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 noble cause.

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 brought about.

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.

under development more later...  If you like what you read and would appreciate more please help support our efforts. PATENTS: Are current Western concepts of intellectual property missing the boat?  Could our Patent System be accused of being a sophisticated blackmail system?  Let's take a look at the Renaissance and industrial revolutions and see what lessons we can learn ... Coming Soon:  Intellectual Property & Patents