By Eric-Charles Banfield • February 1995
“Back when first cutting my teeth on the concepts of free-market economics, I was impressed by the argument that business firms have to satisfy their customers to survive. Firms have strong, natural disincentives against performing poorly or acting immorally because they would risk losing customers and going out of business. For some time thereafter, I defended ‘business’ on those grounds. Business is not an evil, I argued; indeed, businesses are almost ‘slaves’ to the shifting and elusive passions of the sovereign consumer.
But over the years, I found myself forced to refine my views regarding business firms. Three lessons stand out. First, being ‘pro-business’ is not the same as being ‘free-market.’ Second, regulation, which presumably works ‘against’ business, goes hand-in-hand with special privileges and artificial protections ‘for’ business. Third, the phenomenon of active and routine collusion between business and government made the business world seem less than the pure and benevolent social agent I once perceived. In short, I began to recognize that the concept of ‘the corporate welfare state’ goes a long way to describe some of the problems we observe in the complex nexus between the market sector and the government sector. All too often, businesses lobby government for special privileges they would not have in a true, free market.” (Read more from thefreemanonline.org)
The worst thing that might come from this crises is a loss of faith in free markets because of business-government collusion.