Is Capitalism "Pro-Business?"
Is what’s good for General Motors really what’s good for America? Professor Steve Horwitz explains the difference between free market and pro-business attitudes – and why one is better than the other.
In a free market system, Horwitz argues, competition encourages firms to provide higher quality products at lower prices. Because firms have to compete with one another for consumer dollars, those that give consumers what they value most will generate the greatest profits. This pressure creates an incentive for businesses to offer cheaper and better products than their competitors, and promotes innovation that results in value creation. Ultimately, the consumer benefits.
Because free markets create prosperity, supporters of free market systems oppose pro-business measures such as bailouts, subsidies, and monopolies because they do not discourage the inefficient practices of the businesses that receive them. Additionally, regulations allow these inefficient businesses to remain powerful, as they present barriers to entry for new firms and serve the interests of those who have “captured” the regulators.
Supporting free markets, Horwitz concludes, does not make an individual pro-business, but pro-human and pro-people. It is free markets and competition – not what’s best for big business – that is best for America.