How can Capitalism become corrupt?


Don’t corporations become more corrupt and greedy, with power to oppress the common man, the larger they become? Not in a free market. In a free market the collective power of the people decide the fate of companies. “Thousands of enterprises have failed because people voted with their dollars they no longer serve the people and ought to fail. Free market capitalism will punish a corporation that does not satisfy customers or fails to use resources efficiently. Businesses, big and small, that wish to prosper are held accountable by the people who vote with their dollars” (Walter Williams for Prager University, “Is Capitalism Moral?)

Crony Capitalism only exists because government has become big enough to be a worthwhile crony. Small government as envisioned by the Constitution has only limited powers and is of little use to business. Big government is the cause for the type of corruption in the market place known as crony socialism or capitalism.

Businessmen would rather not have to deal with government but they have no choice. Big businessmen (like Trump) make deals with big government out of self interest.The creators of big government are not the businessmen, they are leftist intellectuals, Democrats, and the uneducated voters who empower them.

I do not infer that absolutely no corruption of any kind would exist in the absence of big government, for human nature is always present. I do infer that there is a symbiotic relationship between Power and Corruption. Just as Liberty and Religion nourish each other, so also does Big Business and Big Government nourish each other.

If we go back in time to a better age: 50 years after the Constitution, Tocqueville observed in America that unlike in Europe, the government is innocuous and dispersed. “Written laws exist … but the hand that directs the social machine is invisible … The administrative power presents nothing either centralized or hierarchical in its constitution, this accounts for its passing unperceived. The power exists, but its representative is nowhere to be seen” (Democracy in America Vol. 1 p. 70-71)

There was no “crony socialism/capitalism” then of the type we see today. Government enforced agreed upon rules for society and then stepped back. Things changed when government expanded beyond its Constitutional boundaries (say, around the time of the New Deal)

(Walter Williams on Prager University provides the following insights)

“Economists such as Paul Krugman, Robert Reich, and socialist Bernie Sanders claim it takes bureaucrats running a strong central government to control the corruption of the private sector. They define “control” not only as enforcing legitimate laws of business, but also as confiscating corporate earnings, denying business the opportunity to reinvest those earnings and imposing their personal views of “social justice”.  The fundamental problem with people like Krugman, Sanders, and bureaucrats is that they are not economically but politically driven.

These same people advocate for a powerful, influential government.  As they pick winners and losers in the market.  They usurp from the people the power to reward and punish; there is no “too big to fail” concept in the free market. The government interferes by granting bailouts, subsidies, exemptions from onerous regulations, etc. to privileged corporations.  Chrysler, GM, Solyndra, and General Electric are recent examples.

Privileged corporations return the favor by supporting privileged bureaucrats in a cycle of mutual corruption.  Resources are misplaced and wealth is squandered, reflective of the failed socialist economies of the past. Efficient corporations refusing to play the game suffer and take their business overseas. Unemployment increases. Prosperity declines.

A free market system can only work efficiently if there is limited government. A small government lacks the power to grant privileges that lead to corruption.  Limited government means the people decide which businesses deserve to survive. “That’s the America that our Founding Fathers envisioned — a limited government that has only a few specifically mentioned — or enumerated — powers that are listed in Article I, Section 8 of the United States Constitution. It’s this brilliant, limited-government notion that produced the wealthiest nation in history. In a free market, the ambition and the voluntary effort of citizens, not the government, drives the economy. That is: people, to the best of their ability, shaping their own destiny” 

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