I’ve just seen a hint at an idea which is very interesting.
There is an important debate amongst economists starting in the 1920s with Ludwig von Mises’s critique of socialism. This is the Calculation Debate which brings an argument that the socialist economy cannot allocate resources and the calculations needed are not possible. Personally I think this is settled against socialism, at least in the case where we have a non-static economy. Since for the improvement of the situation of people we need a non-static economy and the fact that not everything can be controlled, I think this debate shows that economic socialism is not possible.
A student of Mises, Murray Rothbard, it appears, took this idea further and showed that this economic calculation problem sets a limit on the size of corporations. Anyone who has worked in a large organisation knows that diseconomies of scale really do come into effect. Its interesting to see this outline of an economic argument as to why this happens.
Why then don’t small businesses run rings around big corporations? The answer is that government intervention and regulation favours the big, established concerns.
Like much taxation, regulation costs those with lower income a greater portion of their income. Regulation increases startup costs, big business has more resources to devote to lobbying politicians.
Contrary to what many think, it is not the free market which gives big companies the advantage, it is the lack of free market which panders to them.
