Pretty much everyone (certainly the vast majority of regulators and politicians) have no clue about capitalism. The concept that a “free market” should be allowed to operate is theoretical, based on “perfect competition” (which essentially means zero barriers to entry). Obviously the politicians support, not capitalism (which would require regulation of imperfect markets (and certainly not support consolidation past the point of many competing companies), but the idea that those with the gold make the rules. Natural monopolies (like gas distribution, electricity, likely internet infrastructure…) should be fully regulated companies which then have the infrastructure accessed by multiple competitors (none of which own the natural monopoly - of course).

With some market that is even remotely in the area where a capitalist free market was in place, it is very simple to not have to deal with companies that treat customers horribly (like Verizon, Comcast, Time Warner Cable…) you just chose another company to deal with.

But these companies want to have the government allow them to create a monopoly (or something extremely close) and then claim to be in favor of capitalism (and further make ludicrous claims about what capitalism would suggest about regulation in oligopolistic markets). These ideas is so laughable that if politicians had even a sense of economic understanding they would adopt the appropriate capitalist response (for government).

Obviously, regulation is required as the market moves away from the area of “perfect competition.” When some huge company wants to buy some other huge company (say creating greater than 10% of the market combined) this would be rejected. If the market is a natural monopoly where the free market is not the proper capitalist market (such as one where the government would allow the proper capitalist response to players in the market attempting to break the free market by gaining to much control), then, of course a regulated natural monopoly would take on that economic task. This is not really complicated stuff.

The idea that businesses would try to suppress the free market (by gaining power that suppress competition) is not some new brilliant idea. At the creation of capitalist thought this was an obvious flaw in the practical application of free markets recognized by all. The government role was to assure that the market stayed very close to perfect competition (though obviously “perfect” was a high goal).

Adam Smith, in the Wealth of Nations:

His solution was not, as many ignorantly state today, to find a “free market” solution. Government responsibility was to enforce competition and not allow monopolistic, oligopolistic practices to divert public gain to private hands. The idea is to regulate so that the market can function to allocate capital most effectively. Without such regulation, those defining capitalism knew that the powerful would attempt to repress markets and extract private gains from their power to avoid the market place (unless government prevented such consolidation of power).

In reaction to: More Telecom Mergers - Great… (yet another horrible customer service example from the telecommunications oligopoly world).

Related: Not Understanding Capitalism - Using Capitalism to Create a Better World

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