Saturday, 17 September 2011

The Free Market Illusion

In Anglo-Saxon politics there are continued calls to "free" the market from government regulation, particularly in the US. Such moves are intellectually validated by right-wing thinktanks and economists, some of who believe in a free market to such an extent they even cheer when companies shut down; celebrating the creative destruction of the market. According to this diverse mix of rich white men, "red tape" unnecessarily limits the opportunities for business expansion and, as such, economic growth.

However, the argument is false as the free market does not, and can not, exist; the concept is an illusion often used to justify a rampant and destructive form of capitalism. The reason the concept is illusionary, as Ha-Joon Chang (Thing 1) states, is that "the "freedom" of a market is, like beauty, in the eye of the beholder." Put another way, regulations that people agree go unnoticed and so are not regarded as limitations on the markets, whereas regulations that people disagree with are noticed and thus labelled as restrictions on the market. Hence, arguments for the free market are merely utilising an illusion in order to justify one's own political beliefs.

Take private property rights in their current formulation for example. These could be seen as restrictions on the market as if the government instead understood land as communally-owned (as was the case historically) then businesses would, arguably, be freer to utilise a wide array of resources than in the current system, where land is privately-owned and limited to the uses of the owner. Current private property rights are also restrictions on the market in that they decide what counts as property. So, for example, it could be seen as a limitation of the free market in that businesses may not own slaves; that people do not count as property.

Government also limits what transactions are allowed to take place and what services can be offered. So, bribery, assassination or heroin-dealing, for example, could all be legalised if we were to free the market and harness the full wealth-creating powers of the market. Likewise, child labour laws and minimum wage laws place limitations on the market that limit the opportunites for business expansion and increased economic activity.

Interestingly, proponents of the "free market" are yet to express a desire to re-intoduce slavery, legalise assassination, bribery and drug dealing, and allow children to work for pittance wages. The reason for this oversight is that these limitations are not considered limitations at all because they agree with the need for these regulations and so do not notice the continued operation of these laws. On the other hand, environmental protection and health and safety laws (which, frankly, if you go into the history of, are very much justified - just think Victorian work houses) are considered limitations on the free market....because free marketeers simply disagree with such restrictions.

Extending the logic, it would appear that any law or regulation that the government passes can be considered a restriction the free market. As such, a "free" market requires no government and no law - to free the market, one must destroy the state, law and authority. Once anarchy is achieved, then business will be free to pollute, kill, maim and destroy as it pleases, and we will all bask in the warm glow of the market.

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