At what point is greed not rational self-interest? Is there an upper-bound on greed?
In sum: Economic giants take over the living of the economic ants.
Basically: Is there any prevention of this in a free capitalist society? What prevents corruption in free capitalism?
How does that differ from the controls socialists/communists employ on the population (as I hear)?
If unrestricted greed led to abuses of power, inequality and restriction of self-determination of individual,…would that invalidate laissez-faire capitalism?…similarly, with the way the communism, is said to be, invalid because of the way in Russia, China and others, there were abuses of power, inequality and lack of self-determination for individuals?
The comments regarding "Gun vs. no Gun" and "desire for more of something" answer the essence of the question.
The question mentions "plutocracy":
A number of individuals accumulate such a disproportionate amount relative to the average that if they so wanted they could form a plutocracy.
"Plutocracy" refers to government by the wealthy, and/or the class of wealthy people who control a government. How would wealthy people be able to do that in a system that consistently upholds individual rights? They would have no power to do so, and no way to "buy" power, since the government itself would inherently be limited strictly to its very specific proper functions. They would also have no incentive to try it, nothing to gain from it, since the government would have no power to grant special privileges -- such as bailouts, subsidies, loan quarantees, grants, suppression of competitors, etc. Refer to the topic of "Government" in The Ayn Rand Lexicon, and especially the topic of "Economic Power versus Political Power." There is also considerable discussion in the literature of Objectivism (CUI, for intstance) of the "pressure group warfare' that arises in a mixed economy.
The question seems to be pointing to mixed economies and dictatorships for its concerns about "economic power." But one can't learn very much about capitalism and a proper govenment by studying mixed economies and dictatorships. America's Founders attempted to set up a system that strictly limits the powers of government. Their efforts show how such a system could be constructed, with just a few additional revisions to eliminate some contradictions that existed in that system from the start. But philosophical change would be needed first, before any serious reform of the U.S. Constitution could be attempted -- a philosophy of reason and the morality of individualism, in which no one may be sacrificed to or by anyone. A nation's political system is a consequence of the prevailing morality, and the morality of individualism leads to the exact opposite of the morality of altruism. Individualism leads to freedom and laissez-faire capitalism, while altruism leads to collectivism and statism (and pervasive corruption).
The question's attempt to associate selfishness with greed and plutocracy shows how intimately dictatorship depends on altruism. It is only altruism that makes dictatorships possible and sustainable (while there are still victims to support it and sanction it).
Update: Slaves of Freedom
The questioner has expanded upon what he means by plutocracy. The expanded version states, in part:
•People do not realise that they are slaves, it all seems acceptable.
This sounds like a recent Hollywood movie, along the lines of the "brain in a vat" hypothetical (or the old Charlie Chaplin movies that try to depict factory workers as slaves of capitalist task-masters). As far as I know, this view proceeds from a deeply mystical-altruistic-collectivist-statist philosophy, in which "slavery" and "freedom" have very different meanings than the ordinary usage for rational observers (deliberately so in dictatorships, to bolster the dictatorship's "legitimacy" in the minds of the public). If one is free to act, to think, to speak, to change jobs when one doesn't like one's present job and can find a better one, or start a business of one's own; free to travel, to associate with others or not; free to observe what the government is doing and complain about it if it doesn't seem right, even change those who are in charge in the government through the power of the ballot box and maybe even running for elected office oneself; free to read books and possibly even write and publish them, to speak one's mind on the Internet and elsewhere, and so on and on -- then how can it be said that one is not, in fact, free, but is nevertheless a slave? On its face, taken as anything but entertaining fiction, such a suggestion is ridiculous. It's like saying, "We are all slaves of reality, because we must conform to reality's requirements in order to live." Or: "We are slaves of our freedom, because it corrupts our souls." Note the mystic-altruistic moral premise in this last analogy.
Dictators tend to understand conspiratorial intrigue very well and may even wonder (perhaps with a smile of seemingly proufound insight), "Isn't everyone like that, or too naive to notice?" But dictators can't survive for long without heavy reliance on forcible terror, aimed both at making sure the enslaved remain chronically fearful and submissive, and at hiding from the dictator his own ultimate dependence on his victims.
Further Update: Corrupting a Free Society
The questioner's rewriting of the question highlights one important point not already addressed:
Is there any prevention of this in a free capitalist society? What prevents corruption in free capitalism?
By "this," the questioner means a plutocratic takeover of a formerly free and rational society.
This issue actually promises to feature prominently in Leonard Peikoff's forthcoming book on The DIM Hypothesis, dealing with the epistemological mechanics by which philosophy shapes society. Dr. Peikoff's website describes the book as follows (link):
The purpose of the book is to demonstrate the role of these three methods [Integration, Misintegration, Disintegration] in shaping Western culture and history, and their implications for America’s future.
Any society depends fundamentally on an underlying, prevailing philosophy. It is the prevailing philosophy that most fundamentally shapes a society. Any society can be taken over by a power grab from within if the prevailing philosophy allows it and sanctions it. For a plutocracy such as Adeikov describes to develop within a properly formed capitalist society founded on a proper philosophy that was once widely accepted, especially by the society's intellectuals, it could only happen as a result of a major default on that philosophy throughout the culture. Such a default is always within the volitional choice of a society's members, especially its intellectuals.
It would not, however, be a philosophy of greed that would displace a philsoophy of reason, individualism and freedom. It would far more likely be a philosophy of altruism and its epistemological and metaphysical base. Would-be plutocrats would not be able to fool an informed, rational public for long. There would need to be a serious abandonment or disillusionment with reason (and freedom) first, and mysticism-altruism is just the philosophical outlook that could do it if those who know better allow it "to go -- unheard," as Amy Peikoff would say.
No social system can "run itself" just from its laws and constitution (if it has one). A corrupted philosophy can easily lead, over time, to harmful changes in the law and even in the constitution itself. It is only philosophy that ultimately can save a culture, and it is primarily the responsibility of a society's intellectuals to uphold the philosophy of reason, individualism and freedom from which a capitalist society can fluorish and endure.
The revised question also repeats an essential point already covered in my previous update:
The plutocrats want to keep disorder to a minimum and to quell unrest with the facade of a free capitalist society ... [and the people] don't realise the facade nor their slavery to it, it all seems acceptable.
I titled my previous update, "Slaves of Freedom." See above for the details.