In Absence Of The Federal Trade Commission

In Absence of the Federal Trade Commission

In Michael Huemer’s book, The Problem of Political Authority he argues that the government does not hold legitimate authority and then proposes a form of anarcho capitalism, which he believes could eventually replace an existing democracy, specifically in the United States. I found the section concerning whether or not the government holds legitimate authority to be convincing. However, the second section of the essay directed at proposing how a system of anarcho capitalism could be put into action does not seem like a feasible alternative to government. Huemer does well to address how private security agencies and private arbitration firms could replace the current police and court systems, but does

The Federal Trade Commission’s primary aim is keeping markets fair and competitive. On their website, they state their mission is to: “… enforce the rules of the competitive marketplace — the antitrust laws. These laws promote vigorous competition and protect consumers from anticompetitive mergers and business practices.”1 Competition keeps a market healthy and growing, its effect is what Adam Smith called ‘the invisible hand’, which sets the ‘natural price’ by allowing consumers to choose the product they want from the firm with the lowest price.2 If a company values its product above the natural price, consumers inevitably buy the product from a different company with a comparable product but lower price. If valued too low, the company will lose money. Therefore, a company must anticipate how much other companies will charge for a similar product to have competitive pricing. This turns into an application of game theory. This happens when two firms (or

In anarcho capitalism, it is highly unlikely that there would be a market for a privatized FTC. For a private company to exist, they must have customers which pay them for some good or service. Consumers must first have some need unfulfilled, then the product can exist. Most people would not know that they want a private FTC until they saw the consequences of not having one, and by that time monopolies and collusion will already be running rampant in the marketplace. Once two giant companies merge to form a complete monopoly, (I am specifically thinking of Time Warner and Comcast) there is no real way to separate them again. Once monopolies form, there is no reason they would not merge to form a multi-market conglomerate . Once collusion is common, it is likely that every business will collude in some way. In Holland, when construction companies started colluding without repercussions from the government, it was almost impossible for a construction firm to make money without being a part of the “cartel” of business who collude. “Individual construction companies that tried to stop this practice by not attending these secret meetings soon learned that their orders greatly diminished and were, therefore, forced to continue their cooperation”4. Therefore not only will there be incentives for unethical business, there will be repercussions from not partaking. If this happened in every market, those involved would probably not consider