Capitalism Paradox

Business folks swear by free market competition, in theory, that is, but in practice they actually fear it, hate it, and do all they can to avoid or eliminate it. Ideally they do this by providing a better product or service than their competitors: the “invisible hand” of the self-regulating interplay of supply-and-demand as prescribed by the acknowledged dean of capitalism, Adam Smith, in his 1776 classic, The Wealth of Nations. But when the “invisible hand” proves too difficult to maintain or fails altogether, many business folks are apt to resort to devious means of trumping their competitors—By lobbying government officials for subsidies and special tax-breaks; by gaining their favor, not to say bribing them, with campaign contributions; by filing nit-picking lawsuits; through false advertisement, fuzzy accounting practices, misleading information to prospective investors, and so forth. In The Wealth of Nations Adam Smith devotes a good three fourths of the book to the various ways by which the “invisible hand” was thwarted in the England of his generation. Remarkably, much of what he noted back then is still current in the U.K. and common in the U.S. and other so-called free-market nations.

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