This question might be a binary over-simplification. We currently do not have the tools to measure who is "the most competent people running a business". Markets are never pure so I do not think that the current situation (predominantly white men in boards) is the outcome of rational optimisation over the years. If anything, free market proponents should welcome these laws as a way to experiment with different variables to empirically determine what's the best way to run a business.

I also do not think that (most) proponents of a balanced representation favour diversity over competency. Speaking for myself, I do believe (from experience) that having diversity in a team results in more resilient, efficient, and "optimal" decision-making. Again, we do not have sufficient tools to prove that empirically, so we better A/B test the hell out of it :)