A recent conversation with a friend highlighted the fact that even among conservatives there is a pervasive belief that “unfettered” markets require some level of “control” by the government. The poster child for this viewpoint is Rockefeller’s Standard Oil which at its peak achieved 90% market share. The formation of such a “monopoly” (it wasn’t, a monopoly would be 100% market share – something only a government can achieve in the many areas it deems worthy of nationalization) is sufficient proof in their minds of both ill deeds and ill intent. Unfortunately the facts do not support a narrative of ill will. In 1865 when Rockefeller was just starting and had virtually no market share kerosene cost 58¢/gallon. By 1870 Standard Oil’s (SO) share was a mere 4% and yet they had driven the price down to 26¢. Only 10 years later SO’s market share had shot up to 90% and did prices skyrocket as well under this “monopoly”? No, prices declined to 9¢. And by 1890 still at 90% market share prices fell even further to 7¢. So who exactly was harmed here? Certainly not the consumers of kerosene.
One could argue that the competitors were “harmed” but so what? SO achieved its market position by becoming more efficient so that it could profitably charge lower prices. It did not engage in violence or the threat of violence to achieve its goals, as the state/government is wont to do. Mere “harm” cannot be the nebulous standard by which we invoke the necessity of state intervention. If five people apply for a job then the four that did not get the job are arguably harmed, so, should the state step in and penalize the person who got the job by making him or her share it with the others? When two sports teams play each other is not the losing team “harmed”? Upset fans, potential decreased ticket sales, lower potential ad revenue – all these things constitute types of harm, yet no one is (yet) screaming for the state to step in. Most likely because all recognize the solution would be absurd – they would simply mandate all games end in a tie or that wins and losses must be equalized. We certainly can’t have an unequal “win” distribution, how unfair.
One type of specific harm that anti-trust proponents say must be banned is the practice of “predatory pricing”. This is the practice of a competitor temporarily lowering their price and losing money in order to drive out competitors that can’t afford to lose money as long (the economic equivalent of a game of “chicken”). Problem is, this has never actually happened. Sure there might be temporary “price wars” between competing retailers that go on for a few days, but neither side gets ahead and at the end of the day no company has ever actually been driven out of business this way. The reason for this is the following: either you have to buy up the whole world (impossible) or the act of driving competitors into bankruptcy creates replacements that can more readily compete on price. For example, if a competitor went into bankruptcy then someone else would buy up their assets at pennies on the dollar and reopen the business with a much lower operating overhead. Now they are in a much better position to compete with you. Not a useful outcome.
But lets say for the sake of argument somehow it all worked and you could drive out competitors this way. Where is the natural rights violation? What is essentially happening here is large competitor A is using their deep financial resources (savings) to compete with small competitor B in a way that B is incapable of because of their smaller size. Is this unfair? Well before you answer that consider that this goes on all day long in the business world. Larger companies can spend a lot more of their financial resources (savings) on: more sales personnel, larger R&D budget, improving efficiency through automation and so on. That is deemed perfectly fair, however using those exact same resources to facilitate deep pricing discount is not. Simply put, there is no reason to arbitrarily single out such a practice and threaten to throw people in cages if they engage in it. It is no more of an excuse for state intervention in the market than is a dislike of the font in a company’s logo.
As long as no aggression (fraud, violence, or the threat of violence) is occurring then any and all actions or businesses or products should be permitted. No one should live in fear that men with guns will throw them in cages because of someone’s subjective opinion of what constitutes fairness or harm. Opinions are fine, but opinions backed up by a threat of violence violate everyone’s natural right to liberty and the pursuit of happiness.