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Free Minds & Free Markets

Corporations Are Not As Powerful As You Think

Free markets work.

Concern over the power of large corporations is back in vogue. From Sen. Elizabeth Warren (D–Mass.) on the left to Fox News' Tucker Carlson on the right, politicians and opinion makers worry about the influence of U.S. corporate giants on politics as well as on the private lives of ordinary Americans. People are concerned about Facebook's censorship of content, Twitter's banning of controversial users, and Google's possession of staggering amounts of information about users' search histories, shopping habits, etc.

As a libertarian, I say, pish-tosh! If you don't like a particular company, find an alternative provider or live without a particular service altogether. Alas, most people are not libertarians or as closely wedded to the sanctity of the contract as the latter tend to be.

The good news is that corporations are not as powerful as most people think. Before I get to that, a little background is in order. Until the 19th century, most economic output came from family farms in rural areas and artisan families in towns. As such, the only serious concentration of wealth and power was in the hands of the landed aristocracy and a few wealthy bankers. The latter came from small Italian city-states or were Jewish. As such, they had little political muscle and their wealth was subjected to periodic expropriations.

As with so many other things, the Industrial Revolution upended the old order. The rise of the factory and large-scale manufacturing put massive amounts of money in the hands of a new breed of men—the Industrialists. By the end of the 19th century, Western Europe and North America could boast a coterie of self-made millionaires, including Cornelius Vanderbilt, John Jacob Astor, Edward L. Doheny, John D. Rockefeller, Andrew Carnegie and J. P. Morgan. The ruling classes were caught by surprise, and it is telling that a disproportionate number of early socialists were aristocrats.

Although they comprised a mere 1.7 percent of the population of the Russian Empire, 22 percent of Bolsheviks belonged to the landed gentry. And Russia was not an outlier. The French Emperor Napoleon III once worried about the Empire's prospects, quipping, "The Empress is a legitimist; Morny is an Orleanist; Prince Napoleon is a republican; I am a socialist...; only Persigny is an Imperialist—and he is mad!"

As George Watson argued in his The Lost Literature of Socialism, "Socialism above all meant a horror of the new age: the age of machines and high finance. It was more than conservative. It was reactionary and nostalgic, and in the long march from status to contract it demanded a return to the familiar and time honored world of status."

It was not just the wealth of the industrialists that the aristocrats envied and the loss of the nobility's relative status that the latter bemoaned. At the end of the 19th century, no one knew just how large corporations could get. Many people simply assumed that corporations would continue to grow indefinitely. Concern about the drift of the corporate behemoth toward a monopoly gave rise to the Progressive Movement in the United States—a bipartisan phenomenon as witnessed by its two leading lights, Teddy Roosevelt, a Republican, and Woodrow Wilson, a Democrat.

Unfortunately, the Progressives have not found time to evaluate the logic of, and the empirical evidence for, their concern over corporate power in the last 100 years. And so it fell to Mark Perry of the American Enterprise Institute to do that for them. In a fascinating article, "Fortune 500 firms 1955 v. 2017: Only 60 remain, thanks to the creative destruction that fuels economic prosperity," Perry looked at the changes in the composition of the Fortune 500 firms between 1955 and 2017.

According to Perry, "only 60 companies… appear in both lists. In other words, fewer than 12 percent of the Fortune 500 companies included in 1955 were still on the list 62 years later in 2017, and 88 percent of the companies from 1955 have either gone bankrupt, merged with (or were acquired by) another firm, or they still exist but have fallen from the top Fortune 500 companies (ranked by total revenues). Many of the companies on the list in 1955 are unrecognizable, forgotten companies today (e.g., Armstrong Rubber, Cone Mills, Hines Lumber, Pacific Vegetable Oil, and Riegel Textile)."

Stated differently, in so far as corporations are interested in relentless expansion and acquisition of an ever-increasing market share, most have done a very bad job of it. Some are dead and some are much diminished. That's good news for the defenders of free market capitalism, for it confirms that Schumpetarian creative destruction continues to do its magic. That's also good news for progressives in both parties, for it means that they can sleep better.

Photo Credit: Stephen D. Melkisethian/flickr

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  • Fist of Etiquette||

    Unfortunately, the Progressives have not found time to evaluate the logic of and the empirical evidence for their concern over corporate power in the last 100 years.

    Corporations can't knock your door down and drag you out of your home, but the state sure can.

  • sarcasmic||

    People need jobs. People need stuff. So people must work for corporations and buy stuff from corporations. They have no choice. That means that corporations force people to work for them and force people to buy stuff from them. People have no choice. So we're all slaves to our corporate masters. Take their jobs and buy their stuff, or die. It's exactly like living in a company town. The whole world is a company town. There is no choice in the matter. It's all force. We're slaves. Duh.

  • Rhywun||

    88% of the SF I read begs to differ.

  • ||

    The real corporate crimes stem from their influence on the State. They provide kickbacks and the taxpayers pay double.

  • timbo||

    I pay double taxes and apple pays none?

  • ||

    Yep! Apple passes on their taxes in the form of higher prices. So you pay all the taxes and Apple pays none.

  • plusafdotcom||

    PH2.... ALL Companies pass ALL their taxes on to their customers!

    Or is that idea novel to you?
    To whom ELSE do they pass their costs to?

  • plusafdotcom||

    As I've tried to explain too many times... Apple, and every other corporation, takes advantage of every tax law (and loophole) available to them.

    And you should, too. To not do that is stupid and altruistic of you (which is its own sin, if you're a Reason supporter....)

    Next, if you're a stranger to Critical Thinking, here's how to practice it...

    Why do corporations pay little or no taxes?
    -- because the tax laws enable them to do that.

    Why do the tax laws enable that?
    -- because Congress passed those laws enabling that.

    Why does Congress pass such laws?
    -- whatever... bribery, favors to political contributors, lobbyists...

    Why don't we get rid of those Bad Congress Monkeys?
    -- well, while Congress' Approval Rating is (currently) about 1/3rd as high as Donald Trump's members of
    Congress get put BACK into office about 90-95% of the time!

    Why do these bad guys keep getting re-elected?!
    -- Beats the shit out of me... go ask the ELECTORATE which keeps voting for them!

    Why do they keep voting them back into office?
    -- YOU think of a list of why and get back to us...

    That's what getting close to Root Cause of The Problem means, so see if you can get closer to Root Cause by yourself....

  • ||

    Exactly this. Corporations only have power when enforced by the state.

  • BestUsedCarSales||

    I don't believe that is true. Corporations are just conglomerations of individuals working together. This means they are as able to sin as any group of people. The problem is that more often than not the government legitimizes it rather than allowing people to deal with these trespasses directly.

  • buddhastalin||

    How dare corporations try to influence the thing that lords over them. Abolish the state.

  • sarcasmic||

    Unfortunately, the Progressives have not found time to evaluate the logic of and the empirical evidence for their concern over corporate power in the last 100 years.

    Progressives don't have any use for logic or evidence. That's what rational people use to arrive at conclusions. Progressives emote. It feels true so it is true. And you can't reason someone out of a conclusion they arrived at by emotion.

  • Palin's Buttplug||

    Conservatives emote too. Knee-jerk flag-waving, Bible-thumpers are all gut no brain.

  • sarcasmic||

    THE RED HERRING DID IT! THE RED HERRING DID IT!

  • timbo||

    Sarc,
    How could it be that 88% of the companies form 195 are no more? What did they do with all of that money that they stole from hard working little guys?

  • Incomprehensible Bitching||

    Whereas progressives are pure pussy.

  • Mitsima||

    At least that's not a denial. Recognizing you have a problem is the first step to fixing it.

  • StackOfCoins||

    As a libertarian, I say, pish-tosh! If you don't like a particular company, find an alternative provider or live without a particular service altogether.


    Hey man, if you don't like the country, just like, leave, man.

  • Mitsima||

    Live without a particular service altogether? Wish I could, but, you know, IRS.

  • Brandybuck||

    But I need my Facebook!!!

  • Tony||

    What kind of idiot would conflate a genuine and timely concern about the concentration of wealth with a general disdain for market activity. An idiot who wants to distract from the former, I expect.

  • Incomprehensible Bitching||

    Probably someone who didn't read the article.

  • timbo||

    Incomp,
    My guess that idiot is the kind of idiot who does not understand the wonders of free market capitalism. The same kind of idiot who cannot understand how cheap, competitive, and of better quality goods and services have become for the whole world. I guess only an evil capitalist can put a smart phone in the hands of a poor third world citizen and allow them to borrow money from a for-profit organization 5,000 miles away to start a business. What a scumbag that capitalist is.

  • sarcasmic||

    Well, yeah. That capitalist is a total scumbag because he's not giving away free shit. If that capitalist really cared about the poor then he'd become a politician, and use his power to steal accumulated wealth then spread it around to those who deserve it.

    Creating wealth is evil because it is done on the backs of the poor. Poor people create the wealth with their labor, and rich people keep it. It's not fair.

    Government theft on the other hand, that's altruistic and pure because it makes everyone more equal. It is better to be equally poor than unequally rich.

  • Brandybuck||

    Concentration of wealth is bad, but the concentration of absolute power in D.C is supposed to be a good thing,

  • Curt2004||

    Ad hominem much?

  • timbo||

    Wasted question Curt,.

    Tony thinks Ad Hominem is an early ape like creature.

  • sarcasmic||

    Progressives feel that ad hominems are compelling arguments. After all, if you discredit a witness in court then their testimony doesn't matter. It's the same with economics, math, science, etc.

  • timbo||

    I want a concentration of wealth. I am willing to work really hard for it.
    Therefore, I think I should be able to keep it.

    I am an evil capitalist.

  • Tony||

    But you'd prefer to acquire it without working really hard for it. Life is short, after all.

  • timbo||

    I work smarter, not harder.

    I know that first part is foreign to you.

  • Incomprehensible Bitching||

    Capitalism and markets are irrational.

    The best way to gain wealth is herding cats into voting booths to beg for government cheese.

    Duh.

  • timbo||

    That's where we are heading. I think the brainwashers have long succeeded in undermining the rationality of markets.
    When the zombies have all been brainwashed that the successful are evil, then markets become less functional to a degree as the sheep vote in the regulators, protectionists, and corrupt scum. Take the last 4 presidents for example.

    The participants in the amercian market economy did vote for one president who said that we have to abandon free markets to save them and another who said that capitalist business owners did not build their businesses.

    These are abject morons that actually ran our country with a massive blank checkbook. Zombies deserve what they get.

  • Lester224||

    The best and easiest way to gain wealth is to inherit it. Like Trump and his kids did.

  • Sevo||

    Poor Lester! Your daddy was so mean to you!
    Quit whining and get a job.

    "One of the least broadcast realities about serving affluent investors – but one that studies have confirmed for years – is that for 90% of wealthy families, their fortunes are gone by the end of the third generation."
    http://www.thinkadvisor.com/20.....-in-3-gene

  • Brandybuck||

    If I didn't want to work for it, I would have become a progressive mooching politician instead.

  • Brandybuck||

    But... but... but... every Hollywood movie, like ever, has an evil corporation as the villian! I mean, Ernst Stavro Blofeld looks quaint in comparison, he's just the scion of hereditary aristocracy, but corporations are all run by power mad CEOs with absolute power!

  • Lester224||

    "find an alternative provider or live without a particular service altogether. "

    I wish this worked for ISPs and cable in all areas...

  • Sevo||

    Poor Lester.

  • gagster||

    There are areas where you can't live without ISPs or cable?

  • Myk||

    Meanwhile corporations buy political favors, force competition out of business or create monopolies in areas with their bought and paid for government fist. They can even use that fist to force you off your own land thanks to SCOTUS. Conveniently too many "libertarians" love to ignore that blatantly anti-libertarian corruption while crying about the poor little corporations and telling us we have the power to shop elsewhere if we wish when they know in many instances that is far from the truth.

  • Sevo||

    Too many lefty twits don't read enough here to understand that crony-capitalism is a big a villain as gov't over-reach. They'd prefer to push their ignorant assumptions and lies rather than read anything.
    But they are lefties, and therefore not real bright, as Myk here shows quite well.
    BTW, Myk: Fuck off.

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