Free Markets

I recently posted an article talking about the weakness of the “free market” argument of Libertarians. After writing that article, I realize there was more to be said about the free market.

The “free market” is a concept often cited by economists and Libertarians. It is vested in their minds with magical powers. All of what they claim for the free market assumes several things. First, that the free market is fully informed. That is, all the information you should know to make a viable decision is available in the free market. But as we’ve seen from sad experience over the last few years, the market is anything but this way. People can be paid to withhold information, or do so to avoid embarrassment or prosecution. In fact, it is often true that what passes for truth in the free market is demonstrably false, given enough digging to discover the truth. And thus the market is not fully informed.

Second, those participating in the free market may or may not be fully informed according to their own tastes, educations or other factors. Participants may choose to remain ignorant or simply not be tuned into the free market very well. Thus, even if the market contains all the information they need, they may not know it. Or the public may be ill-educated in certain aspects of life, and so the lessons of the free market are lost on them. Or they may listen through a veil of their own bias. Information which conflicts with their own leanings is simply negated. Thus, when they attempt to participate in the free market, the result may be contrary to what one might expect.

The free market is a flow of goods, services, news and ideas. It isn’t a thing unto itself. It does not exist without the cooperation of the humans who power it and participate in it. And humans vary widely in their ability to reason, think, communicate and make wise decisions. They can be made to stampede and jump off cliffs for no real reason.

I remember when studying economics that the market was considered the great leveler of the playing field. The market alone would serve to make things fairer and the outcomes more equitable. I was rather young at the time, and that sounded good. But after many decades studying the market and having to live in it, I now realize that whatever idealistic thoughts anyone had about it should be discarded with the trash. The market is not, has not been, and probably never will be all economists promise it to be. If you have ever studied economics or plan to do so in the future, bear this in mind.