Can you prove that large scale business would form in a free society? I don’t see how.
Another way of putting this: why do you seem so certain that in a free society, 747’s would be a product which would be deemed necessary? It’s entirely possible that all sorts of things we cannot imagine being without would not evolve, and other things we cannot currently imagine would, in their place. Maybe dirigibles would be the preferred flying mode. Maybe something comlpetely different. The economics of the situation would be so vastly different, I think it’s probably futile to speculate. But it certainly is fruitless to presume that the same products would be required.
This argument that large scale businesses similar to what we see today must necessarily exist in a free society cannot possibly be proven, since this has never existed in the modern age. I think the arguments against it given by david_z and by wombatron, in particular, with references included, are compelling. Clearly, State protectionism has benefited multinationals beyond all reason. One of the most persuasive arguments IMO is this: without the State to tilt the playing field in their favor, larger, less nimble companies would find it difficult to compete with smaller more agile companies. I’ve worked as a professional engineer in startups, mid sized companies, and huge multinationals. I can attest to the fact that there are serious diseconomies of scale, as I think wombatron pointed out, as a company grows (in fact, there has been some published research done on this exact topic - will see if I can dig it up). Bureaucracy is one of the worst of these, which impedes innovation and efficiency, whether in business or government. Accordingly, the growth of in-company bureaucracy can result in disfunction which allows smaller competitors to come knocking on the door - I could give you examples from as recently as two weeks ago. It cost us a piece of the business at an important account. So the VERY relevant point that david_z made was to reference Bastiat’s enormously important dictum to consider ‘what is not seen’. It is certain that, in the balance between economies of scale, and diseconomies of scale, what counts is the NET, and that net is precisely what the State can affect by putting obstacles in the way of smaller businesses seeking to play David to the corporate Goliaths. After all, that’s precisely what politicians get elected for.
This is very similar to evolution, BTW. The peacock with the largest tail may often get the peahen, but if that tail grows too large, it makes for easier prey in the presence of predators (though you’d not know this from watching them at the zoo - with their protectors [analogous to the State] keeping predators from the door). In fact, this is a commonly recognized balancing mechanism across species in the natural world (including humans). Every adaptation can yield advantage only up to a point, at which point it can actually become disadvantageous - especially as surrounding species adapt also (saber tooth tigers are extinct, after all). It’s all evolution, natural selection, adaptation pressure. The same mechanisms at work in the natural and in the business world.
I suspect there is a range of ‘business size’ which would be naturally occuring and established - and enforced - by natural market forces in a free market society. It strikes me as absurd to imagine a gargantuan business like GE in the absence of the State. Never happen. So it may well be that we do without 747s and stick with dirigibles. Which works for me aesthetically as well. Business travel in coach blows.
