Some of the most well known free market philosophers are Adam Smith, F. A. Hayek, and Milton Friedman. Proponents of free markets believe that individuals (should) make their own decisions about what to buy and where to work. When this freedom/right is exercised, the market responds to supply and demand by valuing goods and labor in a way that is collectively agreed upon as fair. This should happen automatically without outside interference from regulators. Proponents believe that a (truly free) market will result in an efficient use of resources, and output production will be determined by the preferences of consumers.
A free market would work best if consumers 1. had access to information about all products available so that they could freely choose 2. had the ability to purchase products they desire which might not be available in their area or might be out of their price range 3. had the luxury to make choices with the long term in mind rather than short term 4. had the time to investigate choices instead of just buying out of familiarity 5. were not manipulated and deceived by advertising.
A free market does not work if 1. some producers are favored over others by Federal Reserve banks which give them low/no interest loans, allowing them to expand and take over markets even though consumers may prefer different producers 2. efficiency is not defined in terms of efficient use of material resources and labor hours, and instead in terms of the lowest financial investment for the most profit. 3. government regulations and taxes disproportionately harm small and medium-sized business, allowing large businesses to unjustly capture more of the market.
A free market means that businesses are free to use any tactic, loophole, and power imbalance to their advantage to take over more of the market and to eliminate some of the choices available to consumers. Competition in the market (and in nature, according to 21st century evolutionary theory) can actually stifle innovation, decrease the diversity of choices, and encourage monopolies. This is especially true when government and business begin to overlap and the largest corporations influence political policy.
A truly free market means the separation of business and state. A truly free market means that corporations are employee-owned and -run, not controlled by unions and not controlled solely by top-level management. A truly free market means that consumers have equal access to information, communication and free speech.
According to Hayek, central planning of the economy means withholding certain resources; or, not authorizing the development of certain industries. The less powerful groups, or the majority of the population, are subservient to a dominant group, of the ruling authority that controls the planning structure. In a Direct Democracy the people would have more control over any central planning. If they have the opportunity to choose, they may not authorize the development of certain industries that tend to benefit the few in terms of profit and harm the majority in terms of, for example, environmental damage. In a Direct Democracy, the people would have more control over trade agreements and the majority would be able to decide to protect domestic production and domestic economy, rather than allowing the government to dictate what is produced for trade. For example, the people might prefer not to subsidize corn exports in exchange for cheaper fossil fuel imports and grow more efficient biofuels, like algae or hemp oil, instead.
Are there some industries that do not tend to produce the best products and services if efficiency is the only guiding principle? Some medical care, rail transportation, roads, education, free speech, the judicial system, military and security, and arts and culture seem to be areas that are not appropriately regulated by supply and demand and may require charity or government subsidy or control. Some services provided by the government (such as hospital care) might also be offered by competing businesses to keep government spending in check.
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Nice summation. The latter day understandings about the deviations from supply and demand (Starting from Maynard Keynes ‘price stickiness’ and down the rabbit hole from there) is important to evaluate and take into consideration for creating the baby steps toward the final goal. To me it’s like when Einstein said ‘Newton was wrong’ …..he wasn’t really wrong, but for the new phase of understanding we did have to take that stance somewhat categorically before returning to it’s relevancy at a latter time. Good job on getting to the core again. It’s sad we are going to have to reinvent the wheel for a while. But with the right dialogue in place we can stay on course of reinventing the wheel bionic man style rather than allowing history to repeat itself Reagan style.