How can a small business enter the market when there are big businesses already dominating it? New York City, for example, protects its small businesses by preventing Wal-Mart from opening any stores in the area.
If Wal-Mart dominates the retail market in NYC, then small businesses would be put out of business, as they would have to sell products at a lower price (or risk losing customers) and wouldn't be able to make enough money to afford the lease and other operating expenses.
Competition prevents monopolies, but how does a newcomer compete against a well-established business?
Shouldn't small businesses get a fair shot at success on a level playing field?
Why should an area be served by many small stores duplicating purchasing and logistics efforts, as opposed to one organization which might own all the same storefronts, but which benefits from economies of scale regarding back-office integration, data-center integration, human-resources integration, etc?
Capitalism allows the company which can solve a problem in the most efficient manner to succeed by reducing costs, maximizing profit, and lowering prices for customers. It's a win-win situation.
It's true that for some kinds of activities, scale vastly increases efficiency. This means that the bigger these companies get, the better they are at cheaply solving the problems they solve. So, if you are a small competitor, lacking the advantage of size, you will not win unless you serve a niche market that isn't well served by the big guys.
Life is full of niche markets. Small businesses can succeed only by serving these niches. Big business can and should serve general markets.
answered Oct 19 '12 at 14:41
John Paquette ♦
Stemming from the belief in the inviolability of man's rights in a social setting, the philosophy of Objectivism calls for pure laissez-faire Capitalism; "a social system based on the recognition of individual rights, including property rights, in which all property is privately owned." It necessarily rejects all calls for intervention by the state that aren't within the purview of protecting individual rights.
Arguments like "shouldn't small businesses get a fair shot at success?" tend to conjure up images of a benevolent statesman handing down regulations, favors, exemptions, etc. to prop up or disenfranchise competitors. This is precisely what Objectivism rejects. Economic regulation (i.e. subjective force initiated by the government on behalf of some group) necessarily equates to some rights violation, and no violation of rights is permitted in a civilized and free society.
To the particulars of your question, Wal-Mart's success is predicated on its ability to please its customers. It provides products at a price they agree with, and employs individuals at a rate they accept. This is the hallmark of a free market; voluntary exchanges between free and equal people trading value for value. The sheer size of Wal-Mart is a testament to that, and should be respected.
That it out-competes smaller businesses in communities across the nation (and across the globe) is a side effect of its efficiency and efficacy. If companies of any size wish to compete, they can improve their products, lower their prices, remodel their stores, or up their customer service quality. What they shouldn't do is turn to the government to cripple Wal-Mart with preposterous regulatory burdens (which in the end only hurt the customers Wal-Mart so readily provides for).
The "playing field" that appears so uneven is so by design, and its unevenness is no moral failing or unwelcomed externality of Capitalism. The natural barriers to entry in the market are bars of standards that should only rise, and never be lowered. The statist who relentlessly seeks to level the "playing field," to lower those bars to his liking and by his standard, will spend his time chasing rainbows, leaving rights violated in his wake.
answered Oct 19 '12 at 15:15
JK Gregg ♦