Column on Corporations and Government

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 Keynes’ 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.

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