“Adversity scores” are the latest gimmick to justify racial preferences in college admissions.
Any defense of a limited-government conservatism today is likely to meet with a now-familiar refrain from the “new right”: What about corporate power? Conservatives, the story goes, have been so narrowly focused on the dangers of big government that they have overlooked the dangers of corporate power and big business, which can also undermine a healthy society.
There’s no shortage of examples of large corporations playing an outsized and unhealthy role in political and cultural controversies. Most prominently, Disney attempted (belatedly and unsuccessfully) to use its significant influence in Florida to stop the Parental Rights in Education Act, and has since come under fire for its not-so-veiled attempt to use its cultural influence to promote progressive sexual ethics. Twitter, of course, regularly uses its authority to ban users in an unbalanced manner, silencing conservative voices that dissent against prevailing left-wing political expectations from sexuality to Covid-19. And it seems you can’t see a razor blade or athletic shoe ad without a woke lecture.
Prominent voices on the American right point to these corporations as a reason to embrace a more comprehensive role for government in managing the economy and policing the culture. Josh Hammer and Kevin D. Roberts argue for the use of antitrust laws and other measures to “tame” Big Tech. Some, including J.D. Vance, have singled out particular entities like the Ford Foundation for scrutiny, questioning whether its status as a nonprofit is merited. These corporations and institutions are not accountable to the public through elections, and they are often goaded into action by loud activists that may not be particularly representative of the views of society at large. Shouldn’t they be restrained by the hand of the state, representing the people and aiming for the general good?
As Florida Senator Marco Rubio wrote, perhaps aspirationally, “The days of conservatives being taken for granted by the business community are over.” The era of the Reagan-Thatcher Revolution and the likes of Milton Friedman and Friedrich Hayek have lost their charm for much of the right. The claim of such conservatives: Big business is not the friend of conservatism. To this, we say—to paraphrase a popular meme—“never has been.” Conservatives should indeed be wary of the concentration of all forms of power, including corporate power. But the faults of big corporations will not be remedied by a knee-jerk reaction in favor of government regulation.
Too often, conservative critics of big business overlook, willfully or not, the dangers of overcorrecting. Arguments for more government regulation of the economy, particularly for ad hoc targeting of left-leaning companies and institutions, glide over the danger of empowering or acquiescing to a far more comprehensive, and hardly more representative, entity to order economic and cultural life—an entity that will not always be in the hands of conservatives. And just like progressive planners before them, they tend to ignore knowledge problems and the possibility of unintended consequences.
But there is a more fundamental problem with a big-government remedy to the diseases of big business: Namely, the fact that big business loves big government. The left has been successful over the years in associating big business with the free market. But as economists have long pointed out, a relatively heavy regulatory environment is actually beneficial to large, well-established companies more capable than smaller competitors of navigating legal minefields and more adept at wielding political influence inside and outside of capitol buildings. Those companies might not be able to adapt as quickly to changes in the market as smaller companies, so they are more apt to seek regulation that makes entry harder for competitors, guarding their privileged position.
So if there is an emerging conservative consensus that big businesses are a problem, the answer is not heavy-handed regulation from the state. If conservatives embrace this approach hoping to comprehensively order social and economic life toward the common good, they will inadvertently create a political environment dominated by big business. Instead, government should focus on the maintenance of a framework within which individuals, corporations, and civil associations all order the social whole through their lawful interaction, ensuring a genuinely competitive market that forces companies to keep their attention on their market share and actually respond to their consumers.
Free market economics might seem generally favorable to corporate power, and certainly it promotes enterprise and business activity. But it’s a mistake to think of free-market economists as simply pro-business. Milton Friedman’s famous case against the generalized notion of corporate “social responsibility,” for instance, was partly an argument against corporations exercising undue social and political influence. Proponents of free-market economics like Friedman and George Stigler also noted that corporations have interests in limiting competition rather than promoting it. Consider the following point by Friedman. In answer to the question, “Who are the real enemies of free markets?” he said:
In many ways, businesses are the enemy of the market because businessmen are always seeking to get government to intervene on their behalf. We don’t have any of these regulatory agencies opposed by businesses. They all are in favor of it… So that, in many ways, the real enemies of markets are the business communities. In many ways, the real function of government ought to be to keep down the power of anybody from becoming excessive, including the business community.
Corporations don’t want—that is, their incentives don’t lead them to favor—market competition. Rather, each corporation has an incentive to increase barriers to entry for competitors and secure favorable conditions for its enterprise. Businesses want tariffs and other interventions designed to increase their market share. With his theory of “regulatory capture,” Stigler provided a rationale for the observed tendency of government regulation, including anti-monopoly regulation, to benefit regulated enterprises, arguing that government regulation often aids businesses since they play an active role in shaping it. As the theory of “rent-seeking,” developed by Gordon Tullock and named by Anne Krueger, suggests, firms are just as happy to seek profits through lobbying as through productive enterprise in a competitive marketplace.
These economists’ insights echo the great champion of free enterprise Adam Smith’s famous dictum: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The law, he argued, should not further incentivize such collusion between businesses. As Art Carden writes, “’Free market’ does not mean ’pro-business’“.
In a theory of political economy focused on preserving economic liberty while safeguarding the public good, the government plays an important role in limiting corporate power by keeping barriers to entry low, preventing price-fixing, and ensuring competition. “Free enterprise” or market-preserving governance curtails the private interests of corporations who prefer to erect barriers to entry and secure special advantages, instead promoting the public interest by maintaining competition to put downward pressure on prices and incentivize increases in the quality of goods and services. In other words, market-preserving governance can serve the common good, at the expense of the private interests of corporations.
So, does market-preserving governance mean trust-busting? Well, yes and no. In theory, carefully designed antitrust laws fit within the vision of market-preserving governance, a vision aimed at maintaining balance and equilibrium across social actors such that no locus of power, private or public, has free reign. Yet Friedman continues: “The antitrust laws, monopoly laws, would be an appropriate function of government if they could be exercised appropriately. But even there, what happens? Who brought suit against Microsoft? It was [Microsoft’s competitors.]” Firms can strategically use poorly designed antitrust laws to further their own interests against competitors, as a legal club to beat them with, avoiding actual market competition.
Regulation or government intervention, whether for anti-trust or for other purposes, is sometimes appropriate. But we shouldn’t embrace hasty or ill-conceived interventions based only on their ostensible purposes.
Competition and the Common Good
Is the competition model still applicable, though, in the age of woke capital? When corporations seem as interested in spreading a social justice message as they are in the bottom line, it might seem like forces that constrain business no longer apply. But there’s every reason to believe they are still in force and that they are more effective than a number of attempts at regulation we already have in place. Many corporate behemoths like Google, Facebook, Twitter, and Amazon embrace increased regulation because they know they are in a position to steer it in a favorable direction.
First, there is no reason to believe the forces of crony capitalism, regulatory capture, and political lobbying will not continue to operate as usual when you move from purely economic regulation to culturally or ideologically driven regulation. In fact, several high-profile cultural battles show that we’ve been utilizing “common good” regulations for some time, and big companies have managed just fine.
In 2021, Florida passed a law punishing companies that de-platformed any candidate for political office in the state. An interesting exception was made, however: The fines would not apply to any “company that owns and operates a theme park or entertainment complex.” It seems a certain mouse had the ear of legislators. And that wasn’t Disney’s first rodeo. Though the language of the Constitution’s Copyright Clause evokes the common good perhaps as much as any other part of the document, the private interest of the entertainment giant was a driving force behind changes to copyright law in 1976 and 1998, both of which came after serious lobbying efforts to avoid the scheduled expiration of the Mickey Mouse copyright. The company also secured the Reedy Creek Improvement District in 1967, essentially giving Walt Disney World the status of a local government. The inevitable use of legislative influence to secure carve-outs or special benefits means that much common-good regulation will wind up placing burdens on certain companies, while excluding those that are politically connected.
Now that the GOP and Disney are no longer on speaking terms, all these special favors have expired or been directly targeted for repeal—and that’s a good thing. But since they turned on Disney in a fit of pique, one has to wonder if Republicans have learned any deeper lesson about the ability of corporations to co-opt regulation ostensibly for the “public good.” The better rationale for these moves is to preserve fair terms of competition and thus protect the public interest, not to punish adversaries in the culture war as political enemies.
The kind of lobbying efforts Disney used to promote its own interests can also target opponents. In March, the Washington Post reported that Facebook funded an attack ad against rival TikTok via Republican consulting firm Targeted Victory. Facebook/Meta is probably right that TikTok is a net negative for our social architecture, but the event should be a warning for those who want to build political movements around purifying the culture: A righteous campaign against the corrupting influence of a social media company is quickly bought up and redirected by another platform.
Second, the competition that comes from a genuinely free market provides options for consumers, ensuring no single locus of power in society operates without the possibility of challenge. Left-leaning companies like Starbucks compete with Chick-Fil-A and Hobby Lobby, for example, over politically motivated consumers. When bookselling behemoth Amazon shamefully banned Ryan T. Anderson’s When Harry Became Sally, there were plenty of competitors happy to sell it. Anderson himself predicted (and he has confirmed its accuracy with us) that sales of his book would actually boom. One-off cancellations like this can ironically offer the kind of publicity no money can buy. What makes them dangerous is when they are systematic and consumers have no alternatives.
Even in the entertainment realm, where left-leaning companies like Disney (and its many subsidiaries), Netflix, and Apple have enormous influence, low barriers to entry have allowed for projects like The Chosen, a high-quality, crowd-funded series on the life of Christ produced by Angel Studios. While many companies have gone woke, conservative consumers still have plenty of options.
Finally, because of these options, competition disciplines businesses in terms of how they conduct themselves. Companies can only prioritize the culture war when they are confident that doing so will not significantly affect their profits. This still serves as a major constraint on activism. Despite its ban on Anderson’s book, Amazon still sells all manner of politically incorrect material, including other books heavily critical of transgender ideology, realizing that such bans can only safely be carried out in isolation, lest millions of customers go elsewhere. In fact, trans activist employees recently demonstrated outside of Amazon’s headquarters in protest of all the “transphobic” material for sale on the site. And Netflix’s recent “purge” of woke employees and projects in the face of steep subscriber losses shows just how much of a luxury item progressive causes often are. There is at least some truth to the saying, “go woke, go broke.”
Consider Twitter as another example. It undoubtedly uses its power to censor and ban users. But right-wing accusations that Twitter is a kind of totalitarian dystopia that silences any dissent are easy to disprove. Even as the Babylon Bee, Project Veritas, and others have been banned for this or that violation of woke propriety, other extremely popular accounts saying substantially the same things continue to flourish. This is not, of course, because Twitter is actually a fair and balanced company neutrally applying its rules. It is because a genuine purge of all conservative voices would lead to a mass exodus. Conservatives now on Twitter would go to an existing copycat service like Parler or the upstart Gettr, build a brand new platform, or make do with competing social media formats like Facebook with a less rigorous censorship program.
Of course, there’s another market-driven concern that might prompt course corrections at the shareholder level. As we’ve seen recently, if you ban a billionaire’s favorite politically incorrect satire site from your publicly traded social media platform, he might just buy the whole thing.
One reason big businesses seem to lean so disproportionately leftist is that conservatives have been historically reluctant to turn away from companies because of their political views. Corporations were therefore largely immune from the consequences of political activism. As Alexandra DeSanctis recently observed, companies have tended to take their stands carefully—under circumstances that threaten little or no consequences for the bottom line. Why have conservatives tended to be more comfortable sipping their Diet Coke despite political activism on the part of Coca-Cola that would give liberals an aneurysm if undertaken by a right-wing chicken sandwich restaurant? That’s probably a matter of sentiment, and it may reveal something about underlying commitments to civil tolerance. But it may be changing as cultural crusades like that undertaken by Disney force their way into consumers’ living rooms.
The Task of Government
Pursuing the common good involves mutual adjustment and compromise, holding the balance between competing particular interests. Promoting the common good, therefore, means securing conditions in which these adjustments can take place in an orderly, fair, and tolerably just manner. This is the primary task of civil government. To be sure, a government primarily tasked in the economic realm with protecting the competitive marketplace will not create a culture systematically ordered to the human good—something conservatives have long held to be impossible, recognizing the limited task of government within the broader “civil social order.” But it would do more than any other model to prevent concentrated power in any form—political or corporate—from dominating society.
State governments, of course, have the prerogative to use police powers to promote the public good and prevent serious harms. Not everything needs to be for sale on the market—think of kidneys or prostitution—and the government properly prosecutes fraud and other forms of abuse. To say power should be limited is not to deny the need for good governance and public order. Caution about the abuse of coercive power is not the same as the “horror of living human authority” that Adrian Vermeule ascribes to liberalism.
Nor does a theory of market-preserving governance exhibit “liberal fideism” in the magic of the invisible hand that Vermeule describes as central to the liberal “sociopolitical order.” Again, the government plays an important role in preserving competition, countering the preferences of self-interested actors in the economy and society. The government imposes a prisoners’ dilemma, so to speak, on businesses, subjecting them to market competition as a form of discipline and discouraging collusion, price-fixing, and rent-seeking. The invisible hand simply illustrates the idea that self-interested actors, given the right institutional conditions, can be induced to serve socially beneficial ends–the butcher and the baker selling their products to make a living instead of out of the goodness of their hearts. But those institutional conditions don’t appear out of nowhere: political and civic leaders have to forge and maintain them.
There are real concerns with corporate power and the influence of Big Tech in our lives. Anderson, for instance, rightly warns of a potentially chilling, self-censorship effect that could inadvertently promote radicalized voices as the reasonable ones retreat from or adapt to corporate censorship.
On the cultural front, conservatives shouldn’t grope for blunt instruments with which to bludgeon their corporate enemies. Rather, they should work to ensure that competition and dissenting voices are able to do their work. They should target government coordination with tech companies, for instance, that seeks to control the kind of information disseminated on their platforms. They should give more exacting scrutiny to situations that threaten to kill upstart companies and stifle competition along ideological lines. (Parler’s systematic exclusion from web hosting services in 2021 may be one such example.) They would also be perfectly justified in reevaluating policies, like those copyright regulations, made at the behest of powerful corporations.
This approach doesn’t even necessarily rule out applying common-carrier jurisprudence to curtail social media censorship. Even in a generally market-based economy, public utilities and common carriers have long been subject to special common law regulations due to the nature of the service provided. But we should be skeptical of the application to Big Tech. It’s hard to argue that social media companies are monopolistic, let alone that the social media sector constitutes a natural monopoly, as we’ve discussed above. Neither is it clear that social media companies or host sites actually fit the historic standard for common-carriers.
Still, Philip Hamburger and Clare Morell convincingly argue that Big Tech companies claim the advantages of common-carrier-like entities in the form of immunity from liability for the speech on their platforms. They’re not like newspaper editors who decide what to publish, in other words. They serve a public function, providing forums for speech. Since they gain the advantages of this situation, it would stand to reason they should also accept certain obligations. Any regulatory framework would have to be carefully crafted so that it doesn’t inadvertently task the government with the censorship of political speech we’re trying to curtail in the private sector.
Finally, corporations aren’t above criticism, even in the market-oriented model we’re promoting here. We can and should critique businesses, their decisions, and policies on moral, substantive, or even common good grounds. This might help competitors know there is demand for a different model.
Is big business a friend or an enemy? That’s not really the right question. It is neither, and it’s not supposed to be either. The more productive question facing conservatives is how to prevent concentrated power, in whatever form, from reshaping society according to its own preferences. Any response to concentrated corporate power that merely shifts that power to the administrative state or populist politicians following their electoral advantage is bound to be self-defeating. Government is the monopoly to end all monopolies, and so always requires the careful and jealous eye of republican citizens to keep it to its specific task: maintaining a set of rules that preserves a framework of ordered liberty.