"I'm just looking for your honest opinion. What about niches in the market for crooked arbitration firms or firms that pander to the magnates of society? This is just a thought experiment, but I could definitely see this happening and these firms being very profitable."




There are shysters in all places. They tend to naturally gravitate to government, but that's irrelevant. The point is that shysters occupy a small fraction of the market, when they don't have government to lean on. It is hard for a shyster to gain market share in and industry where the product is objective and observable (shysters rule in industries where the product is subjective and unobservable, like fortune telling; they're all shysters). Let's say that an arbitrator began peddling influence by making judgements that favored a particular company because that company pays him hefty bonuses. Other arbitration services will monitor each other's judgments for just such occurences. Why? Because they can advertise that their competitor is making unjust judgements and is on the take. Behaving unethically in this scenario is a large risk; you can lose your entire business to gain one bribe. Who will want to bring their case to your firm in the future knowing that you essentially shill for certain companies?

In short, there are private mechanisms that prevent this. Why doesn't Underwriter's Laboratories hand out their approval based on which company pays them the most? Because their approval would mean nothing, and they'd go out of business. The same is true of many private certifications that are extremely well respected and render their judgement on the competence of a firm or worker or the quality of a product or service yet who do not take bribes.


"I realize that even in states power peddles power, but I can't see any check on things like this in AC."


You have it exactly backwards. There are market mechanisms that punish shysters. Under government, the shysters don't have to be market entrepeneurs, providing a better or cheaper product or service, all they have to become are political entrepeneurs, and have the government, or more properly the politicians whose reelection campaigns they fund, write the law in their favor. A market entrepeneur can only succeed by pleasing customers more than his competition. Political entrepeneurs arrange to use the police power of the state to keep the competition from outcompeting them.