Must Corporations Be In Bed With Government?

Tibor R. Machan

For Karl Marx one reason laissez-faire capitalism would not last is that he believed big corporations would always subvert governments. The idea in support of such an economic system is that government can and must stay out of economic affairs. Economics, for champions of the fully free market, should be like religion, completely separate from government. Only that way would there be a level playing field in the economy, at least as level as that is realistically possible. (Clearly some people are born more talented, of parents with more resources than others, with physical advantages others don't have--so the idea of a completely level playing field is ridiculous.)

But critics of capitalism maintain that this level playing field is impossible to obtain when big corporations can appeal for support from governments. After all, even the most fair minded politician in a democracy requires support so as to get elected to office. And big corporations are in a better position to supply such support that small shops, universities, or other special interest groups. Which means big corporations will always be able to gain unfair advantages from governments. And so there really is no hope for a system of pure laissez faire capitalism, a fully free market such as advocated by libertarians. Business will always have the government on its side with all the powers it can offer to help out.

And this does sound like a good point. It is made these days by the likes of Ralph Nader, Michael Moore and others who claim that capitalism is inherently corrupt. Except for the fact that such a system is not actually a free market capitalist one, they are right. Once the government is legally allowed to accept favors from the citizenry, it is no big wonder that the richest of those citizens, mostly corporations, will be favored by governments. The task for those who support the idea of a genuine--bona fide free market, laissez faire--capitalist system is to establish legal bans against government and business coziness. Again, this is in principle akin to the ban on cozy church and state relations

Is this some kind of pie in the sky aspiration, to have a system in which it is illegitimate for business and government to get into bed together? Well, it would appear to be difficult, of course, since corporations do have the resources to seek out government favors--although so do some other institutions, such as unions and universities. But just because they can, it doesn't follow that they have to and will. Quite possibly laws and public policy can be established that make the ties between business and government illegal. What this requires is vigorous education, plain and simple, just as do all the provisions that make a political system less and less corrupt. Corruption is always a temptation and there is never any guarantee against it. All that is available to guard against corruption is citizenship vigilance and intelligence.

But many difficult objectives have been achieved throughout human history, so why not this? Slavery, which is so tempting for some, got abolished. The military draft is gone, at least in America. There is a first amendment in the USA that prohibits government censorship and any religious influence in government. Such improvements, and many others that rendered legal systems more and more just, could be accomplished and have been, despite enormous resistance. So why not the separation between business and government?

There is much to be said for such separation, even for big corporations--leaving them all to compete in a genuine free market without special help from government would seem to be something desirable all around. Yes, some will try to defeat that kind of system, thinking they can gain advantages not available to others. But over the long haul this is a myth. Corruption tends to undermine the whole system and produce harm to all those who are part of it, at least intermittently. So the case for cleaning up the system, for vigilant opposition to favoritism even when big powerful moneyed interest are vying for it, is a good one.

So while it is undoubtedly true that freedom is always susceptible to being undermined, in the last analysis there really isn't any better alternative. Such modern thinkers as John Maynard Keynes have tried to deny this--check out Kaynes' little 1926 book, The End of Laissez Faire--but they could present no alternative, nothing but the myth of the educated ruling elite. Yet throughout history this alternative has proven to be even more vulnerable to corruption than capitalism has ever been.