GOLD mining on federal lands, raising sugar cane near the Everglades, and irrigating Western deserts all illustrate the critical differences between being pro-free market and pro-business.

It is easy to see why many people confuse the two. Wise Use groups and others, out of duplicity or ignorance, posture as defenders of the free market. But in fact, they often argue for special privileges and protections that cost the environment, consumers and taxpayers dearly. It is important to understand the difference between advocating the free market as a process and advocating special treatment for businesses.

The market is a system of information and incentives. It coordinates human action and allocates resources to their highest valued uses with greater efficiency than other systems. It works extremely well, though never perfectly, with commodities such as minerals, agricultural goods and manufactures.

However, some valuable things, such as clean air, species diversity, migratory waterfowl, and scenic landscapes are difficult to protect and allocate through the market. Economists call these public goods and common-pool resources. It is difficult or impossible to price or to establish clear property rights over them - and without clear and transferable property rights, the market cannot function well. If markets are to minimize waste and efficiently protect the environment, people must bear the costs of their actions.

Businesses are players within the market framework. Each shares the framework with other groups as well as unorganized individuals. Businesses in the market are like organisms in an ecological system.

Businesses have incentives to avoid the full costs of their actions. They often favor policies that advantage themselves and impose costs on others. If responsible for their full costs, the things they produce may be more expensive. For example, gold mining, which can involve dynamiting entire mountains and bathing the rubble in poisonous cyanide solutions to leach out the gold, may not be profitable if ecological, aesthetic and health costs are counted. Companies may even have to give up their mines. Society (i.e. all of us) would reap a net gain, but stockholders and employees would suffer losses.

A pro-market position puts the public's well-being ahead of special privileges for any business. In contrast, the phrase "pro business" means allowing certain people to evade responsibility for the costs of their actions and to insulate themselves from competition. Many businesses try to avoid or ignore environmental costs because by doing so, they gain in the short run. To avoid costs, businesses lobby legislatures to limit competition, obtain subsidies, or ignore certain costs.

Consider Florida sugar growers. U.S. sugar quotas protect them from less-expensive imports. Moreover, sugar growers can ignore the enormous ecological damage they inflict on the Everglades. Their political power (even then-Sen. Al Gore voted to protect them) allows them to retain these subsidies at the financial and environmental expense of the country.

But such pro-business strategies always advantage one industry by disadvantaging others. For instance, candy manufacturers who use sugar have higher costs than Canadian competitors because U.S. sugar prices are kept artificially high by quotas. They have been forced to use corn syrup as a higher cost and imperfect substitute for sugar. And now the corn syrup producers lobby to keep the quotas on foreign sugar. In economies as in ecology, everything is tied to everything else.

Or consider the Mining Act of 1872. It grants companies the right to mine federal lands virtually for free. It probably made sense 100 years ago, but today it is an indirect subsidy to environmentally destructive mining. Mining companies favor the law because they don't want to pay market prices for the lands they mine and be responsible for the environmental damage they cause. Again, being pro-market by requiring mining companies to bear these environmental costs would hurt the companies while benefiting the public.

Federal subsidies for irrigation are a notorious pro-business strategy. With water delivered at 10 percent of its cost, it is profitable to grow water-intensive crops such as rice in semi-deserts like the Central Valley of California. But the "cheap" water does not reflect the opportunity costs of taxpayers' money, the wildlife habitat and fish runs damaged by dams and water diversions, and the pollution created by chemical runoff from irrigated fields. Subsidized water costs society a great deal. Here again, being pro-market puts us at odds with the private interests of agribusiness.

People who take pro-market stands take equally strong stands against special privileges for businesses. Both justice and efficiency demand that businesses bear full responsibility for the costs their actions impose on society, including the environmental costs. Market principles favor the environment because many environmental problems arise when people are isolated from the costs of their actions. This insulation comes from favors for the politically powerful. This is why being pro-market supports the public's interests first and foremost. As environmentalists learn this distinction, I hope to see a union of pro-market and environmental forces.