The Federal Reserve system’s ability to create credit out of thin air and inflate the money supply drives down interest rates. It is little different than if the government taxed everyone to create a pool of credit that it then lent it out to favored corporations. Large corporations can get better rates from the FED than others because of greater chances for a government bailout in case things go bad.
Leftists who spread fear of corporations are generally motivated not by actual history but Marxist propaganda. They believe private ownership of capital is oppressive, and inequality of income is immoral. There is no point in catering towards these people in describing the nature of corporations in a free market. A free market may shrink the corporations, but it doesn’t change their fundamental gripes about capitalism.
For those who believe corporations benefit from economies of scale and would thus end up growing until they have reached a monopoly, there are numerous studies throughout the 20th century that have shown such benefits disappear and are actually replaced by diseconomies beyond very small markets (compared to what these fear-mongers advocate). A corporation would have a very difficult time monopolizing a single metropolitan city, let alone a nation or the entire globe, were it to rest simply on economy of scale. This is backed up by empirical evidence. No society relatively close to a free market ever saw a monopoly, other then temporarily, such as an innovator that creates his own industry. The model case for these folk is Rockerfeller’s Standard Oil, which was losing market share for years before it was broken up by anti-trust law. If their model case does not fit their logic… Moreover, the few near-monopolies in American history arose because of consumer preference. They offered low prices and quality service. If such were to create a natural monopoly, this wouldn’t be a bad thing. As long as there is free competition, monopolies that attempt to exploit that status by restricting output, rising prices, and decreasing quality would quickly face competitors and lose market share. In other words, so long as there are no artificial barriers to free entry, monopoly does not imply inefficiency but actually the opposite.
Then there are those who dislike corporations for cultural reasons, believing that chains neuter local culture replacing it with cookie-cutter values. These people generally believe that such chains benefit from economies of scale or some mystical process that smaller competitors can’t compete with. Or they prefer hand-crafted to mass manufactured goods. The prime target here is Wal-Mart. I’m not sure there’s much use in arguing with such people. Just tell them that if they really believe what they are saying - that consumers would prefer small shops and local cultural quirks - they should invest heavily in and/or invent capital that will elevate the small stores and custom producers to have as much productivity per worker as the large mass manufacturers. Then they can competitively price their goods, and we can see if consumers really do prefer locally-crafted goods.
Then there are those people who fear private tyranny. Their rationale is that we don’t own the corporations, but we do own the government. Thus a corporate monopoly is bad, but a government monopoly is good. They argue that greed leads corporations to externalize costs (pollute) in order to maximize profit. Well, I don’t understand why these people fear private tyranny but love government. First off the government (that “we” supposedly control), purposefully failed to enforce property rights against business interests. In other words, it institutionalized the process of externalizing costs rather than preventing it from the get-go. Secondly, the Department of Defense pollutes far more than any private company. What do we have more control over - private industry or government? For private industry, our daily consumer decisions effect how it operates. Boycotts due to environmental concerns can effectively motivate companies to change behavior. As can lawsuits. Furthermore, corporate stock ownership is an open market, allowing individuals to purchase ownership stakes and directly control the business. The government on the other hand is significantly insulated from the populace. Its most frequent elections only occur every 2 years. Elections favor incumbents, with the reelection rate over 90%. Many positions in government are lifelong appointments. The government does not rely on voluntary support - it forcefully taxes what it needs to operate. Suing the government is generally ineffective, where not altogether prohibited, as it is its own arbiter. Such externalized costs or other forms of aggression struggle to exist in a free market, as there is free competition in governance. Courts and enforcement agencies would have a strong market incentive to cater towards such victims, especially because the perps have deep pockets. Monopoly government on the other hand has incentives to create alliances with big business.
Now, there are many policies of government that benefit big business, creating artificial economies of scale. These are regressive regulatory costs, tax incentives, easy credit, too-big-to-fail, direct subsidies, corruption, lobbying influence…etc.
But my basic point here is that if you don’t agree with your audience about WHY we should desire smaller corporations, your argument is likely futile. A libertarian should desire smaller corporations because of greater economic efficiency, greater consumer choice, reduced external costs (ie better achievement of justice), and decentralized power. A free market will not create less cut-throat competition, create less wealth inequality (although the distribution would likely be more normalized), end franchising, or offer communal ownership of capital goods.