatus exists. If this government is corrupt, it might take a payoff from the perpetrators of the crime. If it is weak and inept, it might take years to solve the crime, or they might never solve it, either closing the book on the case or arresting the wrong person.
All of this (strict gun laws and/or outright bans and corrupt and/or inept government) conspires to give people and/or companies willing to do violence carte blanche.
Now, take government out of the picture. This is the hard part, but there are a few salient points that make business-on-business violence less likely. No one claims it's not going to happen, but it happens now under government, so we wouldn't really be worse off.
Doing violence against competitors consumes resources that could be otherwise channeled towards production. Internecine conflict is expensive and
Doing violence against competitors who are very likely armed is dangerous. Violently suppressing competition puts the perpetrator of violence in the very precarious position of having retaliatory force being visited upon him. But if the perpetrator of violence is willing to take that risk he should probably realize that
Engaging in an all out war with a business rival is not only personally dangerous, but it makes no sense, economically. It wastes resources, and destroys the reputation of the firm in the eyes of the consumer. The winner of a war between companies in a laissez-faire society would ultimately lose in two ways: first, while he and his rival are warring (and wasting valuable resources) other companies will quickly form, rush in and sop up the customers who have been neglected, and second it will be impossible to keep such a war hidden from the public, and in general, people tend to not do business with violent people.
Anytime there is a need in the market, there is someone with a profit seeking motivation who will fill that need. If I own a company, and there has been violence done to me in the past by competitors, or I suspect it might happen, there will be a firm willing to accept payment in exchange for security services.
Both Murray N. Rothbard in For A New Liberty, and Morris and Linda Tannehill in The Market For Liberty address these issues far better than I can. I strongly urge you to read them. The free pdf versions of these two books are here and here, and the free audiobook versions are here and here.
You said "The fact that in the developed world business-related violence is not as common is mostly a function of government regulation, which tends to even out the playing field (even as it distorts it in other places)." Keeping in mind that you are a bright guy and very likely far more intelligent than me, I feel compelled to remind you that correlation isn't causation. I had a cup of coffee this morning and the sun rose. There were no nuclear weapons until women got the right to vote.
It is just as likely that business-related violence isn't common in the developed world because businesses have learned that mutual cooperation and voluntary exchange is beneficial and that engaging in violence against competitors makes no economic sense, or alternately, in a darwinian sense, those companies that would do business at the point of a gun are constantly and consistently weeded out except the government, which can only do business at the point of a gun.
So, what's the optimal level of regulation? I say 100% regulation of all markets everywhere... regulation by the consumer, that is! As Mises said, "consumer is king". The consumers determine which businesses fail, and which flourish. While I am not a proponent of, or believer in, political democracy, I am a tireless advocate of economic democracy. Billions of times a day, worldwide, billions of people vote, with their dollars, for the businesses that they like and of which they approve.
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The views expressed in this
article are those of Steven McDuffie only and do not represent
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The anarchy question that always gets me [you might give this a look Force and Scarcity ]is whether force can be used to "enforce" peace or is that an inherent contradiction? Unless we believe that ultimate peace will occur, force is needed to protect against what we judge as "unjust" force or aggression.
Still, even to consider that force CAN be used to enforce peace, we have to believe that history will change, as all force has been abused throughout history [eg. the same people who used force to free us from England, used the same force to commit genocide on the Natives] , and certainly now is an example.
I am not saying that there may be less "force" with anarchy, the bar is very high with government. But the force would be in different areas, probably.
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