The relationship between businesses and the state is often portrayed as antagonistic. Businesses, so the story goes, are just victims of state aggression. However, the truth of the matter is that while businesses can be victims of the abuses of power by the state, they are also accomplices of it.
To a certain degree, both individuals and businesses must engage with the state in order to ensure survival in society. Businesses must comply with regulation to survive and must engage in lobbying as a means of self-defense. Individuals have to follow the law. When this is our reality, distinguishing the true perpetrators from the “agents of injustice” is a challenge.
However, when “compliance” becomes collusion with the state’s coercion, businesses must be viewed with the same wariness with which we view the state itself.
The desire to increase your own wellbeing results in mutually beneficial trade between individuals. This is something most people believe, but this profit motive can also be manipulated by the state to create a system where pleasing politicians and regulators, rather than the creation and voluntary exchange of value, is a better means of profit. This provides a strong incentive for businesses to effectively merge with the state to amass coercive power, blurring the lines between business and state.
Banks are a prime example of this issue. Banks are not only forced to comply, but are also compelled to do the dirty work of the state through a plethora of complex laws. For example, the Bank Secrecy Act requires banks to report certain “suspicious” activity to the fed—without telling the person they’re reporting.
At a recent banker’s conference, a speaker (a former banker who now works for a government agency – a seamless transition I’m sure) took this affiliation to the next level by calling for the creation of a “culture of compliance” within the banks. He encouraged bankers to stop protesting excessive regulations and asserted that banks should embrace change by relishing the barriers to the entry of competitors being created by the regulatory environment and by “getting in the game” to make the regulations work for them.
When a business takes this approach, that entity has clearly crossed the line from victim to perpetrator. Businesses are not obligated to attempt to stop the robbery of others at their own expense, but they are obligated to abstain from actively participating in the robbery. If someone holds a gun to my head and demands my money and I hand it over, I am a victim of a crime. However, if I offer to “get in the game” and help the perpetrator execute a bigger robbery in exchange for keeping some of my money or other benefits or favors, while still a victim, I am now also an accomplice.
The state has employed businesses to accomplish this depraved objective by gaming the system. If we love free enterprise, we must not be so quick to exonerate businesses that are in cahoots with the state.
Brittney Wheeler is an Econ nerd with a passion for monetary and institutional economics. Her wide-ranging work experience includes everything from sales to bank regulatory compliance. She loves learning almost any topic and thrives on change. When she isn’t reading, Brittney can be found lifting weights or practicing pull-ups.