Thursday, 15 July 2010

Whoever Insists His Business Has Nothing To Do With Politics Is Obviously Lying

I was just musing to myself (yet again) how offering a product or service on the basis of an idealistic notion of serving your patrons (and society at large) is just not enough in our modern day and age. In every practical market/industry, there are companies that have firmly established themselves as benchmarks for the quality of the services or products offered, and many of these companies are big-ass corporations.

In other words, it is insufficient to go into business without a workable business model that will cover all kinds of things ranging from finances to logistics to human resources. Going in with a product, even if it's a great one that will benefit mankind greatly, and hoping its weight will carry itself is naive and unrealistic.

With this notion in mind, 'bigness' can be a great advantage to gain for any corporation that wants to firmly root itself in the market and lock out competition. It is terribly difficult for new firms to enter certain markets because it is too difficult to offer products and services on the level that the existing giants already provide for.

Anyone who is decently versed in the supposed virtue of the free market will know that it is an established fact that the more firms in a market there are, the more efficient the market becomes - competition is good for the consumer and society on the whole.

The fact that bigness shuts out competition is a profoundly bad thing. Market moralists will argue all sorts of things to defend the market intellectually, but the truth is that any corporation that becomes big enough tends to become a monopolist.

But while I argue that it is a bad thing that new firms face difficulty in entering markets locked out by big corporations, it does not follow that big corporations should therefore lower their standards or provide handicaps so as to give weaker entrants a chance.

The issue really is in the immense amount of power that resides in the hands of big corporations who now can redefine the rules as consumers become dependent on them, a power that is unchecked because there are few entrants and firms that can provide alternatives for consumers. With bigness comes great power and with great power comes the potential for great sin.

Also, there are tons of reasons why the pursuit of profit at all cost is bad, or why the Milton Friedman argument that the 'only thing businesses should care about is profit' is a dodgy mantra to follow. But here's an important one. Without virtues or ethical principles guiding a company's direction for profits, especially when the company is a monopolist, the company can be easily bought over by politicians.

Should there be any social elite with the capital who decides to further any self-serving agenda, any spineless powerful corporation can hop on the bandwagon to further the interests of that social elite, providing all sorts of support ranging from commodities to marketing to manipulation of consumers, as long as the social elite has sufficient money.

When political power and corporations come together, giving rise to the agenda-setting problems that the United States particularly faces, society can be quite doomed.

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