Under laissez-faire capitalism, there are no regulatory agencies controlling the food that grocery stores and restaurants can sell or the drugs that pharmaceutical companies can offer. But the result is not a flood of dangerous food and drugs. Far from it.
First of all, the government does play a crucial role when it comes to food and drugs. A capitalist government punishes force and fraud. If a restaurant negligently serves you tainted meat, or a drug company sells you snake oil disguised as cancer medication, the government will step in to protect your rights.
Second, the market provides powerful incentives for safety and quality. On a free market, where caveat emptor rules, consumers place a high value on reputation. What that means is that companies that have established themselves as reliable and trustworthy reap higher profits. Just think: Are you more likely to buy lunch from McDonald’s, with its proven track record of safe and tasty food—or from Marie’s Discount Beef Joint, which just opened last week?
Third, there are all sorts of ways that consumers in a laissez-faire society can check on the safety and quality of businesses.
They can, for example, read reviews at websites such as Angie’s List or Zagat.
They can turn to private certification agencies, which would independently verify the safety and quality of businesses. A new restaurant might hire Food Inspectors Incorporated to check out its kitchen, and Food Inspectors would stake its reputation (and bottom line) on the reliability of its assessments.
Insurance companies, too, would play a role here, just as they do today. Before agreeing to insure a given business against liability for tainted food or medicine, an insurance company would insist on inspections, oversight, and specific policies and procedures to encourage safety and quality.
(If you’re wondering about Upton Sinclair’s The Jungle, which claimed to describe the stomach-turning conditions of Chicago meat packing factories during the early nineteenth century, I recommend you check out this article.)
Under laissez-faire capitalism, the profit motive drives businessmen to pay careful attention to issues of safety and quality, while a rights-protecting government polices force and fraud. That—not some politically motivated bureaucrat—is what actually ensures our welfare.