Stephen Gordon provides a useful reminder about not conflating “business” interests with “free market” interests: they’re often in conflict.
This is something that should always be kept in mind in economic policy discussions: business groups are pro-BUSINESS, not pro-MARKET.
It is especially important to keep this in mind when we read news items such as this, in which several of Canada’s largest banks voice their opposition to the proposed TMX-LSE merger.
It is true that business groups will often make use the language of markets, and it is obviously in their interest to portray themselves as defenders of markets.
But they are a lobby group like any other, and cannot be relied upon to defend the general public interest.
This point is sometimes hard to see, especially since many business groups have the reputation of favouring such pro-market policies such as free trade. And so they do, but for precisely the wrong reason: as a way of increasing exports.
This is why you can often find big business working hand-in-mailed-gauntlet with regulators to shut down competitors and make it harder for new competitors to enter their markets: corporations do not naturally favour free markets. Corporations exist to maximize profit for their shareholders, not primarily to serve customers. Serving customers is one way to accomplish that end, but in a regulated economy it may not be the best way to do it. If you can get the naked force of government to muscle in and suppress other businesses, that leaves more profit for you (as long as you co-operate with the government, that is).
Small businesses don’t have the ability to cosy up to government in the same way big corporations can, so even if they band together in trade groups, they won’t have the ability to capture and direct the regulators in the way big businesses often can.
