The Big Corporations Excuse

Tibor R. Machan

Anytime I mention to someone from the Left that I consider the scope of government way beyond justice and prudence, I am likely to be told that it is big corporations that make this necessary. And, furthermore, I couldn’t really favor liberty for all if I don’t see corporations as a threat and in desperate need of being reigned in.

So far as I understand it, corporations are just large groups of people who have hired some experts in management aiming to achieve some goal they couldn’t achieve on their own, like grow the company, make it seriously prosper. So long as they do this peacefully, without using coercion to get ahead, I see nothing wrong happening. Size is no problem. This is evident in how we deal with people--some are tiny, some medium sized, some huge but they can all get along fine if no one resorts of violence. And if some big fellow comes off intimidating, a few smaller ones can surely contain him--or her, for that matter.

What then is the big problem with corporations? As far as my Leftist pals would have it, they can wield economic power. But what’s that? They can buy stuff, expand their commercial reach, and flourish, yes, but not without first pleasing their customers. And that means they can only get ahead if they serve others in helping them do the same.

Yet there is one area where corporations can be a threat to liberty, justice, and other fine things. This is where they get into bed with governments. Only if governments are strictly limited in their scope of authority, in what sorts of things they are legally authorized to do, can this be avoided. If governments may yield to public pressure to undertake various tasks like giving subsidies, bailing out failing companies, restrict foreign trade, and so forth, this will invite business corporations to seek or lobby for their help. And there is only so much help governments can give, so those who will get it will have an unfair advantage and will also be able to wield influence and political power.

This is where the trouble with corporations arises, although various other associations can gain similar favors from government, such as unions or large professional groups. What is the answer?

There are those who say nothing can help but giving government the countervailing power which will keep corporations in check. I have never found that a convincing solution. After all, usually the problem is government and corporations (or some other group) getting into bed together and running roughshod over others. (This is that famous process euphemistically called wealth redistribution and commonly advocated, naively, as a means by which the unfortunate will be helped but which in fact involves a lot of what economists call rent-seeking, taking from Peter and providing for Paul.)

If one is an economic determinist, one may think that nothing can be done to prevent the corporate state from engaging in predation. But what if education and some prodding can in fact help? What if people could learn, in time, that governments need to be limited to the exercise of certain specific, limited powers--as the American Founders put it, to “securing [our] rights”? What if we could advance along such lines just as we have made progress in the fight against slavery, racism, sexism, and other evils?

The approach taken by libertarians, over all, is to have confidence in the power of reason, in the capacity of human beings to learn to be just. Takes time, yes, but is it hopeless? If it is, then so would be entrusting the taming of the giant corporations--the title of an early book on this topic by Ralph Nader--to governments. Public choice theory has pretty much demonstrated that it is futile to count on government to behave in the saintly way it would have to if this approach held out promise.

The famous statement of Lord Acton, that “Power tends to corrupt; absolute power corrupts absolutely,” is right and undercuts the hope that the way to contain corporations is by giving governments greater powers. Why those on the Left don’t appreciate this baffles me.