One of the most oft-repeated sayings in political circles is that “the government should be run like a business.” Traditionally, those throughout history who have argued for the reorientation of government and society along the lines of a single business or enterprise have been advocates of socialism and totalitarianism, including individuals like Vladimir Lenin, Henri de Saint-Simon, and Georges Sorel. However, many “pro-business” conservatives have adopted this traditionally left-wing talking point without full consideration of its implications.
Most recently, Oklahoma GOP gubernatorial candidate Kevin Stitt revived this argument. He claimed that by merely reorientating the government along the lines of a business, he will improve Oklahoma’s educational performance, create jobs, and improve infrastructure—all through these supposedly simple administrative changes. In believing that applying the principles of the private sector to the public sector will automatically improve the performance of the public sector, Stitt shows a poor understanding of what makes the private sector successful in the first place.
Government Cannot Mirror the Market
The key to the perceived superiority of business to government among politicians like Stitt is not some characteristic of businesses themselves but the market environment in which they operate. The market is the solution to the problem of dispersed knowledge throughout society or the fact that no one person has access to all of the knowledge within society.
As Adam Smith, the Scottish economist commonly regarded as the father of capitalism, once said, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard for their own interest.”
This means that even if someone doesn’t have the knowledge of butchery, brewing, and baking, through the market he can benefit from others’ knowledge of all three. In a village with three butchers, the butcher with the greatest knowledge and skill will attract the most customers. One of the other butchers, realizing that his services are inferior and thus in lower demand, may lower his prices. Now, individuals of lesser means and individuals who care little about the quality of their meat and wish to conserve their money for other purposes have an option that is favorable to them.
