July 1st, 2024 | Allan Ray

Libertarianism Leads To The Same Place As Socialism

They both lead to the consolidation of power.

Libertarianism, with its emphasis on individual liberty and minimal government intervention, often presents itself as a champion of free markets and a bulwark against authoritarianism. However, a closer examination reveals a potential paradox: the unfettered pursuit of liberty, particularly in the economic sphere, can paradoxically lead to the consolidation of power in the hands of a few.

I never thought much about libertarians until I read a piece right here at PostCanadian that in passing, in an unrelated argument, suggested that libertarianism and socialism both lead to one place. When I thought about it, I began to realize that I agreed with the author.

The core of this argument lies in the inherent nature of competition. While free markets promote innovation and efficiency, they also inherently contain the seeds of their own destruction. The drive for profit, a cornerstone of capitalism, often leads corporations to seek dominance and to eliminate their competition.

As businesses grow, they often achieve economies of scale, meaning their cost per unit decreases as production increases. This allows them to undercut smaller competitors and ultimately drive them out of the market. Network effects further exacerbate this dynamic. Platforms like social media or online marketplaces derive value from the number of users they attract. The more users they have, the more valuable they become, making it increasingly difficult for new entrants to compete.

In an absolutely free market, nothing prohibits the growth and expansion of monopolies.

Libertarians argue that the free market punishes these practices and that “true capitalism” in its most basic and unfettered form would prevent monopolies. They often point to current laws that protect monopolies, which is fair, but even outside these laws and in places where these laws are more lax or do not exist, strong monopolies continue to emerge and corner their markets.

Libertarians champion the "invisible hand" of the market, assuming that competition will naturally regulate itself. However, this assumption ignores the reality of predatory pricing. Large companies can utilize their vast resources to undercut smaller competitors, selling products below cost to force them out of business.

In an unregulated free market, small potential competitors are easily swallowed up because they do not have the capital and wealth to break into certain markets.

While libertarians often advocate for minimal government intervention, the reality is that even in the absence of explicit regulations, powerful corporations can exert significant influence over government policy. This phenomenon, known as regulatory capture, occurs when industries use their resources to shape regulations in their favour, often at the expense of consumers and smaller businesses.

The result of these dynamics is a concentration of economic power in the hands of a few. Monopolies, characterized by a single entity controlling a significant portion of a market, emerge. These monopolies can then dictate prices, stifle innovation, and limit consumer choice. The "free market" becomes a facade, masking an oligopoly where a handful of powerful entities control the flow of goods and services.

This economic consolidation has profound societal implications, extending beyond mere market distortions.

Monopolization translates into political influence. Corporations can leverage their wealth to lobby for favourable legislation, influence public opinion through advertising, and even fund political campaigns. This creates a system where the interests of the wealthy and powerful are disproportionately represented, leading to a widening gap between the rich and the poor.

To regulate all of these aspects would not be “libertarian”.

The libertarian ideal of free market capitalism is, ironically, undermined by the rise of monopolies. While individuals may have the freedom to choose from a variety of products in a truly competitive market, monopolies can severely limit consumer choice. They can also dictate terms of service and employment, effectively undermining the individual's ability to exercise their freedom of choice.

Monopolies can expand their control over the supply chain by acquiring upstream or downstream firms, thereby eliminating potential competitors and further consolidating their power. For instance, Amazon's acquisition of Whole Foods enabled the company to gain control over a significant portion of the grocery market, further solidifying its dominance in the e-commerce sector.

Monopolies can also extend beyond the economic sphere. Corporations can use their influence to shape public discourse, control access to information, and even influence cultural norms and values. This can lead to a homogenization of society, where a narrow range of ideas and perspectives dominate, stifling diversity and dissent.

At the moment, woke culture is heavily perpetuated by corporations.

Although libertarianism champions individual liberty and free markets, it fails to account for the inherent dynamics of competition that can lead to the very opposite outcome: the concentration of power in the hands of a few. The pursuit of unfettered economic freedom can paradoxically result in monopolies, authoritarianism, and a decline in individual liberty. This paradox underscores the need for a more nuanced approach to economic policy, one that balances individual freedom with the need for regulations that ensure fair competition and prevent the unchecked consolidation of power.

Like socialism, libertarianism's road does indeed arrive at the same destination.