anonnymous:I agree that the answer to monopolization is competition but when the defense companies band together wouldn't that then be to much power in to few hands and wouldn't that present its own problems? Even in a free market wouldn't there need to be some regulation other than companies banding together? Please forgive me for all the questions for I am just now beginning to understand this concept of free markets.
I think, again as an imperfect prediction, that they would band together only long enough to deal with the crazy agency threatening to upset the world. Look what happens in other industries - there is a tendency towards cooperation that goes along with the tendency towards competition, but not towards cooperation to the point where companies just spontaneously merge or form cartels.
On that topic, a large difference is that if an industry does cartelize, including the defense industry, a strong incentive is thereby given to other firms to enter the industry, offering a more moral and cheaper service. The cartelization raises profits, which increases the incentive to enter the industry or provide a good substitute.
If an industry wants to get unfair profits, it needs to not just cartelize, but also threaten the use of force against anyone who tries to compete. This is how the mafia makes money; it's how government provision of defense works as well. If, despite all this, it were cartelized, we'd end up with what we have now. There might still be a difference in people's minds though - people accept the mafia, but do not think that arguing against the mafia is immoral.