On Monopolies: The Artificial Creation Of Instability

Even those who know little about government and economics have thoughts on why monopolies are so bad. The common understanding of monopolies is that they are bad for local economies and for consumers. They are thought to drive small local companies out of business so people lose their jobs. Then, after driving these companies out of business, these monopolies raise their prices and lower the quality of their products. Consumers then have no choice to buy their products because they cannot get the same product or service elsewhere.

While the free and voluntary market naturally tends to eliminate any monopoly, and especially any monopoly taking advantage of its “customers,” government doesn’t exist on the free and voluntary market. Government uses aggressive violence and coercion to provide services and so is able to supersede market forces. Existing through aggressive violence, the State is the worst kind of monopoly and citizens suffer from all the downsides of monopolies mentioned above.

A less frequently mentioned downside of monopolies is they create potential social instability. The central argument of this article naturally follows the previous argument. The State’s provision of the services of social order – property protection, contract enforcement, law creation, and dispute resolution – establishes a situation where all these services could disappear simultaneously, resulting in bedlam. This instability is not inherent in the production of such services, but is inherent in government production of these services. The fact of government monopoly creates latent volatility for the consumers of the services the State forces upon them. This volatility would not be present in a free market.

The Stability of the Market

Last time, we imagined what it would look like if Walmart was the monopoly retailer, distributor, and producer of food and pharmaceuticals. If they suddenly went out of business, people would become desperate and afraid for their survival because they would no longer access to the food and drugs they needed to live. In this case, a degree of chaos and violent social unrest would be created due to a sudden absence of essential services.

We live in a world where Walmart provides food and pharmaceuticals to millions. Yet, even if they shut their doors tomorrow without warning, everyone would be just fine. Sure, it would have some economic effects. Many would be unemployed. Many would be inconvenienced and some families would face a really difficult and long transition period. Walmart’s collapse would create many negative ripples, but we wouldn’t see people dying from a lack of resources or see violence and theft at a significant scale due to people trying to get what they need to survive.

The reason we would not expect a period of violent social discord if Walmart closed is because they don’t have a monopoly. There are thousands of other companies across the US who provide food and pharmaceuticals. These grocery stores and pharmacies are already mostly equipped to handle the sudden absence of Walmart. They would need to increase their stock a little bit, maybe hire a few more employees or add some overtime hours, and may need some capital investment, but it wouldn’t be hard for the companies already in existence to collectively make up for the loss in supply of food and pharmaceuticals caused by Walmart’s collapse. Consumers are protected and can receive a relatively uninterrupted supply of services because of the existence of market competition for the same or similar products and services.

When we turn to examine government’s monopoly provision of services elucidated by this example, we can see clearly how coercive provision of social order services creates an instability for consumers which would not be present on the voluntary market. If the government collapses the vast majority of services for social order collapse with it. In the absence of these services there would be social turmoil. However, the only reason we would anticipate this is because they are the sole provider. Monopoly provision of services creates a kind of instability which would not exist on the voluntary market.

Were the services of the State provided on the free market, in the case of a collapse, we would expect things to go much like they did in our Walmart example. Let’s say “Government” is simply the name of a company who provides property protection and dispute resolution services. They still provide the same services, but they haven’t monopolized the services. Then, “Government” goes out of business, probably because their name sucks. In an instant all of their property protection and dispute resolution ceases. Now what?

Again, we know there would be a negative economic impact for investors, employees, and customers of Government. There would be a painful period of adjustment for those affected. However, if this Government collapsed, which provides the same social order services as normal governments do, we wouldn’t expect chaos, social unrest, or even a measurable increase in crime. The reason is that La Guardia International Security, The Neighborhood Nightwatchmen, and Non Aggression Protection would all pick up some customers from the Government collapse and would be in a position to quickly make up for the decrease in supply of available services. As with a Walmart collapse, if Government collapsed in a free market, we would expect an inconvenience to consumers and probably a temporary price increase, but overall life in society would remain relatively unchanged.

The peaceful and voluntary market, through free and mutually beneficial economic relationships, naturally tends to create a stable provision of essential services, even when large providers of those services go out of business. The presence of alternatives for necessary services, whether food or property protection, helps ensure an uninterrupted flow of these services to individuals and society as a whole.

The Purpose of Potential Instability

As we’ve been discussing, coercive monopolies on essential services are a disaster waiting to happen. When they breakdown, society is left without the services necessary for a civil and harmonious existence. Most people recognize this. Most recognize if their government collapsed tomorrow the effects would be disastrous. They understand intuitively the instability inherent in the system.

This insecurity is perfect for the State. Every government in existence, even the ones which started really small, like the US government, is always the monopolistic provider of property protection, dispute resolution, and law creation. They have made themselves necessary for the well-being of society. It’s a brilliant move by the State. There are few better ways to retain power and pacify the populace than to monopolize essential social order services.

The reason this is so effective is because it causes people to naturally and rationally become afraid of a sudden termination of government. People would be left fearful, helpless, and without a viable alternative for protection in the case of a sudden absence of the State. So they fight for it. They defend their rulers. They defend the violent enslavement of others. They try to shame those who suggest peaceful and voluntary relationships are superior. The State turns their victims into their greatest allies.

The three topics discussed in this series: the illusion of control voting provides, the deceptive narrative that humans need to be ruled, and the artificial creation of social instability, all function to entrench and grow government. They provide silly moral justifications for the State and are false declarations of its necessity. Arguments like these are designed to obscure the truth, the cold hard reality no one likes to talk about and most people are afraid to acknowledge. All government exists through initiatory violence. All government exists through the violently coercive treatment of citizens. All government exists through exercising ownership over the body and property of peaceful people. By any reasonable standard of morality, government is evil at the core and every halfway decent person should advocate for its abolition.