Libertarian Societies and Cartelization: Preventing a Post-Dimensional Future
In the realm of contemporary political thought, right-libertarianism presents a fundamental challenge to democratic structures and free market principles. Advocates of this philosophy often argue for reduced or non-existent government intervention in the economy, favoring instead a system dominated by private entities and individual rights. However, the reality of such a society is far from ideal, especially concerning the potential for cartelization.
Right-Libertarianism and the Dream of Cartelization
Right-libertarianism, as a political and economic ideology, emphasizes individual liberty and the right to own and control property without interference from the state. In theory, this is intended to foster a competitive and equitable market environment. Unfortunately, the historical record and theoretical analysis suggest that it might lead to the opposite outcome. Right-libertarians aim to replace democratic frameworks with systems dependent on cartels and monopolies, prioritizing property rights over human rights.
They propose two main approaches: a “night watchman” state that enforces property rights but maintains minimal intervention, or a pseudo-governmental structure where private paramilitary forces operate. Both scenarios, however, could potentially recreate and entrench market imbalances, substituting one form of monopoly for another.
Barriers to a Free Market
The reality of market dynamics shows that cartels and monopolies can arise even in the absence of government restrictions. Market imbalances can be artificially created through various mechanisms: government subsidies, patents, legislation, and regulations. Additionally, resource scarcity, geographic limitations, and financial costs can also influence market dynamics, leading to unfair advantages for certain entities.
Geographic and Resource Scarcities
Consider the example of a candy bar manufacturer. To produce candy bars, one must first secure the necessary resources. For instance, chocolate is often sourced from distant continents, creating a geographic scarcity. This means initial investments such as acquiring a boat, a captain, and a navigator are required before any meaningful trades can occur. These financial costs create a barrier to entry for smaller players, potentially leading to the consolidation of resources and the formation of cartels.
Resource Allocation and Market Dominance
As the chocolate supplier and the boat owner collude to reduce prices, they gain a larger market share. This scenario reflects resource scarcity in the market—a situation where limited resources are allocated to create strategic advantages. The boat owner, with exclusive access to transportation, gains an edge and can manipulate market prices. This process can repeat itself, with the boat owner and cocoa grower merging to form a larger entity, further consolidating control over the market.
Vertical Scaling and Monopolistic Practices
The next phase of market manipulation, often referred to as “vertical scaling,” involves the consolidation of control over the entire production chain. The business in question might seek to control cocoa farms, shipping vessels, factories, and even the machinery used in production. Government regulations, such as patents, play a role in this consolidation by protecting intellectual property. For instance, patents ensure that once a company has a monopoly on a process or product, it can prevent others from using that knowledge.
Lack of Government Regulation
In a libertarian society, government regulations that prevent such monopolies and cartels would be eliminated. The absence of regulatory frameworks leaves the door wide open for market manipulation. Intellectual property, often preserved in traditional capitalist societies, would be discarded in favor of profit-driven actions. The legal system itself, which is seen as a necessary evil, might become a tool for monopolists to control and suppress competition.
The Fallout of Libertarianism
The consequences of a libertarian society could be dire for consumers and the overall market ecosystem. Without regulations, the risk of monopolistic practices and cartels significantly increases. The path to a market dominated by a few powerful entities is not only possible but likely. The failure to prevent such imbalances means that the very core of the market system—competition—would be undermined.
In summary, libertarianism, in its strictest form, may not prevent market imbalances but instead exacerbate them. The pursuit of a post-democratic market system could lead to the formation of oligopolies and cartels, depriving consumers of fair and competitive markets.