In a genuinely free society, a laissez faire society in the early sense of this much abused phrase, the businessman is a mandatary of consumers; the customer is boss. Consumer sovereignty! Is this the way the businessman likes it? Of course not. Our businessman would like to think of himself as the man in charge, a captain of industry running a tight ship. But who’s he kidding? He doesn’t even have the power to set wages and prices. His competition, his employees, and his customers make those decisions for him. If he tries to lower wages he will lose his best workers to his competitors who pay the going rate or more. If he tries to raise prices, people buy elsewhere. He’s stymied, and that’s why he’s tempted on occasion to persuade some politician to bend the rules in his favor, just enough to give him what a friend of mine called, ironically, a “fair advantage.”
But when a businessman yields to this temptation he forfeits his standing as a businessman and becomes something else—a branch of the government bureaucracy. He has left the economic order, and is now part of the State. As a businessman he had no power over anyone; as a part of the State he shares, with government, the power to tax. People now have to pay for his products whether they buy them or not.