One of the fundamental mistakes people make when they attack libertarianism is to view it as an ideology that defends or promotes the interests of the wealthy and the powerful. It is a critique you hear far too often and really shows that the person who makes the claim has no idea what libertarianism is.

The problem starts, usually, with the erroneous assumption that we live in a capitalist society. We do not. If this is capitalism then libertarians aren’t capitalists. What we experience is corporatism – as huge a gulf from true capitalism as socialism is. Corporatism defends the interests of the rich and the wealthy, Corporatism – as Mussolini said, is a brand of fascism, big business and the state leaning on each other, propping each other up over the interests of the ‘normal’ people.

Libertarianism is about true free markets, a system we have never, ever, had before. Those that believe libertarians are defending the rich do not understand what free markets are, and why free markets mean free people – not concentrated wealth.

In Britain today we have had only one new bank set up in the past 150 years, something that almost didn’t happen according to the founders, due exclusively to excessive regulation. In America Goldman Sachs and other big financial institutions was one of the big donors to both the Romney and the Obama campaigns – not to Gary Johnson. The wealthy and the powerful do not owe their positions to free markets, they owe them to the Government, to the special favours that the state gives them. Bankers are so wealthy because FSA and BoE regulation means that no new banks can be set up – competition isn’t possible so profit is huge. Train companies, bus companies, supermarkets, financial institutions, law firms, private health firms and pretty much any big company you can think of benefit from the corporatism system we have. High taxes and complex regulation means that it is very expensive and very hard (if not impossible) for new entrants to enter the market. Which means existing firms can consolidate their position, and reap in huge rewards.

In a libertarian system you wouldn’t have the super wealthy, because they wouldn’t be able to protect their position with the awesome power of the state. The current corporatist system is like a feudal lord or King who gives favours to his courtiers – allowing certain favoured ones the sole rights to sell or trade certain precious commodities. A free market removes the favour-givers; without anyone to ask favours from, businesses have to compete and as we see the rare times that happens, former giants that fail to adapt die off or shrink. HMV is a great modern example of something that looked like it was dominant and failed to change to meet new competition. Other examples include MySpace, Ask Jeeves, Yahoo, Motorola, Dell, Kodak, Sony and even Microsoft, all formerly dominant in their field and now either collapsed, waning, trying to change or severely reduced.

The current system favours the rich; complicated tax laws mean it is the rich who can afford to find ways not to pay. Complicated regulation means it is the rich who can afford to pay people to understand it or work around it. Small business doesn’t have a chance, swamped in paper work rather than being able to serve customers and bled dry by taxes. It is no surprise that it is some of the biggest businesses that call for more regulation, or support membership of regulatory bodies like the EU. The more regulation there is, the more tax there is, the more government there is – the more their position is entrenched.

Libertarians are no fan of the wealthy elite, who get to where they are not by hard work or innovation, but by having government contacts and stamping out competition. Libertarians are not apologists for the powerful, who get their power via the state and use their power to keep themselves where they are. And libertarians are not defenders of the current system that keeps the wealthy and powerful in place and sees the state bail out and lobby for big business while the little guy is simultaneously stomped on and foots the bill. A libertarian hates the bankers as much as anyone, for relying on public money to back up their gambles, for using their elite positions to bet on both horses in political races to guarantee themselves special treatment (why else do you think they donate so heavily to both sides of a campaign?)

True free markets would see the huge regulatory barriers to entry broken down; entrenched firms forced to compete for the first time in their lives would either adapt or die. Competition would force down prices, force down the bloated wages of the fat cats and push up quality of products and services. Government attempts to do this have failed – government-run systems have, ever since they began thousands of years ago, seen the cosy elite supported at the expense of the rest of us. Libertarianism is not a defence of the rich and powerful; it is the only way to fight them.