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An idea of corporatocracy (pretty dystopian) exists in some movies and videogames. Typically huge corporations ar epresented as having own armies and those armies can force citizens do their work. We could actually even call each corporation a small state.

And I wondered about question in the title. Suppose even such a problem as road building. Indeed, in such a system all roads would be toll roads. How would road building corporations between each other decide who where builds roads? Maybe it can be done by the right of fastest. I see no problem for a corporation to build roads on several adjacent streets. But then suppose roads became bad after some time. Now what would be a reason for a corporation to fix them? What would be a reason for a corporation not to set to high tolls? So, it turns out that already laissez-faire capitalism turns to corporatocracy and is incompatible with ideas of libertarianism.

To strengthen the argument suppose the case when in order to leave your home and drive somewhere you need to use the roads of the same corporation. That is all the roads in the city block belong to the same corporation. Therefore, it defeats the purpose of capitalism itself: competition. And it forces people in given city block to pay unreasonably high tolls.

How is this issue resolved by laissez-faire capitalists?

  • I'm just gonna use this argumentation for defence of decentralized planning. But I'm asking what if proponents of laissez-faire already have a good counter-argument? – rus9384 Sep 4 '18 at 7:33
  • The libertarians are being used too. The idea is to get the deal done as quickly as possible so the public doesn't have time to ask intelligent questions. If they use libertarianism etc. as a cover, all the better to get the deal done. – Gordon Sep 4 '18 at 8:16
  • This is essentially Lenin's argument in Imperialism, the Highest Stage of Capitalism. Libertarians generally argue, contra Lenin, that monopolies are either beneficial or unsustainable, and offer alternative accounts to "natural monopolies" arising from laissez-faire, see The Myth of Natural Monopoly. Essentially, they argue that corporations are vulnerable to (potential) competitors at any stage of monopolization. People can always move elsewhere. – Conifold Sep 4 '18 at 21:35
  • I have never seen an example of lassez faire capitalism. All modern systems of capitalism are state-managed and nothing like a free market. A free market would look nothing like what we have at present. I suspect that corporatism is encouraged and enabled by this managed system, but may not be by a true free market. Visit the EU commission and the place will be full of corporate representatives organising the market. They know that a free market would do them no good. – PeterJ Sep 5 '18 at 9:43
  • @PeterJ, of course they are state-managed, that's why most roads are free to use and their building is paid by taxes. In a free market, I suspect, the amount of drug cartels would raise significantly. – rus9384 Sep 5 '18 at 9:54
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How would road building corporations between each other decide who where builds roads?

The place where the road is to be built is a piece of property. In laissez-faire capitalism the issue of who has the right to use such property should be decided according to who first uses it - the homesteading principle.

But then suppose roads became bad after some time. Now what would be a reason for a corporation to fix them?

If the roads are bad enough people will prefer other routes and their profit from tolls will decline.

What would be a reason for a corporation not to set to high tolls?

If you set higher tolls then fewer people will use your roads. If you increase the price enough then (number of people)*price-(cost of the road) at that price will be smaller than at lower prices. A corporation would want is to set tolls at a price that makes as much profit as possible. The people who use the road at any given price prefer doing so to the other options available. The people who don't use the road at any given price prefer some other option.

  • "If the roads are bad enough people will prefer other routes and their profit from tolls will decline." Then people will lose time and money on fuel. "If you set higher tolls then fewer people will use your roads." - again, roads are limited, unlike portable goods. People will lose time and money on fuel. This would make all corporations raise their tolls more and more until people come to revolution. – rus9384 Sep 4 '18 at 7:29
  • @rus9384 "This would make all corporations raise their tolls more and more until people come to revolution." So you think corporation A will raise its prices and hurt its bottom line to help corporation B? – alanf Sep 4 '18 at 9:00
  • Please, read my third paragraph: people are not free to choose which roads to use. – rus9384 Sep 4 '18 at 9:50
  • People are free to choose what road to use. They have a choice between paying more for a road and paying more for time and fuel, or not using roads at all, e.g. - finding a way to work from home. You also don't understand the role played by alternative roads. If corporation A is making more profit then B, then current and potential shareholders and lenders will look at B, think it is run by idiots and pass when given and opportunity to invest or lend or charge more interest. So if B has set its price too high then it will have problems and may go bust. – alanf Sep 4 '18 at 11:18
  • Who then ensures that people always have alternative roads? Suppose that a corporaation builds all roads in a square kilometer. What can people living within that square kilometer do? Also, I'm not sure what actually prevents corporation from extorting money from you? Other corporations? For an even larger price? – rus9384 Sep 4 '18 at 11:40
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The subject of how capitalism 'decays' or becomes 'decadent' is the subject of extensive work by Marx and countless others.

In theory the only check needed to prevent free market economics from decay is 'competition'. Marx says that capitalism always ends in monopoly, which is your view of capitalism decaying to corporatism. But monopolies bloat, become inefficient and overcharge. They are out-competed by smaller agile companies.

Now if there were no state, and no competition law, the monopoly would just buy up or crush the competition. In some cases this happens because the state can choose to side with the monopoly for ostensibly good reasons like national security. Or because the state is already decayed (corrupt). The issue is that once a company becomes a monopoly it can begin financial trading with its overly large cash flow and use the profits to subsidise mediocrity, making smaller companies uncompetitive.

So to prevent corporatism, companies must be prevented from access to financial markets. And there, there is a dilemma for capitalists per se. One of the last big factors is the 'too big to fail'. Some companies employ so many people, or represent such a large percentage of a country's economy that failure of that company would constitute a 'national security' issue. Allowing that to happen in the first place represents a failure of the state, but one cannot cry over spilled milk.

What to do in that situation? The answer there is usually to legislate to break the company up. In theory, regulating FME is very simple. Of course the scary thought is not corporatocracy; a company is not a real entity, it can be dissolved. The real problem is sovereign individuals, people with so much money that they are de-facto sovereign. This is the failing of plutocracy, which in turn is the real failing of capitalism.

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