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What Power?

In my latest column in the Pittsburgh Tribune-Review, I ponder the belief held by many people that corporations in market economies wield dangerous powers – powers that harm ordinary men, women, and children unless and until government acts as The People’s protector.  It’s a belief as mysterious as it is mistaken.  A slice:

A corporation operating in the market can only make offers to consumers and to suppliers. Consumers and suppliers — including suppliers of labor (workers) — are free to accept or to reject these offers. With no coercion involved, consumers and suppliers accept only those offers that they estimate will make them better off. Corporations that consistently have too few of their offers accepted must make their offers more attractive. If they fail to do so, they go bankrupt.

Also, corporations have no power to prevent other corporations and entrepreneurs from competing with them. And as the history of market economies makes clear, such competition is unending and intense. The only “power” a corporation can exercise to enhance or to maintain its market share is to continually produce better mousetraps and offer them to consumers on terms that consumers judge to be better than those of other companies.

Consumers’ and suppliers’ abilities to reject corporations’ offers, along with the incessant struggle of corporations and entrepreneurs to take business away from each other by making better offers to consumers and suppliers, regulates the market. This regulation is far more reliable, objective and fast-acting than are the government edicts and bureaucratic supervision that are today called “regulation.”