To address the first half of this first, due to things like (a) imperfect mobility and (b) natural inequality between humans and imperfect information, free-market Capitalism necessarily tends towards some businesses becoming larger than others, tending towards monopoly:
(a) People can’t up and leave any situation they are in at will, nor would they want to if they could. Most people settle in certain places for significant periods of time, influenced by the proximity of family and friends, and developing connections with people and their increasingly familiar surroundings. Most people carry significant material baggage with them, which takes a great deal of effort to move from place to place. Most people are only willing to commute a certain distance, giving them a limited area to find work in. All factors like this provide employers with significant scope to push employees beyond their comfort zone before any “voluntary” agreements between employer and employee can no longer be endured - even in the most free market economy.
(b) The most successful business does not become the most successful business simply because it provides the best product. Much of what constitutes the “best” product is in the persuasion of the public that a product is indeed the “best” - “best” is a value judgment based on what information is available. A great deal of what constitutes the information available is in marketing and a great deal of subliminal influence goes into the most effective marketing. Consumers are more often than not merely passively interested in the products available. This is in part because there is so much choice that the consumer is overwhelmed and is no longer willing to be fully in charge of what they choose.
This gives a lot of scope for employers to encourage the “appearance” of a need for a product, even when there is actually very little need or desire initially. Ironically, there is a great deal of security demanded by employers in a free market when ensuring an adequate and predictable market.
Further, it is primarily on business COSTS that businesses compete, not revenues from simply having the best products. An example of this is the sale of branded products for different prices - clearly they are all made by the same company in the same way each time. Further bargaining power to drive down costs comes about when businesses can make larger bulk orders - the gap between larger businesses and smaller ones is increased due to economies of scale. The larger and more powerful businesses likewise have more bargaining power with the threat of withdrawing their orders from suppliers. This can drive costs down even further for already successful businesses much more than it can smaller businesses.
If there was no option to compete on cost and to aggressively influence consumers through advertising campaigns, and to benefit from economies from scale, producing the best products would be much more closely correlated with the best businesses.
The free market encourages all the above things, all detracting from the best product possible being available to consumers, even by the most successful companies.
Let it NOT be mistaken that I am implying that free market tends toward the complete detriment of the consumer.
The only thing in the consumer’s favour that prevents this is the limited power they have in a free market - which leads me to the 2nd “myth”.
It is one thing to say that wealthy people and ordinary people both have power in a free market, and another entirely to claim that they have equal power.
Can an ordinary person buy the best products, no matter how expensive? No.
Can a wealthy person buy the best products as well as the worst? Yes.
Clearly purchasing power is in favour of the wealthy people. Of course wealthy people would have more power than ordinary people.
Do ordinary people have NO power? Of course not.
It is in the employer’s primary interest to increase their market size because this leads to more demand and revenue from greater numbers of people. This is where ordinary people come in useful.
In pursuing his own interests, the employer provides things for ordinary people so that he gets something in return. However, the producer of the product in a free market would not sell anything if they did not get more in return - otherwise they would simply be producing for the love of production, needing a certain amount in return to be able to continue production. The financial incentive that the system is based on requires that money flows steadily back to businesses so that they may grow at the socially accepted rate that equates to “incentive to set up and maintain a business”.
This happens during a boom period, and when too much wealth has flowed back to businesses, consumer wealth decreases to a point where consumers can no longer spend as much, the rich withdraw their investment because they are no longer getting wealthier at their desired rate, and the economy busts.
This is inherently going to happen over and over and over again in a free market.
For every period of growth, the growth must be undone at every recession or depression.
The hope is that in the meantime, more valuable products would have been developed and knowledge of them is not lost. As long as this is the case, the economy can restart once the recession or depression has become so devastating that it cannot get any worse, and we can all start again from a point of higher standard of living.
This would be a lot clearer and extreme without any government “interference”.
Let it not be forgotten that governments resort to tactics like running the printing presses to create the illusion of more money… to continue the imaginary appearance of growth. This is only needed when an economy requires this illusion.
Employees maintaining a similar or increasing standard of living while money flows away from them is a symptom of products becoming cheaper as new, more valuable ones replace older versions - not of wealth flowing towards employees. This is why wealth flowing away from employees isn’t so clear. Inflation masks this process even better.
The illusion of more money makes it look like wages can be increased, but this is later cancelled out by businesses INFLATING prices so that the previous proportion of employer/employee wealth is restored, and the flow from employee to employer continues.
The illusion of more money makes it look like consumers are maintaining their purchasing power or that this power is increasing. This keeps investors under the illusion that they are continuing to profit from their investments at a more steady rate.
However, such action only prolongs the boom periods and lessens the blows of busts when companies are bailed out.
Booms and busts are inevitable in a free market because what is being seen as “growth” is an illusion. The only actual growth is in knowledge of new technologies and products.
(WHY DO WE NEED THESE BOOMS AND BUSTS FOR NEW TECHNOLOGIES AND PRODUCTS TO BE CREATED?!!!)
The greater power is in the hands of the wealthy who the wealth flows towards during boom periods, and who have exclusive access to be most advanced technologies and products. The wealthy investors are in charge of when to withdraw their investments to get them through a bust period.
The lesser power is in the hands of the ordinary employees who wealth flows away from, and who are left with nothing to see them through each bust period - all the while having no access to anything but out of date technologies and poorer quality products.