Concentrated Economic Power
Concentrated economic power Another premise of the defense of the virtues of free market is that individuals and firms do not really accumulate large amounts of power in the market: everyone enters into exchanges as individual, voluntary actors, making choices freely. They may have different purchasing power, and this means that they may have different sets of choices, but no one has the kind of power in which they can impose their will on others.
What is power? There are many answers to this question, but one simple one it that power is the ability to get your way even against the objections or resistance of others. This is the ability to impose your will on others. If you announce in the newspaper that you have a stereo to sell for $100, everyone who reads the ad is completely free to say no to your offer. You have no power over anyone. This is one of the virtues of market exchanges and is why many people believe that markets are the enemy of power and domination; they are the realm of free, autonomous, voluntary action.
The problem is that free markets tend to lead to concentrations of wealth in the form of personal fortunes and, even more significantly, the large mega-corporation. It is an inherent feature of market dynamics that winners in competition will tend to become larger and larger, and when they become very large they exert real power inside of the market (as well as in the political arena). Microsoft, Wal-Mart, Exxon, Boeing, and many other corporations do not just make things and sell them on a market; they shape the market through their exercise of power. The large corporation is not just like the corner grocery store, but bigger; it has the ability to make strategic choices that massively affect the lives of people and communities, the choices they face and the kinds of lives they can lead. Microsoft is notorious in this regard: it is so big that it can force people to buy products that they don’t want by bundling them with their windows operating system, and they can force computer companies to install their entire suite of programs rather than individual components. Wal-Mart forces suppliers to squeeze their workers wages to ruthlessly cut costs. Wal-Mart is so big in many markets that suppliers simply cannot refuse to comply with its demands. Wal-Mart is not just a “price taker” that responds to the prices of products in an impersonal market; it is a “price maker”, using power to shape prices in the market.