See also The "free" market.
Invisible hand has a good description of the main thing I want to discuss:
... by trying to maximize their own gains in a free market, individual ambition benefits society, even if the ambitious have no benevolent intentions.
This is false.
In a free market, a business is most survivable when it has no competition. No competition is a monopoly. A monopoly is a non-free market.
Assuming competition then. In the short run it is perfectly possible for a business to be supply only to legitimate demand, operate legally, compete fairly and be otherwise ethical.
However, that type of business will at some point be faced with competition which is not ethical. Manipulating laws, striving for monopoly, collusion to gain unfair advantages, etc.
We can see many things at work already. Patents, copyrights, a lawyer-dominated marketplace. Control over technology, research and development. Virtual monopolies, government contracts. Etc.
An unethical company will..
Patent important technologies and then leverage that monopoly. Even now we can see a push for patenting software, an entirely ridiculous and harmful notion.
Cut costs by breaking laws. Pollute, unethical employee practices, shirk safety responsibilities. For example, the early history of car safety standards.
Manipulate the marketplace. Miss-label or lie outright to their customers, sell addictive products.
Target competitors. Headhunt key personnel from competitors, practice corporate espionage and sabotage.
... and anything else it takes. An ethical company, pitted against an unethical one will always be out-competed in the long run. Always. Companies will come and go, and there will be a balance of unethical-ness.
A free system is always spiralling towards the drain. Without active observation and resistance, it will sink lower than is sustainable for the species. It probably won't go down that drain -- there will usually be a balance.
When I say "free system", I mean more than an economic system. I mean our quaint veil of democracy as well.
- within each major field of competition there are benevolent dictators in their companies, all fighting against the downward spiral
, or there is overarching government control (i.e. a non-free market)
.. and that's only if the government itself has active oversight by citizens or by its own benevolent dictator (i.e. not a democracy).
... unless there is some sort of significant benevolent control, every element wrestles every other and the entire system and all of us suffer for it.
Most companies will lie, cheat and steal. Pollute, murder and ruin.
Perhaps naivety and/or corruption in early decision-makers made them at least somewhat blind to this problem. Somewhat, but not entirely. There were mechanisms to enforce fair competition, prevent monopoly or hold companies accountable.
Over time, companies attacked these mechanisms. They're all but gone now. Whatever vestiges remain are kept so monopolies can use them as tools to attack potential competitors.
Breaking the control of this system will be as difficult as any revolution to change one system to another. Look at the challenges of previous revolutions to dethrone and change from a Monarchy to another system.
Go from here to where? This is the problem. There is nowhere to go. Breaking monopolistic controls is important, but there are only two sustainable systems to replace it with:
1) A benevolent dictatorship.
2) Watchdog citizens.
A benevolent dictatorship is as fallible as any system. We have historical examples of various sorts of dictatorships spiralling out of control and doing more harm then good.
The system we have now was meant to be a society created of watchdog citizens who have the power to overthrow and replace a government when (not if) it becomes corrupted. Take the USA for example. There's a very grave reason why the right to bear arms was given to their citizens. In that same vein, it should be an explicitly declared intention to empower citizens with the ability to overthrow the government.
The government should at no time be able to "overthrow its citizens". A serious conflict would exist between citizen-militia and government military. Technology, organization, supplies, population.. there would be many differences. A country needs to be able to protect itself from foreign agents, and yet how can it do that and still remain vulnerable to its citizens? That's the problem with overt power.
The other kind of citizen power would be more covert. Citizens who are observant and active in politics should have the ability to change laws or hire and fire politicians to reflect the overall desires of the majority of citizens. This somehow needs to be enlightened enough so that an intelligent direction is maintained.
It's far too easy for an active minority to seize significant political control. So easy, in fact, that the very spirit of laws have been unrecognizable altered. This same alteration has been abused by companies seeking to more strongly compete.
So how is it possible for a free system to be controlled by its citizens? How indeed, when citizens are, well, lazy. Perhaps I should use a nicer word like "efficient", or make some joke and slip in "average" or "unenlightened" or whatever. No, people are lazy. Lazy and stupid. Stupid because they're lazy.
Lazy is efficient. Perhaps there is some sort of personal return on investment calculation going on in each of our heads. If there is, that calculation doesn't extend very far into our future and certainly doesn't often extend into our planet's or species' future.
There is almost certainly some evolutionary leftover constraining our societal and personal actions. Societally, we act as blindly as a virus. We'll consume this planet and turn on each other until we find a balance or extinction.
The lack of economic ethics and political enlightenment has a sort of inefficiency. That inefficiency results in undue strain on global resources. As companies compete unethically, the side-effects are like civilian casualties in some unending war. Except the casualties aren't just civilians but the resources and environment we depend on for our very survival.
This is why I say that a free market threatens human survival.
I see no reasonable way out of this. I say no reasonable way, because there is an entirely unreasonable way. The disbanding of monopolistic powers. The dethroning of current kings. The removal of power from the unethical and the lazy.
A global culture shift might make people ethical, intelligent and active enough to sustain a not-yet-corrupted system. I don't know what it would take to get there. I do know that baby steps from here to there will not and cannot work. Active resistance by the existing power structure would trivially crush any burgeoning revolution. If real threat were observed, the existing structure would band together to fight it. That's a horrifying thought.
As others have suggested, the only possibility is the infiltration of that ethical citizen spirit into the existing power structure. A cultural shift that includes the current unethical participants. Enough of a shift so that the revolution comes from within the existing structures.
How is that possible? No clue. It seems that corruption is paired with the success necessary to be at the highest levels of the existing structures.
The best people to have at those highest levels are those who wouldn't want to be there. Philosopher-kings.