Pro-business versus pro-market

There has been a bit of discussion (for example here and here) on the difference between being pro-business and being pro-market. Pro-market means that you believe that the free market improves general well-being and economic growth because of Adam Smith's "Invisible Hand", Schumpeter's "Creative Destruction" and Keynes "Animal Spirits". This eventually leads to a higher standard of living for all, although admittedly with some bumps along the way.

Pro-business means that you believe that we should give political power to business because they are in the best position to know what is best. For example, we should bring together a group of hospital businesses, drug businesses, and insurance businesses to decide how to fix health care. The big banks should decide how to fix the financial system. And so forth.

Note that these two things are definitely NOT the same. Personally, I am pro-market but definitely not pro-business. I think business should have no more power than other groups. They are just as self-interested as unions, environmental groups, and political parties.

The problem is that many people in power don't see the difference. Ever since the financial/real estate/etc crisis hit, both the Democrats and Republicans have been significantly pro-business but anti-market. But putting all this power and money in the hands of a few big businesses, they are eliminating the creative destruction that could have ironed out many of the problems by now. Yes, banks and builders may have gone under, but something would have emerged to take their place. And the moral hazard that we created by naming many of these companies "too big to fail" will have lasting and devastating effects on entrepreneurship, small business, and I believe our standard of living.

A pox on all their houses.