I just came across (pdf) this expression:
A Smith & Wesson beats a straight flush
What does it mean?
Is it the idea of winning via unlawful means when losing?
Is it a common expression?
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It means a gun will beat whatever you have in a poker game.
That is, if you have a pair of twos and the other person has a straight flush, it won't matter. You have a gun, and you can shoot the person.
Basically, the card game is irrelevant. If you have something powerful (gun, or a monopoly, or a dictatorship) then the rules that everyone is playing by do not apply to you.
The straight flush is the highest hand in poker: nothing beats it. The meaning intended here is, from the document itself: "In the marketplace, whichever party has the most power gets to make the rules."
Of course, that is also a prime example of argumentum ad baculum.
Its exact meaning depends on the context. If you read the paper you link carefully the meaning is straightforward. It's an idiom of the "Main idea" for "ELEMENT #3: Rules" (page 5):
Many people simply assume the rules of business - both formal and informal - are set in stone and are not subject to negotiation. That’s incorrect. There’s no reason why you should blindly follow the rules - you can change them at any time.
But, keep in mind that works both ways. At any time, your competitors, customers, suppliers or complementors can change the rules as well. They don’t necessarily have to follow the same rules you do.
In the marketplace, whichever party has the most power gets to make the rules
Thus, in this context it means that in business those with power can opt out of rule following and benefit from it. Or put differently: in business power is such that it allows for benefits by changing or breaking the rules.