Free Market Foundations

[antagon]

Market principles are central to the form and function of capitalism itself. Free market principles remind that heavy-handed public or private manipulation of markets can destroy the efficiency of the capitalist economy, and corrupt the delicate flow of supply, demand, price and purchasing power.

Its when free market theorists claim that freedom in a market is the most crucial component of its function, that I feel the concept falls short of delivering. Looking at the world's most efficient markets -- those which make the best utilization of factors available to them, and which return the most to the human participants involved -- history makes an argument contrary to laissez-faire theory. These markets are heavily regulated. They are taxed with the intent to support infrastructure crucial to the market, but go one further to employ taxation as a mechanism to circulate purchasing power throughout the market.

Of course the free marketeers object to these very characteristics, but what is their presumption based on, but some books from 18th and 19th century economists?

 

[Metternich]

If you believe that the most current "free-market" (to use a trite and over-politicized term) equilibrium scholars are from the 18th and 19th Century; then there's really nothing to talk about.

 

[antagon]

i guess they couldn't 'from' 200 years ago. that would be disgusting.

how do those who press for freer markets nowadays reconcile their philosophy with the traits of the world's most efficient economies -- all which employ fairly heavy regulation and proactive redistribution of wealth?

 

[Kevin_Kennedy]

i guess they couldn't 'from' 200 years ago. that would be disgusting.

how do those who press for freer markets nowadays reconcile their philosophy with the traits of the world's most efficient economies -- all which employ fairly heavy regulation and proactive redistribution of wealth?

We reconcile it by looking at the global economic meltdown that occurred in 2008.

 

[antagon]

i guess they couldn't 'from' 200 years ago. that would be disgusting.

how do those who press for freer markets nowadays reconcile their philosophy with the traits of the world's most efficient economies -- all which employ fairly heavy regulation and proactive redistribution of wealth?

We reconcile it by looking at the global economic meltdown that occurred in 2008.

what is the end of a business cycle for some is a philosophical vindication for others. dissenters could easily point to the same crisis and argue that lax regulation of futures and lending standards precipitated the 'meltdown'.

any credibility outside the jaded blame-game the crisis has become?

 

[Kevin_Kennedy]

i guess they couldn't 'from' 200 years ago. that would be disgusting.

how do those who press for freer markets nowadays reconcile their philosophy with the traits of the world's most efficient economies -- all which employ fairly heavy regulation and proactive redistribution of wealth?

We reconcile it by looking at the global economic meltdown that occurred in 2008.

what is the end of a business cycle for some is a philosophical vindication for others. dissenters could easily point to the same crisis and argue that lax regulation of futures and lending standards precipitated the 'meltdown'.

any credibility outside the jaded blame-game the crisis has become?

And yet you yourself mentioned that the most successful countries in the world today are mixed economies with regulation, with high taxation, etc... So, in my opinion, you can't have it both ways. Either the global economic system was brought to its knees by rampant laissez-faire policies, or your most successful countries are mixed economies.

However, it's really how you see things. Maybe you can accept that the economy was highly regulated, but you think it needed more regulation. Or, and this is my perspective, maybe you saw the entire system as being completely unsustainable in the long run. It's all how you interpret the facts.

 

[Samson]

how do those who press for freer markets nowadays reconcile their philosophy with the traits of the world's most efficient economies -- all which employ fairly heavy regulation and proactive redistribution of wealth?

"World's most efficient economies?"

"Employ fairly heavy regulation?"

"Proactive redistribution of wealth?"

Let's assume that I would press for a more free market.

Wouldn't I be assuming that the market could be more efficient than the status quo?

Wouldn't I be defining a "free market" as one that has fewer regulations?

What does "proactive redistribution of wealth" have to do with the market? Do you mean taxing the market? Do you mean taxing transactions? Do you mean taxing income?

 

[uscitizen]

And the difference between public and private manipulations has gotten pretty small.

 

[Samson]

And the difference between public and private manipulations has gotten pretty small.

How would we even know?

 

[uscitizen]

And the difference between public and private manipulations has gotten pretty small.

How would we even know?

Exactly!

 

[Samson]

And the difference between public and private manipulations has gotten pretty small.

How would we even know?

Exactly!

 

[antagon]

how do those who press for freer markets nowadays reconcile their philosophy with the traits of the world's most efficient economies -- all which employ fairly heavy regulation and proactive redistribution of wealth?

"World's most efficient economies?"

"Employ fairly heavy regulation?"

"Proactive redistribution of wealth?"

Let's assume that I would press for a more free market.

Wouldn't I be assuming that the market could be more efficient than the status quo?

Wouldn't I be defining a "free market" as one that has fewer regulations?

What does "proactive redistribution of wealth" have to do with the market? Do you mean taxing the market? Do you mean taxing transactions? Do you mean taxing income?

in the OP, i tried to allow some room for the reasonable give and take with respect to regulation and the status quo -- i argue that this moderate flexibility is the status quo. i am one of those who thinks that reigning in regs in some areas and slathering on some more in other respects, might do the US well.

this doesn't encompass the entire range of philosophies at play. there are many who feel, as pointed out in the OP, that freedom in the market is a primary concern, and that our regulatory system should be stripped down. this is the polar opposite to the anti-capitalists who i also feel are off their rockers, or should take their arguments somewhere where the status quo is not superior.

by proactive redistribution of wealth, i'm talking about progressive taxation and public finance which competes with private investment. i'm talking about the extent that the proceeds of this finance fund the many faces of social social welfare.

many people dont see the role of income redistribution in a capitalist system because they see the three pillars of price, supply and demand as being all that holds it up. there is also purchasing power, which begs the question of distribution of that power. the opinions of laissez-faire philosophers bends toward there being a natural equilibrium to unfettered markets and that that equilibrium should be pursued. additional to the implications of public finance is its effects on currency, which stands as a pillar to the capitalist equation initself.

 

[antagon]

We reconcile it by looking at the global economic meltdown that occurred in 2008.

what is the end of a business cycle for some is a philosophical vindication for others. dissenters could easily point to the same crisis and argue that lax regulation of futures and lending standards precipitated the 'meltdown'.

any credibility outside the jaded blame-game the crisis has become?

And yet you yourself mentioned that the most successful countries in the world today are mixed economies with regulation, with high taxation, etc... So, in my opinion, you can't have it both ways. Either the global economic system was brought to its knees by rampant laissez-faire policies, or your most successful countries are mixed economies.

However, it's really how you see things. Maybe you can accept that the economy was highly regulated, but you think it needed more regulation. Or, and this is my perspective, maybe you saw the entire system as being completely unsustainable in the long run. It's all how you interpret the facts.

i actually pointed out three ways of looking at the situation. i'm of the opinion that the crisis is an overdue correction typical of the business cycle. i contend that the gravity of the situation is because the correction was centered on financial services. any hit on this sector is tougher than the average because of its leverage... the ol' tip of the iceberg. also, the interdependence of all other industries on this sector can be a drag, potentially of staflationary proportions. this was not the case with the dot-com bust. at the time the internet was peripheral to the wider economy.

other folks have taken to a tug of war which makes the correction which i feel is central to the situation seem as if its not a factor at all -- that it must be over or under regulation of the market, and i just think that's philosophical opportunism for the most part. this is, however, not to entirely downplay the role that regs or the lack thereof might have played. i just dont think that issue is central to the fact.

 

[antagon]

And the difference between public and private manipulations has gotten pretty small.

i was just going to put 'government manipulation'. i think all sides are grabbing at the controls as you said.

 

[midcan5]

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil." John Maynard Keynes


Here's a tough one, "Can We Agree That Deregulation Does Not Stimulate the Economy?"

Can We Agree That Deregulation Does Not Stimulate the Economy? - The Daily Hurricane

>

 

[CrusaderFrank]

Market principles are central to the form and function of capitalism itself. Free market principles remind that heavy-handed public or private manipulation of markets can destroy the efficiency of the capitalist economy, and corrupt the delicate flow of supply, demand, price and purchasing power.

Its when free market theorists claim that freedom in a market is the most crucial component of its function, that I feel the concept falls short of delivering. Looking at the world's most efficient markets -- those which make the best utilization of factors available to them, and which return the most to the human participants involved -- history makes an argument contrary to laissez-faire theory. These markets are heavily regulated. They are taxed with the intent to support infrastructure crucial to the market, but go one further to employ taxation as a mechanism to circulate purchasing power throughout the market.

Of course the free marketeers object to these very characteristics, but what is their presumption based on, but some books from 18th and 19th century economists?

Can you name something besides the Manhattan Project as an example that validates what you suggest?

 

[antagon]

sorry, frank. i count six or so suggestions in the OP, which one confuses you?

i'm confused by the manhattan project bit if that's any consolation.

 

[Samson]

by proactive redistribution of wealth, i'm talking about progressive taxation and public finance which competes with private investment. i'm talking about the extent that the proceeds of this finance fund the many faces of social social welfare.

OK I'm goning to assume that public finance is the result of progressive taxation, although there are other sources of financing public projects that may compete with private financial instruments: Namely, Government bonds, which may, or may not be repaid with taxes (more often being repaid with the proceeds from additional bond offerings, and currency inflation).

How, in any way, is this a "fair comparison" with private investment in a free market?

....Unless, private sources of funding can do the same thing: Borrow to pay loans.

Borrow from whom?....eventually the trail leads back to The Public, whose ability to create sable future financial vehicles becomes less secure with each reiteration of the scenario.

The key weakness seems to be Governments' willingness to NOT use taxes to back public finance. This creates a less than "Free" Market.

 

[antagon]

samson, thats what i ment by public finance which competes with private investment: the borrowing which we've taken to in lieu of taxation. this does create less of a free market. far from contesting that, i've laid on the line what i see to be the status quo: redistribution of wealth, heavy regulation, market-competitive public finance. alongside that, i can show that the US and other nations which behave in this manner so contradictory to laissez-faire doctrine are the worl'd dominant economies in terms of efficiency and value to their society.

essentially, i am pointing out the folly in presuming freedom in the market is what makes economies tick over -- a philosophy which so many scampered to uphold in the wake of the financial crisis.

 

[Samson]

samson, thats what i ment by public finance which competes with private investment: the borrowing which we've taken to in lieu of taxation. this does create less of a free market. far from contesting that, i've laid on the line what i see to be the status quo: redistribution of wealth, heavy regulation, market-competitive public finance. alongside that, i can show that the US and other nations which behave in this manner so contradictory to laissez-faire doctrine are the worl'd dominant economies in terms of efficiency and value to their society.

essentially, i am pointing out the folly in presuming freedom in the market is what makes economies tick over -- a philosophy which so many scampered to uphold in the wake of the financial crisis.

I don't think the timeline for world economic models allows for all definitive answers about what is ideal.

But what seems clearly an "Evolutionary Economic Dead-End" is centralized control of the market, and public and private sector buying more than they can pay for. Indeed, it seems the later isn't as easy a lesson as anyone might think, as it is part of human (and possibly any other animal, if one had the where-with-all) nature to consume more than is necessary.