Libertarian Thinking ! Anti-trust

Anti-trust legislation has recently been put on the forefront by the Microsoft trials. But one may not claim that such situations are anti-consumer, since they come about by consumer choice. Claiming to know better than consumers is against the notion of freedom of choice.

Some people also believe that “monopolies” can exist in a free market, and that they are harmful and anti-competitive, and therefore support anti-trust legislation. However, such propositions are flawed for obvious logical reasons. The free market is not a state, but a process – more precisely, the process by which consumers and producers exchange value by the means of free trade. The Keynesian fallacy of “perfect competitive state” or “perfect equilibrum” (which is by definition a contradiction, if only because free markets are in dynamic equilibrum, and not in any fixed state), while convenient for certain mathematical purposes, is inadequate in explaining competition.

There is, therefore, no such thing as an anti-competitive state or company in a free market, since by definition the free market is a free process. The fact that some companies do better than others is due to their fitness in the market that they inhabit (for example, AOL dominates its niche – international ISPs – so well despite its terrible faults due to ease of use, large server base, and marketing). Today’s markets are not totally free, however, and government regulations can cause companies to take advantage of the situation (like anti-trust laws). However this should hardly be blamed on them.

But even if they are not anti-competitive, are they harmful ? It is true that optimal monopoly prices are by necessity higher than prices in a Keynesian perfect equilibrum. However, this is due to the absence of rival companies that can lower prices and take profit from the disparity.

Because of this, the only possible monopolies are either those where barriers to entry are higher than the hypothetical profit just mentioned, or those where the government imposes artificial barriers to entry (by law or regulations). US Postal Service is a monopoly : a company like Microsoft, performing in a competitive environment, cannot be a monopoly.

In a libertarian system, only corporations which break the rights of other companies or individuals must be condemned. Corporations, and indeed any group, do not, and should not, have any more or less rights than a single individual.