Critics of free markets claim that in a pure market economy, monopolies would dominate the economy, and billionaires would dominate families. One can find such claims by searching for “monopolies capitalism”. Critics of free markets use the term “capitalism” to blame markets for social problems, yet also stating that current economies are “capitalist,” which begs the question of whether, in today’s mixed economies, it is government intervention that causes the problems.

Those opposed to libertarianism also claim that in a completely free society, billionaires would own all the real estate, and would therefore impose tyranny over families and work places. The masses would be forced to live at subsistence, with shoddy housing, bad and insufficient food, untreated disease, inadequate education, high crime, a dirty environment, and pestilence.

We need to understand the two models of a free market. One model is geolibertarianism, in which land rent belongs to the people in equal shares. The other is allodial libertarianism, which sanctifies current landowners with a legitimate ownership of all the land rent.

To analyze such claims, we need to understand the two models of a free market. One model is geolibertarianism, in which land rent belongs to the people in equal shares. The other is allodial libertarianism, which sanctifies current landowners with a legitimate ownership of all the land rent. Let’s first examine a geolibertarian world.

Currently, in the USA, the home-ownership rate is 63 percent. If, in a geolibertarian world, billionaires would own all the housing, one could ask, why don’t they own it all now? Billionaires could buy up more housing, but if they seek to profit from it, the prices they pay would have to yield a rental no lower than other investments. If billionaires bought up all the housing and pumped up their rental income, in a geolibertarian economy, the land rent would be collected and distributed among the people. So it would not pay to monopolize the housing.

Regarding the monopolization of industry, the allodial libertarian free-market literature points out that even when a firm dominates a technology, new innovator firms often succeed in taking over new spheres such as cell phones and social media. Large firms have economies of scale that enable them to have lower average costs, and a large size can have social benefits, such as many people being able to use the same operating system, thus facilitating new software.

Libertarians also point out that anti-trust policy, the government policy of breaking up monopolies, has often just imposed expenses on companies such as IBM and Whole Foods, without benefit to the public. Even if there is some rationale for intervention against dominant firms, the remedy is worse than the disease, as government attacks companies such as Whole Foods, which did not really have a monopoly or hurt consumers.

“Land monopoly is not the only monopoly, but it is by far the greatest of monopolies—it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”
—Winston Churchill

Winston Churchill, in a speech in 1909, said, “Land monopoly is not the only monopoly, but it is by far the greatest of monopolies—it is a perpetual monopoly, and it is the mother of all other forms of monopoly.” Churchill used the term “monopoly” in the classical sense, meaning the inability of entrants to expand the supply, in this case, of land.

Welfare statists who claim that free markets induce monopoly do not confront the contradiction of their support for government as an absolute monopoly, never mind their neglect of the land monopoly that was imposed by and is protected by government. If monopoly is bad, critics of markets would favor school choice, the ability of parents to choose schooling for their children on an equal financial basis for government and private schools. But they typically oppose school choice. They oppose a free choice in government services generally.

As for allodial free-marketeers, they have some good arguments for why an allodial free market too would not be dominated by monopolies. Many industries achieve economies of scale - lowest average cost - at a small scale, so small firms can compete well with large firms. Even when an industry is dominated by large firms, too high a price set by a monopolist invites entry into the industry. But allodials too ignore the land monopoly, not taking into account that land rent captures much of the gains from economic expansion and efficiencies.

When the land rent is distributed equally among the people, and when there is no legal restriction or imposed cost on peaceful and honest enterprise, nor on the consumption of goods, then a basic income from rent, plus the easy ability to become self-employed, prevents firm owners from exploiting workers, and prevents landlords from becoming housing tyrants.

When the land rent is distributed equally among the people, and when there is no legal restriction or imposed cost on peaceful and honest enterprise, nor on the consumption of goods, then a basic income from rent, plus the easy ability to become self-employed, prevents firm owners from exploiting workers, and prevents landlords from becoming housing tyrants.

The case for landlord and company tyranny by billionaires collapses when closely examined. But the critics cannot do such analysis, as they keep confusing capitalism as a free market with capitalism as today’s mixed economies.

The case for landlord and company tyranny by billionaires collapses when closely examined. But the critics cannot do such analysis, as they keep confusing capitalism as a free market with capitalism as today’s mixed economies. And when they do use the term “free,” they don’t delve into the natural-law ethic that gives freedom and liberty their meaning. The welfare-statist critique of markets is a failure to think things through.

© Text Copyright Fred Foldvary, Ph.D. rights reserved.
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