We should make two big distinctions here.
One is between business and entrepreneurship. The bosses of many big businesses are not entrepreneurs who risk their own money to set up companies, but are bureaucrats and salarymen. Tesco‘s Philip Clarke, RBS’s Stephen Hester and Sainsbury’s Justin King, to name just three prominent figures off the top of my head, joined large companies straight from university. They are no more entrepreneurs than the Labour member working in the public sector.
You might object here that Labour should be the party of small business and entrepreneurs. Maybe. But there’s a danger that, if it becomes pro-business it will listen more to the bureaucrat businessmen with their lobbying power and wealth than to the smaller, powerless entrepreneur.
Secondly, there’s a distinction between being business and markets. Business is about concentrating power at the top of a hierarchy. Markets are about dispersing power. Business thinks high profits are a good thing, but supporters of markets worry that they are instead a sign of a market imperfection or monopoly power.
This distinction means that, in some respects, pro-business policies are very different from pro-market ones:
- A pro-business government gives tax breaks and subsidies for favoured activities. A pro-market government wants a wide tax base with low tax rates.
- A pro-business government favours copyright and patent laws which protect incumbent firms. A pro-market government wants weaker IP laws to encourage new firms.
- A pro-business government will be relaxed about red tape that strangles small firms and thus entrenches incumbents’ position. A pro-market government will not be.
- A pro-business government is happy with planning laws that protect incumbents from new entrants. A pro-market government is not.
- A pro-business government will look to give boondoggles and favours to “good” business (such as manufacturers). A pro-market government prefers a level playing field.
- A pro-business government might encourage or at least tolerate mergers. A pro-market government would worry more about the accumulation of monopoly power.
- A pro-business government will be relaxed about wasteful spending on procurement and infrastructure. A pro-market government will want less spending.
In these senses, to be pro-business is to be anti-market.
And - I’d add - it is to be wrong. New Labour’s (misguided) pro-business stance gave us the managerialism which alienated public sector workers, wasteful PFI projects, IT and military procurement policies which were mere corporate welfare, and targets which often distorted the provision of health and education. In doing all this, Labour failed to see that what makes business efficient - insofar as it is at all - is the discipline of market forces, not the skill of “business leaders.”
I would much prefer that Labour were pro-market - albeit in a more intelligent, evidence-based way than is associated with right libertarians. Sadly, this is even less likely to happen than it becoming pro-business.