Markets versus business

Patrick Crozier asks me why I like markets but don't like business. Here are a few reasons, based on a crude distinction between an ideal-type market and an ideal-type big business:
1. Markets are democratic, business is not. In a market, no-one can prosper for long on reputation alone  if they fail to deliver the goods; even brand names can fade. And the littlest guy can thrive if he has something to offer. Business, though, is anti-democratic; the cult of the CEO encourages people to look to "leaders", and to respect hierarchies.
2.  Markets are empirical, business is not. Markets test hypotheses; does your product sell? Do your investments rise? Business gives us meaningless jargon divorced from reality. Most perniciously, business gives us an ideology that  chief executives  deserve vast salaries because they can create successful businesses. However ,  as I've shown in the day job (maybe subs reqd), this is just plain false; statistically significant alpha is rare even among successful firms.
3. Markets are positive-sum, business is zero-sum (or worse). Everyone gains from trade. But in business, you can gain from rent-seeking and office politics.
4. Markets are pluralist, business is not. In a market, you can go home when you've made enough for the day, and pursue other goals. Business, though, is totalizing; everything is subordinated to making more money.
5. Markets limit  power, business seeks it. In a free market, you can only gain monopoly power by offering customers something they can't get elsewhere. And this edge rarely lasts long.  Business, though, pursues power by lobbying for government protection or crushing rvials.
Of course, some of the evils of business are necessary ones; a relentless focus on the bottom line might be unedifying, but it's efficient.
I suspect many supporters of free market capitalism - and most of the intelligent ones - share my distaste for business, but argue that markets do a good job of limiting these evils.
I'm not sure about that. But I am sure that for "business" here, you could read "government." And markets do a much better job of restraining business than democracy does of restraining the state.

Comments

[dearieme]

Your problem is that you can't push the envelope out of the box, going forward.

[Patrick Crozier]

I have commented on this at: http://www.croziervision.com/index.php/pct/archives/2006/04/#741