What are antitrust laws for, when competition is normal with businesses?
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So, capitalism is not a stable economic system. In fact, no economic systems are stable. Capitalism’s stability requires external intervention because we like to think of competition within markets as an inherent property of capitalism, it’s not.
Capitalism’s inherent property is that capital assets, things like factories are privately owned and run (vs the govt owning/operating it), labor is secured through wages (cash), and any gains from those capital assets are kept by the private owners. And the way that capital is allocated is through prices – basically, consumers decide what goods and services we want and spend accordingly, and that’s what determines what capital assets are good investments, and also where jobs go.
Competition only exists in capitalism as a mechanism for that pricing function. But where most capitalist systems desire competition within a market, it doesn’t require that. A market can form a monopoly – say there’s only one supplier of apples. And that monopoly can set prices at whatever level they want, because the are no competing apple sellers. You still have *some* competition to set prices because consumers could buy pears or oranges instead, so there’s some constraint on prices, but only because consumers are willing to go without certain kinds of goods.
This is seen as undesirable in a free society. So in Liberal countries (Liberal being the political philosophy where capitalism and democracy serve as foundations, not the conventional use of ‘liberal’ as used in the US) consumers ability to have broad access to goods and services is highly valued. As such, having a single supplier of a good is undesirable, even though that’s not incompatible with capitalism. As such these countries tend to have antitrust laws in order to break up markets to encourage competition. This has the additional benefit of reducing market power because under Liberal philosophy, overly powerful corporate entities become a threat to democracy, so keeping them from being dominant is also a stabilizing effort.
So, you suggest that competition is normal for businesses, but it’s not. Just the opposite. The normal state is to take any market advantage you get and use that to eliminate competition – buy competitors, force them out of regional markets, dump products below cost to make them unable to make money, etc. Without these regulations, all markets would eventually consolidate around a single player. And that was the state of things that caused the US to introduce antitrust laws.
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