The free market is democratic in nature. Each buyer in the marketplace "votes" with his or her decisions to purchase certain goods. Consumers walk into a store and exchange money for some desired good. These voluntary exchanges not only benefit the consumer and the producer, (producers would include the "middle people" that ensure a good can be transported from factory to consumer), but are a "democratic" vote for the continuation of the store and the producer of that good.
When Bob decides to purchase one product from Company A over another product from Company B, Bob casts a "vote" in favor of Company A. If enough consumers agree with Bob, Company A will receive a larger margin of the "votes," and would generate greater profit and grow more powerful. Meanwhile, Company B will grow weaker.
In this light, free market capitalism has at its core, consumer satisfaction. Given the freedom to choose between different products provided by different companies, "what the people want" will inevitably rise to the top.
This fact is illustrated in the South Park episode, "Something Wall-Mart This Way Comes," when the boys discover that they, the consumers, are the heart of their evil neighborhood Wall-Mart. It is the consumers’ choices that give companies their power, thus to change the nature of companies is only a question of changing consumers’ values.
This link between a consumer’s demand and a company’s supply can be seen wherever property rights are allowed to flourish; this relationship is built into the way free markets operate, and, as Lew Rockwell Jr. would say, it’s built into the "structure of reality."
The implication of this realization is two-fold. If we wish to change the economic environment we live in, if we wish to see Company A fail or a specific line of products collapse, it is only a matter of changing public opinion. The free market will weed out what consumers do not like by the very structure of capitalism.
Sure, the long arm of government coercion could spread and strip away the freedom of a consumer to exchange with a producer, but this achievement is shallow at best. The very fact that government action was necessitated means that not all people were on board, that some people valued the exchange more than the reasons not to exchange. This decision should be left up to each individual consumer, not rule-bound bureaucrats.
Just think if every time you went to vote, a man stands over your shoulder. After you mark the candidate on your ballot, he smiles, pats you on the back, and then fills out your ballot again, insisting that you’d simply chosen the wrong person. The use of coercion and the peeling back of the freedom of trade is morally repugnant and calls into question, if not outright nullifies, any so-called virtuous action.
The second implication is the free market will operate best without government-backed corporate welfare. When a governing body expropriates funds from a population and gives it to a company, this action might be seen as helping along capitalism, but the opposite is true. This action risks mal-investment as consumers have not indicated a demand for a certain good.
The two major times where corporate welfare is advocated is when a company is starting up and when a company is doing poorly. If a company wants funds to start up, it means that its prospect of future demand for its goods or services looks grim, to the point that investment would be too risky to invest with its own money.
Typically, when a company is doing poorly, it is because situations have changed so that the good can no longer be provided at a price that warrants its purchase, or the demand for a given product has completely dried up. The assets should be liquidated and the capital moved into sectors that boast adequate demand. Corporate welfare prolongs this process, thus prolonging the pain.
Government interference in the free-market not only distorts the allocation of resources, but it interrupts the democratic structure of voluntary exchanges that underpins the system of free market capitalism.
