The Modern-Day Mercantile System

Antitrust or “competition law” complaints against large companies populate headlines virtually every week. The story is always the same: X company, through some anti-competitive practice, has amassed so much market power that it has become a threat to overarching goals of consumer protection.

Last week, U.S. Senator Al Franken urged the government to institute effective safeguards against the potential threats to our privacy posed by Facebook and Google. Meanwhile, Google came under fire from another angle when Expedia filed an antitrust complaint against the California firm, which according to some data “has almost 95 percent of the [web-search] traffic in Europe.”

We live in an age of undeniably powerful corporate actors, many of them engaged in internet- or tech-based businesses that continuously touch our daily lives. Politicians, bureaucrats, pundits and experts occupy themselves with the questions of where these companies derive their power and how we might rein them in.

What we’re witnessing now is the contemporary equivalent of mercantilism, the system that Encyclopedia Britannica calls “the economic counterpart of political absolutism,” designed to increase state power through government intervention in the economy. Mercantilism obtained among the European powers during period between roughly the sixteenth and eighteenth centuries.

Characterized by charters from the crown that gave legal monopolies to favored companies, mercantilism promised strong returns to the elites who invested in these privileged enterprises. This was a time before the powerful needed even to pay so much as lip service to fairness and competition.

Corporate capitalism, though quite distinct from mercantilism in form, is not so very different in principle. Both entail huge levels of determinative intervention on behalf of the rich and powerful. Rather than granting exclusive monopolies over trade routes or geographic areas, the modern state assembles an intricate legal framework whose practical effect is to create monopoly or oligopoly.

Today’s mainstream economists and antitrust lawyers argue that we must also account for non-legal — i.e., non-coercive — barriers to entry, persuaded that even in a true free market harmful monopolies could arise, thus creating “imperfect competition.” Market anarchists, in contrast, hold that these arguments vastly oversell and overestimate the extent to which the supposedly non-legal barriers cited can in fact be attributed to the market itself — as against state-granted privilege.

High sunk costs and economies of scale, for instance, are often adduced as evidence of the potential for monopoly on even a genuine, open free market. But indeed high costs of entry and enormous economies of scale are overwhelmingly the consequences of state intervention.

A perusal of common barriers to entry quickly reveals government as their almost exclusive architect, the headspring of “intellectual property” rights, expensive certifications and licenses, and countless regulations that punish or rule out small business and self-employment. Economies of scale are similarly warped by the state, with the energy and transportation of giant corporations socialized to the taxpayer and untold other subsidies pouring in from governments.

Market anarchism is therefore based in large part on the understanding that free markets are the truest, most reliable enemy of monopolies. Just as the absolute monarchies of the past protected their favorites — the chartered companies of the colonial era — so too does the modern state bridle markets for multinational corporations. The state exists to serve capital.

The power of global corporations does not emanate from voluntary exchange and individual rights. The most effective form of antitrust law is the law of human freedom, withdrawing the restriction that make “trusts” (i.e., collusion) possible.

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