Many people claim to favor capitalism and free markets, yet see no problem with the existence and dominance of for-profit corporations. The same people often oppose labor unions as being a damaging force, coming between employer and employee as they do. Such people lack understanding.

Labor unions are an attempt to use aggregation to obtain "market power", which can be defined as the power to unilaterally set prices and terms of an economic transaction. Likewise, corporations exist for that very purpose: to aggregate or pool resources in order to obtain more market power than the individuals involved could exercise on their own.

Did you see that? Corporations, like unions, exist to obtain market power, so that they can reduce costs, increase prices, and grow their profits. In the process, they violate one of the key conditions that much of capitalist economic theory is based upon--it is no longer about freely negotiated prices between buyers and sellers who cannot on their own affect market prices--it is now about growing your corporation's size, scope, and market share enough to force suppliers, customers, and employees to accept prices and terms that are more beneficial to the corporation.

In doing this, they break out of the area that capitalist theory likes to discuss. They instead move toward something much less appealing than the invisible hand. Corporations, by virtue of their size, life spans, and resources, tend to acquire enormous and outsized influence with governmental entities. They tend to seek out protected spaces, areas in which they may exercise quasi-monopoly or quasi-oligopoly power in exchange for filling the king's hand with coin. That is to say corporations always seek to corrupt governments in order to perpetuate themselves and expand their financial and political power.

So when Johnny, your son who recently graduated from high school or college, goes to apply for a job at "BigCo, Inc", he may not understand that regardless of his prior training or experience, regardless of his enthusiasm, regardless of how hard he works, the corporation's policies constrain his ability to negotiate a wage more in line with the quality and quantity of his output. If BigCo is large enough, the corporation's pay policies will also affect the ability to receive rewards for production at other employers in the same geographical area, or industry.

Although Johnny may not understand it, the corporation, by its anti-competitive nature, constrains and controls his ability to "earn what he's worth" ... it is not "free enterprise" nor "free markets" when a corporation controls what one can earn. It is market failure, caused by the anti-competitiveness that is inherent in corporations.

This is also important to understand because the present #OWS (Occupy Wall Street) protest movement has, like many others, conflated corporations' [mis-]behavior with capitalism. Corporations, and those who manage corporations (including financial corporations) work to prevent capitalist free markets, because their profits would naturally be eroded as rational and aware people realize that the corporate media companies seek to convince consumers that high current spending (and borrowing) is good, and curbing spending in order to save for future needs is bad.

The media don't do this on their own. They do this in order to enlarge the profits of other corporations and to improve the fortunes of politicians whose policies benefit them and their customers.

The truth is entirely different. Corporations are anti-capitalist and anti-free-market. They are pro-monopoly and pro-oligopoly when dealing with their customers (or their customers' customers in the case of Microsoft). Corporations are pro-monopsony and pro-oligopsony when dealing with their suppliers. Corporations decry any attempt for the other parties in the transaction to seek to balance their market power.

The #TeaParty movement also confuses these things. One of their hot-button issues is "socialized medicine", yet they fail to see that it is not possible to have a free market in health care, simply because you will give or promise to give anything that the doctor requests in order to have a few more years or relatively pain-free living. The doctor knows it, and so he or she can charge you very high rates. It is this market failure that led to the rise of third party payers, such as Medicare, Medicaid, and insurers. These organizations aggregate numerous patients in order to obtain (monopsony or oligopsony) market power against providers (hospitals, doctors, nurses, technicians, medical groups) and in the process have also been able to exercise monopoly or oligopoly powers against patients and those who pay the premiums for the patients' coverage.

So if you claim to support free markets, I would encourage you to start opposing corporations and their activities. Start seeking locally-made products from small, locally-owned businesses (SLOBs) and replacing purchases of products of large, out-of-area corporations (LOOACs) with these local purchases.