MONOPOLY VERSUS FREEDOM OF COMPETITION

The Meaning of Freedom and of Freedom of Competition

If there is anything for which capitalism is more strongly denounced than its competition, it is its alleged lack of competition and tendencies toward monopoly. These denunciations stem in large part from a failure properly to understand the meaning of freedom of competition and of monopoly. The terms are usually understood in the light of the anarchic rather than of the rational concept of freedom. According to the rational concept of freedom, of course, freedom means the absence of the initiation of physical force—in particular, on the part of the government. Viewed in a positive light, freedom is the freedom to do whatever one is otherwise capable of doing, unconstrained by the initiation of physical force. 

Applied to the realm of competition, if a man possesses only a few thousand dollars of capital or no capital at all, freedom of competition for him does not mean the ability to enter into competition with General Motors. It does mean the ability to do whatever he is capable of doing with the few thousand dollars of capital he has (or with his abilities unaided by any capital)—without being stopped by the government. It means, for example, that if he can afford to buy a taxicab or a liquor store and judges that that is what is best for him to do, he will not be stopped from doing it by licensing laws. It means that if he is capable of working at a job and can find an employer willing to hire him, he will not be stopped from working by minimum-wage laws or by laws giving coercive powers to labor unions—in both of which cases a part of the supply of labor is forced into unemployment by wages rates being forcibly raised above the market level. And if a man (or a company) does have the capital required to compete with General Motors, and wishes to compete, freedom of competition means for him that he will not be stopped by a tariff or by antitrust laws preventing mergers and the growth of big business.

It means, for example, that Toyota and Nissan will not be stopped and that if U.S. Steel, Exxon, Boeing, or IBM want to enter the automobile business, they will not be stopped. Freedom of competition does not mean that one is automatically able to compete—that one automatically has the necessary knowledge, capital, or whatever else may be required to compete. It means only that insofar as one does have the means of competing, one will not be stopped from exercising those means by the initiation of physical force. The fact that freedom of competition does not guarantee that one will be able to compete—the fact that freedom in general does not guarantee that one will be able to do whatever it is one would like to do, because freedom does not by itself supply the necessary means— does not reduce freedom to the status of a trivial luxury capable of being enjoyed only by the wealthy, as the Marxists claim.

Freedom, including the freedom of competition, is a vital necessity for everyone. It means, in essence, the freedom of opportunity—the freedom to exploit the opportunities one already has, and so later on be capable of enjoying greater opportunities. It means, for example, that an impoverished black youth is able to take a low-paying job, if that is the best he can find, and then with the experience and skill he gains from that job go on to something better.It means that he is able to keep the income he earns from that job and, if he wishes, save it to buy a taxicab or any other kind of business he can afford and so further increase his ability to earn money. Freedom, thus understood—as the freedom of opportunity—is vital to everyone.

Not only does everyone need freedom for himself, but he also needs freedom for others because he enormously benefits from their freedom. Everyone in the world is vastly more prosperous because Thomas Edison and Henry Ford and all the other great inventors and industrialists had the freedom to implement their ideas and bring their products to the market. The general gains from the freedom of lesser men are no less real. For example, there is a gain to everyone who uses such services as those of barbers and tailors if those best able to provide such services are free to provide them. The freedom of all is a condition in which every industry can be carried on by those best suited in the world to conduct it. It is a condition in which each can be supplied by the best choice of suppliers. This, indeed, is the meaning of the freedom of competition: that every industry and occupation should be legally open to everyone who judges that he is equipped to succeed in it and who wishes to try and that then the buyers should be free to choose among them.

Reference :
Reisman, George. 1990. CAPITALISM A Treatise on Economics.  California: TJS Books.