Sure but those free markets would then eventually start amassing wealth and power, and without something to keep them in check (to prevent them from buying out competitors, cutting safety at the expense of workers, etc) would become the defacto govt themselves.
sorry if TL;DR
My response is a paraphrase/quotes from a chapter I'm reading on monopolies in the book
A Spontaneous Order: A Capitalist Case for a Stateless Society
again, this is all in the realm of theory. With ancap theory, empirical
examples may be used to illustrate a certain part of the theory, but at its core, anarcho-capitalism is theoretical.
Let's talk about monopolies to illustrate the theory of anarcho-capitalism. I think this topic helps show how businesses could be kept in check in a free market.
So, in Ancapistan,
the free market and consumers are the regulating force keeping businesses in check.
Monopolies, would they be able to form in a truly free market? Ancap theory says that monopolies would not. What is a monopoly? A basic definition is
a firm that is the single provider of a particular good or service. This definition is not that economically useful, as it can render everyone a monopolist.
Let's say we both sold wheat. You would have a monopoly on
The Hammer Wheat and I would hold a monopoly on
Xavier Graham Wheat. Our wheat would be differentiated by the process we used to grow it. No one else can offer the unique labor contributions of other people. We are all monopolizing our skill sets.
So where did monopolies originally come from? It initially meant an exclusive privilege to produce or sell a product or service, granted by the King himself.
Murray Rothbard, an anarcho-capitalist, said this
Monopoly is a grant of special privilege by the State, reserving a certain area of production to one particular individual or group. Entry into the field is prohibited to others and this prohibition is enforced by the gendarmes of the State.
Without the Statist apparatus of compulsion, there could be no special grants given to certain businesses. Free entry is the default condition for all industries. Monopolies created by the power of the State could not exist in a truly free market.
For the sake of argument, let's assume that a single provider of a given good or service does arise. As the absence of aggressive barriers to entry into any industry is inherent in free markets, the threat of a potential competitor will be much stronger relative to the case in which the State imposes artificial barriers, and sometimes even prohibitions, on competition in various industries.
scenario - a water company triples its prices without a corresponding increase in the cost of production. How do market participants respond? Firstly, potential future consumers would be deterred from moving to the town, and current residents would be incentivized to move. Consumers would act more conservatively with their water. Less water will be used, and a decrease translates into a decrease in revenue for the water company. Even if the company lowers its prices again, consumers may have grown fond of their conservation methods, thereby permanently lowering the income of this water company. However, if they keep the high prices, then a competing water company from the next town may decide to move in as an alternate provider. If after this, the original water company decided to lower their prices again, they still will have lost the trust of consumers.
Finally, for a company to achieve a "monopoly" status in the first place, it would have had to gain the trust of its customers and provided a more satisfactory service than any actual or potential competitors. The likelihood of this business fundamentally changing its practices which made it successful in the first place is relatively low. . This is of course speculative to some degree. Hopefully the hypothetical may demonstrate the means in which people in the market may effectively deter, prevent, and mitigate all activity that is harmful to the consumer.
Only through the application of State-mandated price ceilings, price floors, regulations, occupational licensure, minimum wages, taxes, and even explicit grants of monopoly over certain industries, can a given firm exploit the consumer. The exploitation of the consumer only exists in this arrangement because the State is able to insulate a given business from market forces via legislation.
WHAT IS THE POINT OF ALL THIS you say? Unrestricted competition in society would not allow for a single entity to amass enough power in order to become a defacto government. There would always be options for people to choose from. So if a certain company were to try to exploit their position, they would simply be replaced by a more consumer friendly competitor. If a company cuts safety precautions for it's workers, workers would be incentivized to go elsewhere to work, as that company would not be the only option.