Taking Stock / Who Loves the Free Market?

The biggest threat of all to the free market and free economy isn't populist politicians and radical social movements

At the age of 51, he became the number one businessman in the land and the company he controlled became the most powerful force in the economy. The popular press follows his every move, and tries to avoid stepping on his toes while about it. He's a household name, and more generally admired than the nation's political or spiritual leaders who led the country to independence from the British just over 60 years ago.

You know who we mean, if not by his age or the length of time since the country shook off the British mandate, then by the fact that every Tom, Dick and Yossi knows who he is. But we aren't talking about Nochi Dankner or Lev Leviev, or Yitzhak Tshuva either. No, the above is an abstract from an article two weeks ago in the Herald Tribune about Mukesh Ambani, the richest man in India, the oldest son of the Ambani family who, the paper writes, has replaced Mahatma Gandhi in the role of the most influential citizen in India.

India and Israel are very different. Israel is tiny and India is the seventh-largest country in the world, with the second-largest population. The only common denominator is probably a strong identification with liberal democracy.

Actually, the similarity between the story of India, Mukesh Ambani and a handful of Indian billionaires, and the tremendous power that a handful of tycoons has been accumulating in Israel, is nothing special. Readers of the Israeli press may have the impression that the economic processes in Israel in recent years are unique, but it's a global phenomenon that's simply more glaring in the young developing economies of Asia, South America and eastern Europe - the gradual weakening of government and its institutions, and rise of the business sector and a handful of tycoons.

Nor are widening gaps between the various segments of society a uniquely Israeli story. The extreme nature of the gap in Israel is mainly due to the large segment of two populations that eschew work for cultural and ideological reasons.

The public debate, the popular press, public figures who bare their bleeding hearts and even the blogosphere - which is supposed to be more independent and free - tend to have a very narrow viewpoint, namely: enrichment of the very few. But enrichment of the very few is far from being an economic problem, and it's not at all certain that this is the core the social problems.

Reducing the number of successful businessmen is unlikely to improve education, social security or the competitive capacity of the economy. Nor have better methods been found to drive economic growth and living standards than ones based on competition, initiative and reward for achievement.

Globalization, technology and opening the markets are the factors behind the tremendous accrual of wealth in the hands of a few businessmen around the world. Despite the distortions, anomalies and the wild, eye-popping extravagances they bring, their alternatives are not more promising.

Much more worrying is the way that the accrual of wealth and economic power in the hands of the few can threaten the most important foundations of democratic society, and of the free market and competition.

While the wealthy speak loftily of the free market and liberal democracy, the fact is that they spend much of their time trying to bypass democracy and governmental tools to introduce competition and fairness into their markets.

The media's intensive coverage of social gaps and enrichment of the few doesn't bother the 10, or 20 or 30 richest, most powerful businesspeople in Israel. It may even serve their purposes, because it distracts the debate from the way some of them accrue and preserve their riches and power: bypassing democracy, buying the newspaper publishers, weakening regulations that seek to force fair competition into their spheres.

This is where those of our readers who keep close track of the global economy will leap up and exclaim that we're being naive. Big money is trying to buy government, regulation and the media everywhere in the West and East, too. In some countries like China and Russia it's done brutally, and elsewhere - mainly in the West - there are checks and balances.

It's little comfort that the problem is widespread. Israel cannot afford what the big nations can. It is small and lives in a state of existential threat, while institutional and other corruption gnaw at our competitive edge in the global economy, threatening the country's economic and political independence.

In the last couple of years some of the more brash, belligerent and power-mad tycoons, helped by their legal and public-relations teams, have set out to delegitimize the commonly-used phrase "wealth and power" (or rather, "wealth, power and the press"), which describes unholy relations between big business and politics.

Links between wealth and power are legitimate, they say, even necessary because the function of government is to help the "economy" realize its full growth potential. That is demagoguery by people who assume their audience is mentally retarded. Nobody is arguing against necessary dialog between government and the business sector in order to form an advanced economic strategy.

Links between wealth, power and the press are not helpful discussions between representatives of the business world and government bodies in charge of economic and social affairs. The bad ties between wealth, power and the press are when ministers, politicians and government officials act in favor of specific businessmen - by hamstringing regulation, tailoring tenders, whispering inside information, and the hundreds and thousands of ways designed to help certain companies flourish at the taxpayer's expense.

The party central committees, grimy election methods and control of big unions over party primaries are not the only enemy of democracy in Israel. The growing direct and indirect influence of dozens of businessmen over government is just as great a threat. Paradoxically, surprisingly, the biggest threat of all to the free market and free economy isn't populist politicians and radical, lunatic social movements that argue in favor of a small, isolated economy over a competitive, growing economy. It's the very tycoons who, having swallowed up whole swathes of the marketplace, want to maintain the status quo that brings them their billions.