Two players, one market
More than a century ago, American economist Thorstein Veblen exposed a distinction that has rarely been taken seriously since. In The Theory of Business Enterprise (1904), he wrote that capitalism has two fundamentally different logics. On the one hand, there is “industry”: organising people, knowledge and resources to make something useful. On the other hand, there is “business”: accumulating capital, regardless of what it takes to do so.
Both use the market, but for different purposes. The entrepreneur, the man of “industry”, uses the market to produce and sell. His interest is in a healthy economy with customers who have purchasing power, fair competition and functioning institutions. The businessman uses the market to maximise profits, not necessarily by producing better, but by paying less: to employees, to the government, to society. For him, the market is not a place of exchange but of extraction. Taxes, labour costs, environmental damage, health risks: anything that does not have to be paid increases the result.
And it explains why deregulation is so attractive to those who accumulate capital, even though it is rarely the entrepreneur who demands it most.
Politicians who deregulate have the entrepreneur in mind. They see rules as a burden for the baker who is expanding, the start-up that is growing and innovating, the factory that is producing. That entrepreneur exists. But he has no lobbyists in Brussels. The lobbying power behind the European omnibus bills comes from sectors that are large enough to help write the rules that relieve them. The baker does not benefit from an omnibus. The chemical industry, the financial sector and the agro-industry do.
The right to pass on damage
Those who are allowed to pass on damage to others do so. Deregulation is therefore not a liberation for companies. It is a legal right to pass the bill on to society.
Researchers calculated the size of that bill for companies at the Dutch stock exchange last year. They looked at how much value the largest Dutch listed companies actually create, when social and ecological costs are taken into account. The result: on average, 30% of what is recorded as profit is in fact damage passed on. Climate costs, damage to health, depletion of raw materials: none of these appear on the company's balance sheet, but they are there nonetheless. Several AEX companies already destroy more social value than they create on balance.
Deregulation only makes this easier. Allowing damage to health increases profits for companies, but shortens the life expectancy of the population. Underpaying employees improves operating results, but increases poverty. Every rule that disappears shifts costs from the balance sheet to society.
Contraction masquerading as growth
These kinds of costs do not disappear. They reappear elsewhere: in hospital bills, in water purification costs, in failed harvests and extreme weather. What is presented as economic growth is, from a social perspective, contraction. Collective impoverishment, with accounting that points to growth. Those who recognise this also know what needs to change: not fewer rules, but better ones.
And yet this is called market policy. The language of market forces suggests a neutral mechanism: supply, demand, price, balance. But a market is never neutral. A market is a set of rules, and rules determine who wins. Large companies with lobbyists in Brussels and Washington help write the omnibus bills that relieve them of their obligations. That is not market forces. That is the forces of power. And as long as we continue to confuse the two, the same parties will always win.
This opinion piece was previously published in newspaper Het Financieele Dagblad (Dutch)