An economy of family firms and family farms might once have functioned like an Idealized Free Market. But the modern system of corporate industry does not. It behaves differently in regard both to output and employment and to pricing: output and employment are adjusted to current sales, but prices are planned with an eye to the financing of investment, so are governed by long-term considerations, and tend to be unresponsive to shot term changes. So, the automatic and anonymous rule of supply and demand in the market came to be replaced by a form of private administration.And when the corporation's decision span covers the globe, when capital flows internationally, individual governments are about as powerless to stimulate their national growth as an entrepreneurial new fruit-stall. Or perhaps less so.
Our instinct is that an apple bought from a street trader has a greater multiplier effect in the economy than an apple bought from Tesco, that the change in the endogenous variable is greater given the same exogenous variable. Our instinct may be correct; I'd be interested in pointers to econometric research on this. And if this is the case, the answer to economic growth may lie in maximising the multiplier effect of the internal economy, as clearly the corporate - government complex will not answer, despite Dave's brave words. Discuss.