From my Blog:
But Don't Businesses Need to be 'Regulated'?
by David Wilens (July 24, 2009)
Laissez-faire capitalism calls for a separation of state and economy, without regulation of private sector businesses by government. But don’t businesses need to be regulated by governments to protect people’s individual rights?
The answer is: no, they don’t.
But then, if businesses are not regulated, what would stop them from rampantly making dangerous products, defrauding consumers, breaching contracts and committing (and getting away with) other injurious actions?
The answer is: not regulations, but rather laws – properly formulated, to protect the individual rights of everyone. As the foregoing makes clear, the fundamental distinction is one between the proper concept of laws, and the concept of regulations.
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In a capitalist society there is no justification for regulations. If a business negligently, knowingly, intentionally or recklessly acts in a way that violates others’ rights, it should be prosecuted and held accountable; it should not be ‘regulated’. For example, if a car company creates or markets unsafe models that cause injury or death to others or their property, such as the Ford Pinto during the 1970’s, the solution is to convict and imprison the officers and engineers who knowingly approved the dangerous design and levy heavy fines against the company; it is not to start telling all car companies how to design their gas tanks or chassis or engine blocks or whatever. If a CEO of a major corporation directs the accountants to “cook the books” by greatly overvaluing assets and causes the company’s bankruptcy, as was done at Enron Corporation, the solution is to prosecute the CEO and the accountants for fraud; it is not to start specifying how all companies are to conduct their accounting procedures (as the American Federal Government did with the Sarbanes-Oxley Act).
As for deterring future violations of rights by others, whether they be businesses or individuals, this will be accomplished by holding the violators of rights accountable for their actions. In this manner inferior and dangerous business practices will be abandoned, and be replaced with safer and better ones over time.
In sum, businesses (like individuals) should be held accountable for violating others’ rights – but no, they should not be ‘regulated’.
