Do Free Markets Exist?

[Lightfiend]

Something I posted on my website today:

The phrase “free market” gets thrown around a lot. Many people who use this term fail to ever reflect on its meaning. Republicans and those on the right typically claim that we need to preserve the free markets, and that Obama’s current policies are destroying free markets. Meanwhile, Democrats and those on the left like to claim that the free market doesn’t exist, and that it is a fictional utopia concocted by proponents of capitalism.

What both of these parties have failed to do before making their claims is to define what a free market really is. Republicans – what are you saying we should protect? And democrats – what are you saying doesn’t exist?

Definition Of An Ideal Free Market

I cannot speak for others but, like the Republicans and Democrats, I do have some things to say regarding the “free market”. So before I state some of my views I will try my best to first begin by defining what a free market actually is to me.

To me, the free market is when all individuals in the marketplace cooperate voluntarily without the use of coercion. Hence – economic decisions are agreed on freely by only the parties involved in each transaction – and there is no force acted upon by the state, or government.

An immediate stumbling block to this idea is: What if people don’t act voluntarily with one another? For example - criminals or gangs who steal property from others. Because criminals use coercive force to steal properties from their otherwise rightful owner I would permit the state to use coercive force only so much as to protect these property rights as to where they rightfully belong. This is why criminals and people who steal go to jail for the misdeeds. Criminals undermine the free market by initiating force, which is not a valid means of exchange in what would otherwise be only free and voluntary economic transactions.

If a man does not keep his end of a contract, that too is an undermining of the voluntary decisions of individuals. It is a kind of fraud, and it cheats legitimate and honest individuals in the free market system (and thus, cheats the free market itself). Therefore, I also believe it is the job of the state to protect these contracts in order to preserve voluntary, and what I would call true, economic behavior.

Other than these protections by the state (property rights, contract rights and fraud), the state would be out of economic affairs completely if we wanted to call this a pure free market system.


The Ontology Of The Free Market

In what way does this free market exist? As anti-capitalists rightfully point out: empirical reality is much more blurry than the clear-cut ideals of the free market. Free marketers like to tout how free markets are all about a non-coercive economic playing field. But things are not so simple.

The United States current marketplace is very-mixed, quite far away from the pure free market that I described above. In fact our current market breaks just about every free market ideal. We have regulations for almost every industry, subsidies for businesses in various sectors of the economy, an enforced monetary system, as well as government monopolies like the U.S. Postal Service and Amtrak.

The ideal free market that people so commonly support has, for all intents and purposes, never existed in our country’s history. Even by the end of George Washington’s presidential term we had our first central bank – a plainly non-free market institution.

In this sense, anti-capitalists are right: the free market is an abstract concept that has no basis in empirical reality. There is no time in our history, or in the history of any other nation that we could say we have had a free market.

But – was the free market ever intended to identify an empirical reality? Or is the free market merely a theoretical construct that may guide our understanding of empirical information? Certainly there is no economist that can reference a specific economic society and claim: “That was the free market!” But we could – and economists often do – look at particular economies and can make the judgment that they are “more free market” or “less free market.”

Why would an abstract concept be ignored simply due to its inability to be directly observed in the natural world? Is that the very nature of what makes an abstract concept? Is a concept that is abstract mean it is not useful in a epistemological sense? What if that concept is concretely defined?

Take for example the concept of a perfect circle or the number pi. Neither of these can be found in the real world, they are only theoretical; however, we still use these concepts to guide our understanding of real world phenomena!

Final Words

Instead of thinking of the free market as a specimen that can be observed in the “real world,” perhaps we are better off thinking of it as a lens out of which we observe – it’s the free market perspective – and it is a very real way of observing economic behaviors and making sense of them. The free market is a measuring stick, a tool of observation, not a formula for an ideal society. It is a way to determine how much freedom individual’s have in their economic activity. And if you are one to believe that freedom is the key ingredient to peace and prosperity in a society, then the free market is something worth understanding and reflecting on.​

 

[garyd]

Pretty standard actually.

 

[Metternich]

It seems that way, wish I had more to say but there doesn't seem much to debate either way. The US is not a perfectly free market, yeah we should likely imagine it as such so we can the crazier socialists schemes that are hurting it but that is just a re-affirmation of what you have already said. Heh.

 

[edthecynic]

What exists today is MONOPOLY.

 

[Oddball]

Free markets will always exist.

Just ask any black marketeer.

 

[Lightfiend]

Free markets will always exist.

Just ask any black marketeer.

Black markets are the complete opposite of free markets. Their sole existence depends on coercive force by the state by making products "illegal". Growing/dealing is a tremendously high risk than growing any other crop or dealing any other product. This is why items on the black market are so expensive - way higher than what they would be in a free market. Black markets promote gang life and violence - more pushing and shoving usually means more pushing and shoving, go figure. And how do you expect to protect against fraud or theft in a black market where there is already an economic environment prone to illegal activity. Black markets are the best example of what is most indefinitely NOT a free market. Prohibition is one of the worst injustices to man and it is all inflicted on by the state.

 

[Oddball]

If it weren't for the aggression in the otherwise free markets by political mobsters, who act under color of law, black markets wouldn't exist.

 

[garyd]

Due you just both said the same thing he just used a lot more words.

 

[Oddball]

Brevity is the soul of wit, man.

 

[Agnapostate]

And the domain of the feeble-minded.

Markets as a whole are an inefficient means of resource allocation, IMO, but the specific reason for the nonexistence of the free market in the capitalist economy is that capitalism is based upon a powerful state presence and would be severely destabilized in its absence. The state played a major role in facilitating the phase of the primitive accumulation of capital, the state played a major role in strategic trade formation wherein the development of infant industries was protected so as to maximize dynamic comparative advantage, the state plays a major role in levying taxation and utilizing the welfare state to maintain macroeconomic stabilization, and the state's role cannot be diminished in the capitalist economy without increasing the prevalence of market failure.

 

[Oddball]

If we're all so feeble minded, why do you bother??

There are hundreds of college professors' sphincters you could be tonguing right now, with much better results.

 

[Agnapostate]

If we're all so feeble minded, why do you bother??

I never claimed that *everyone* was feeble minded. I claimed that you were, which is an obvious reality evidenced by your inability to reply to my post just now.

There are hundreds of college professors' sphincters you could be tonguing right now, with much better results.

Now, now, Dud...now that you and JB have got that daisy chain going, I'm sure you've been itching to hold the LP convention at your local bathhouse...but I'd appreciate being left out of that.

 

[Oddball]

Yet again, you seem to think you're a sneaky little shit.

First of all, your typically bloviating post made no discernment as to whom it was directed.

Secondly, neither JB nor I are professors, so you'll have to find other sphincters to clean out.

 

[JBeukema]

And the domain of the feeble-minded.

Markets as a whole are an inefficient means of resource allocation IMO

The whole world disagrees. Having everyone meet in one place with all conceivable goods is quite convenient. Personally, going to the flea market is fun

Secondly, neither JB nor I are professors, so you'll have to find other sphincters to clean out.

Although I do profess that if Agna comes anywhere near me with thoughts of licking anything, I'll kill the little cretin


Reposting this from another thread:

Has not true or pure laissez fair capitalism demonstrated itself to be ripe with abuse, fraud, and corruption? A certain level of regulation (such as requiring transparency and full disclosure) is necessary to protect the general populace.


What's needed is a system that calls for minimal regulation while providing such protections

I do not support truly 'free', unregulated markets*

*using markets in the sense of this thread, not in the same sense I used it earlier, whole busting agna's chops

 

[Agnapostate]

Yet again, you seem to think you're a sneaky little shit.

First of all, your typically bloviating post made no discernment as to whom it was directed.

Secondly, neither JB nor I are professors, so you'll have to find other sphincters to clean out.

Yet again, your stupid rambling isn't composed of a reply, Dud. Why is that?

The whole world disagrees.

I don't have an interest in majority approval; I have an interest in accuracy.

 

[editec]

We so love the word free that we will buy into nearly anything with that word attached to it.

Markets cannot exist in a state of pure freedom.

Pure freedom is anarchy.

But when we can develop a system which grants as much freedom to as many people as socially possible, that society thrives and prospers.

Centralized government is a necessary component to having a market.

When that centralized government becomes corrupt, when it attemtps to control too much, then the market suffers.

When that centrlized government abandons it responsibility to keep the market playing honestly (as it has in this nation for some time) then the market might be free but the rest of us are not.

Finding that blance and keeping it is what we should be striving for.

Thinking that etierh extreme is going to solve our problems leads that society to an authoritarian system where the insiders do well, and the rest of the society are slaves.

Call it communism, call it facism, they're essantially the same god damned thing.