Corporations as gladiators

At the height of the crisis, discussions about the failure of the capitalist system flourish, see the http://blogs.ft.com/capitalismblog/ where illustrious minds share their views. At this point, when the end of the crisis is not in sight, we get the boldest and the most radical proposals for changing this, until very recently, world-wide acclaimed economic system. There is no doubt that more regulation will be needed; oftentimes, free markets fail to function and this leads to sub-optimal equilibria (or even no equilibrium what-so-ever) resulting in an inefficient allocation of resources, but this was already known to economists. Market power, asymmetric information, adverse selection, moral hazard and many other circumstances where the market outcome is not optimal in any conceivable way, were both known and thoroughly analyzed by scholars. Unfortunately, very few of the readily accessible solutions for correction were transposed in practice by decision makers.I, myself being concerned with what has come to be known as corporate social responsibility, can see many developments for this particular paradigm, following the current crisis. However, one should not be fooled into denying perhaps the most important feature of the free-market system, the true engine of growth and sustainable development: sheer competition. The frictions born out of the corporations’ struggle to survive and flourish are what bring about the most rewarding benefits of capitalism. Regulation is needed, no doubt, but only to the extent that it enhances and sharpens the corporate struggle. Sure enough, regulation is also needed to protect the private citizen and the environment from the negative consequences of the corporate fight. There is a comparison which, I believe, embodies my point here. Corporations are the gladiators of the modern world. Gladiators were much prized and esteemed in the golden days of Rome. They provided the spectacular fights that delighted the masses. The fiercer their fight was, the more enjoyable the show. But there were rules. Gladiators were supposed to kill each other, but not the spectators. Their fight was limited to the arena of the Colosseum. Should they have taken their fight outside the arena, killing innocent side-viewers, rioting on the streets of Rome, tearing walls and burning down houses, it would perhaps have been a bigger show, but not so enjoyable and beneficial to the ordinary citizen. In the same manner corporations fight for the benefit of consumers, but ultimately this fight should not inflict harm on them or the environment. Regulators, please give room to corporations to kill each other “peacefully”, but just keep them off the spectators! Ave, Caesar, morituri te salutant..