Economic Power

At 6,500 stores, 1.6 million employees, and $312 billion in annual sales, there's no question that Wal-Mart is powerful. But its power is economic, not political, a vital nuance the Socialists and collectivists that oppose business conveniently forget to consider.

Economic power is the power to trade. Business, no matter how big, can't oppress, hurt or subjugate you in any way. Economic power can't take your home, your savings, or violate your rights. Wal-Mart can open a store, but it can't sneak into your apartment and rip off the television. It can't force you to work there, shop there, or invest in its stock.

Economic power is gained through voluntary trade. A big company, regardless of how powerful it might be, can't force anybody to do business with it who doesn't want to. From Chevron (CVX) to Chico's (CHS), you are free to trade with them...or not.

So despite the endless flow of venom and bile toward large corporations, the truth is that we are the ones who make a business big. What makes Microsoft (MSFT), Procter & Gamble (PG), Fox News, or even mega-hedge fund Citadel powerful is that they all provide goods and services that individuals want to buy. Each week 165 million customers voluntarily shop at Wal-Mart.

It's an instinctual part of American free markets. If you value gas from ExxonMobil, or like hamburgers from McDonald's (MCD), you are free to purchase them as little or often as you wish. If you'd rather ride a 10-speed and drink wheat grass, that's your prerogative.

"Economic power," as philosopher Ayn Rand wrote, "is exercised by means of a positive, by offering men a reward, an incentive, a payment, a value; political power is exercised by means of a negative, by the threat of punishment, injury, imprisonment, destruction. The businessman's tool is values; the bureaucrat's tool is fear."

Of course, the bureaucrat represents political power, which, these days, is the power of government to do essentially whatever it damn pleases. After all, government makes the laws. And unlike Exxon, Boeing (BA) or MasterCard (MA), they don't give you an option to play ball. If you choose not to buy pizza from Dominos Pizza (DPZ), nobody will give a hoot. If you don't pay your taxes, rob a bank or run someone over, you could be fined, jailed or even put to death.

So political power — such as that wielded by various attorneys general, the Justice Department or the SEC, actually creates nothing. And while we'd like to think of government as the just policeman who diligently protects us from burglars and bad guys, when political power runs amok, it doesn't protect victims; it creates them, as law-abiding businesses and citizens who are forced — at the point of a gun — to comply with new, arbitrary and immoral laws.

When Sen. Paul Sarbanes and Rep. Michael Oxley decide to spearhead an unjustly onerous regulatory burden, or when legislators vote to raise the minimum wage higher than many businesses can afford to pay, there's no freedom or voluntary trade involved or all. You either comply — or face devastating consequences.

In recent years, political power has slipped to near absurd levels. As regular readers know, we've written extensively on Chicago's disintegration into a full-fledged nanny state. In the past 18 months or so, the city has banished smoking, driving with a cellphone, foie gras and, if one alderman has his way, the trans fats used in frying onion rings. They've also passed a sweeping "living wage" law that forces employers — at the point of a gun — to pay above-market wages.

These days, it's fashionable to accuse successful businesses of being predatory and bullying. Big companies are regularly demonized as gouging consumers or destroying small towns. But in reality, the only power business has is economic power earned by providing a product or service valued by others who voluntarily seek it out.

Political power, on other hand, is the power to make and enforce law by physical coercion. There is no trade and no choice involved — you are simply forced to obey. Providing that law is objective and respective of individual rights, no harm is done. But as political power is hijacked by opportunistic bureaucrats, a civilized, capitalist society quickly deteriorates into mob rule. That has the potential to do more harm than Disney (DIS), Coca-Cola (KO) or any big company ever could.