Define the "free market"

[ChooseLiberty]

There seems to be some confusion about what "free market" means in discussions here on the board.

Anyone want to take a shot at defining the "free market" and give an example?

:D

[TheEvilDetector]

http://www.mises.org/journals/fm/jan06.pdf

[ChooseLiberty]

That's nice. So any market not dictated by 'command' like in the old USSR is a free market?



http://www.mises.org/journals/fm/jan06.pdf

[cjhowe]

That's nice. So any market not dictated by 'command' like in the old USSR is a free market?

Any market that is participated in by volition is a free market.

[angrydragon]

Here's a great introduction video on liberty and economics. Ron Paul is @ 13:18.

http://video.google.com/videoplay?docid=-5658307639261829691

http://www.ronpaulforums.com/showthread.php?t=4053

[ChooseLiberty]

So "laws" and "taxes" are permissible in a free market as long as there is no coercion in the transaction?

[Brandybuck]

But market "commands" are frequently disguised. Just because there isn't an obvious czar dictating production, consumption or prices doesn't mean it's a free market. Examples include regulation, special privilege, excessive taxes or tarrifs, licensure, etc.

My definition of free market is one that is relatively free of government interference. The only legitimate role for the government in a market is to provide a system of uniform laws and courts. (I say "relatively", because it's impossible to have zero government interference short of anarchy).

One common accusation against the free market is that it encourages monopolies. Nothing could be further from the truth. Nearly every monopoly in history was the result of government privilege of one kind or another. Under a free market you can have monopolies, but except for special localized cases, they will always be short lived. They more they try to take advantage of their monopoly position, the more they encourage their competition to arise. Even monopolies having the benefit of extremely elastic prices will give rise to competing alternatives.

[Gee]

Capitalism, or the free market, is a system of property rights and really nothing more. Property rights of course include things like free trade and self-ownership.

Things which are sort of "outside" the free market are things which it is difficult to place ownership on, such as air and water.

[fsk]

Anyone want to take a shot at defining the "free market" and give an example?


I define a free market as "no government at all". There is no group of people strong enough to use force to impose their will on everyone else.



So "laws" and "taxes" are permissible in a free market as long as there is no coercion in the transaction?


The only "law" in a free market is common law and contract law. You can do whatever you want as long as you don't injure someone else. That's common law. You do what you say you're going to do. That's contract law. (Of course, contracts entered through trickery or coercion aren't valid.)

No, there cannot be involuntary taxes in a free market. Whoever controls the money that is used to pay taxes has a coercive monopoly over anyone else. Whoever controls the tax payment medium gets to enslave everyone else.

In a truly free market, all services are paid for. You hire a private police force. You hire private courts. Everything that the government currently does could be performed better by multiple competing vendors.

[ChooseLiberty]

As I suspected, it seems like most people have their own definition.

"Free market" seems to mean whatever the person trying to make an argument wants it to mean.

Or you can follow the definition of the Mises site and every non-command (USSR) market is "free".

[Mesogen]

Can I cook crystal meth and sell it on my porch in a free market?

[Kregener]

Why do you keep referencing the USSR in your rebuttals to the definitions provided to your question?

What was "free" about communist Russia?

In a free society you would certainly be able to cook meth and sell it. And I would be free to sue you in court for everything you have if you or your product harmed my family in any way.

[kylejack]

Can I cook crystal meth and sell it on my porch in a free market?
I think a free market can still protect property rights. Meth creates quite the stench, but if you can manage to keep the stench from wafting onto the neighbor's property, sure, you ought to be able to make meth.

[Bradley in DC]

http://www.mises.org/humanaction/chap15sec1.asp

The market is not a place, a thing, or a collective entity. The market is a process, actuated by the interplay of the actions of the various individuals cooperating under the division of labor. The forces determining the --continually changing--state of the market are the [p. 258] value judgments of these individuals and their actions as directed by these value judgments. The state of the market at any instant is the price structure, i.e., the totality of the exchange ratios as established by the interaction of those eager to buy and those eager to sell. There is nothing inhuman or mystical with regard to the market. The market process is entirely a resultant of human actions. Every market phenomenon can be traced back to definite choices of the members of the market society.
The market process is the adjustment of the individual actions of the various members of the market society to the requirements of mutual cooperation. The market prices tell the producers what to produce, how to produce, and in what quantity. The market is the focal point to which the activities of the individuals converge. It is the center from which the activities of the individuals radiate.

[Brandybuck]

"Free market" seems to mean whatever the person trying to make an argument wants it to mean.
It depends on where you draw the line between free and non-free. Anarchists will draw the line much further towards the anarchy side than I will, while others will draw the line on the other side. But we pretty much all agree, the less government intervention in the market, the freer it is.

[Man from La Mancha]

A great example of the success of an almost complete free market company.



On eBay, we see millions of transactions occurring every day in one of the freest markets
in human history. And almost all of the transactions are satisfactory for both parties. You
really can trust most people most of the time to keep their word in business matters, and
never before has it been so clearly shown. eBay's primary mechanisms of quality control
and contract enforcement have sprung about in the voluntary sector, with no coercive
monopoly. Reputation plays a very crucial role. If you have not sold much online to
people who will vouch for you, it will be harder for you to unload a large expensive item
at a reasonable price. The market at eBay is self-correcting. People succeed roughly as
much as they deserve. Honesty and entrepreneurial cunning are rewarded and cheating
and waste strongly discouraged. Every week, billions of dollars exchange hands on this
site alone, which has encouraged people everywhere to trust the methods of mutual
exchange and, even if only subconsciously, no longer associate market success with
central planning. Entire businesses, small and not so small, thrive by selling on this site
and doing nothing else. eBay could have probably brought us out of the Depression, and
the unbridled capitalism it represents, along with all the millions of other marketing sites
online, might be the only things keeping us out of another one.

Along with eBay came the success story of PayPal, another site that has helped to
revolutionize an economic sector, in this case of money itself. Money can be anonymous
and transferable to anywhere in the world. With the proliferation of such sites, we might
see the unraveling of people's hope in the government as a major fiscal and monetary
player. The Internet has many people more jealous of their money, more resistant to hand
it over to the tax men, and that alone is a blessing.

The spontaneous order that has cultivated a free market in ideas, goods and services
online has unmistakably been met with approval by the masses. It is a genuine market,
open to everyone for miniscule start-up and administrative costs and nothing like the
barriers of entry we see in the highly regulated industries of realspace. It is no surprise
that most of the major Web sites and companies – eBay, Yahoo, Google, Pay Pal,
Amazon – lean so heavily toward freedom and against the state.

Now, I hear all the time people saying that we can talk on forums and Web sites all we want, but
real activism is what's needed to make a difference. Well, even on this, who can doubt
how much the Internet has done? In 2003, twenty million people congregated in protests,
all around the world, in anticipation of and in mutual opposition to the U.S. and U.K. war
against Iraq. 20 million! This would have been unimaginable in previous times. Thanks
to telecommunications, and especially e-mail and Web sites, activists were able to
arrange, more-or-less spontaneously and in decentralized fashion, these enormous shows
of international solidarity against the war. This was not in any way a real world departure
from the ways of the Internet in political activism. It was in fact only possible because of
our online capacity.

excerpt from http://www.keepyourassets.net/internetstate.pdf

[ghemminger]

I think a free market can still protect property rights. Meth creates quite the stench, but if you can manage to keep the stench from wafting onto the neighbor's property, sure, you ought to be able to make meth.

Nice Quote Troll......

[Mesogen]

I think a free market can still protect property rights. Meth creates quite the stench, but if you can manage to keep the stench from wafting onto the neighbor's property, sure, you ought to be able to make meth.

I don't really want to sell meth from my porch, but I am curious about the limits of a free market.

What about FDA and USDA regulations? The concept behind the FDA and USDA is just fine in my book. IMO, the purpose of these agencies is actually to protect my rights. I think I have a right to be sold food or drugs while being told honestly what the contents are and what the drugs effects are. IOW, I have a right to not be tricked into buying poison. The FDA ideally would protect that right.

(Of course, these agencies go way outside their original intent and regulate in such a way as to benefit certain large corporations to the detriment of consumers, but the concept is a good one IMO.)

So in the porch meth salesman scenario, the FDA would certify that my meth was pure enough and that the customer knew exactly what he was buying and what its effects were (and how he would die in a slow downward spiral).

I would still consider that a free market, even though there were some regulations, which were intended to protect individual rights.

[Brandybuck]

What about FDA and USDA regulations? The concept behind the FDA and USDA is just fine in my book. IMO, the purpose of these agencies is actually to protect my rights. I think I have a right to be sold food or drugs while being told honestly what the contents are and what the drugs effects are. IOW, I have a right to not be tricked into buying poison. The FDA ideally would protect that right.
You don't need a regulatory agency for that, all you need are laws against fraud and a sane tort system. Granted, there's a fuzzy line between marketing hyperbole and product claims, but you don't need massive bureaucracies like the FDA and USDA to prevent deceit.

[Mesogen]

You don't need a regulatory agency for that, all you need are laws against fraud and a sane tort system. Granted, there's a fuzzy line between marketing hyperbole and product claims, but you don't need massive bureaucracies like the FDA and USDA to prevent deceit.

Yeah, but I can't sue you if I'm dead.

I know the system doesn't work the way it's supposed to and there are drugs approved by the FDA, or even fast tracked, that will rot your liver or blow a hole in your heart. I'd like to try to pre-empt having a hole in my heart and never take the drug, so I prefer some vetting system before a drug or even food is commercialized.

And the FDA doesn't need to be a massive bureaucracy. It is, and bureaucracies tend to grow over time, but they don't necessarily need to.


(Oh, and I love Buckaroo Banzai, btw!)

[Kregener]

The FDA is part of the Medical Triad, which has no interest in "protecting" you health and well-being.

[Brandybuck]

Yeah, but I can't sue you if I'm dead.
And what good does it do you to have the FDA slap a fine on someone after you're dead? Same difference.

However, the specter of lawsuits keeps businesses wary. Besides the immediate cash hit, your market standing is going to severely tank over the bad press.


so I prefer some vetting system before a drug or even food is commercialized.
But that vetting system doesn't have to be a regulatory bureaucracy. Underwriter Laboratories does a damned good job vetting electrical appliances, and they're a wholly private organization. If the FDA wasn't around, you can rest assured that the medical and insurance industries would start vetting pharmaceuticals, because it's in their interest to do so.

[Mesogen]

And what good does it do you to have the FDA slap a fine on someone after you're dead? Same difference.
No, the FDA (in principle, mind you) would prevent the drug/food from ever being commercially available in the first place.


However, the specter of lawsuits keeps businesses wary. Besides the immediate cash hit, your market standing is going to severely tank over the bad press.
If the FDA didn't catch the problem, the seller could still be sued.

That doesn't seem to stop people from selling poisonous crap though, for some reason.


But that vetting system doesn't have to be a regulatory bureaucracy. Underwriter Laboratories does a damned good job vetting electrical appliances, and they're a wholly private organization. If the FDA wasn't around, you can rest assured that the medical and insurance industries would start vetting pharmaceuticals, because it's in their interest to do so.
True. UL and Consumer Reports are fine.

Not sure how corruptible they are, but actually, it would be better if they were private because their credibility would be nil if they let crap through. They could potentially go out of business and another organization would take its place. If it's the government doing it, then what can anyone do?

[Mesogen]

The FDA is part of the Medical Triad, which has no interest in "protecting" you health and well-being.

I've never heard of the medical triad. Who is in it?

FDA, DEA, and AMA? NIH? CDC?

Can't find it on google.

[Brandybuck]

No, the FDA (in principle, mind you) would prevent the drug/food from ever being commercially available in the first place.
Very wishful thinking. But it's not how reality works. Ron Paul is not offering a fantasy, he's offering us the freedom to live in reality.

Here's the blunt truth: accidents happen. 100% safety is not an option. Sometimes you get contamination in food. The FDA can't prevent it. The USDA can't prevent it. If we were an adult society, we would realize this. Even if we locked everyone up in bubbles, someone somewhere would still die and accidental death.

[Mesogen]

http://www.fda.gov/oc/history/historyoffda/default.htm

The FDA arose from a unity of disparate groups that sought a way to detect the "Adulteration and misbranding of foods and drugs" which was rampant.

The original mode of enforcement was: "The basis of the law rested on the regulation of product labeling rather than pre-market approval. Drugs, defined in accordance with the standards of strength, quality, and purity in the United States Pharmacopoeia and the National Formulary, could not be sold in any other condition unless the specific variations from the applicable standards were plainly stated on the label. Foods were not defined according to analogous standards, but the law prohibited the addition of any ingredients that would substitute for the food, conceal damage, pose a health hazard, or constitute a filthy or decomposed substance. Interpretations of the food provisions in the law led to many, sometimes protracted, court battles. If the manufacturer opted to list the weight or measure of a food, this had to be done accurately. Also, the food or drug label could not be false or misleading in any particular, and the presence and amount of eleven dangerous ingredients, including alcohol, heroin, and cocaine, had to be listed."
http://www.fda.gov/oc/history/historyoffda/section1.html

This I totally agree with. If the FDA still stuck to this, I'd totally support them. Sorry.

Again, in principle, I agree that there should be laws against selling products like these:
"The FDA itself exemplified the state of affairs in the marketplace by assembling a collection of products that illustrated shortcomings in the 1906 law. It included Banbar, a worthless "cure" for diabetes that the old law protected; Lash-Lure, an eyelash dye that blinded some women (see illustration at right); numerous examples of foods deceptively packaged or labeled; Radithor, a radium-containing tonic that sentenced users to a slow and painful death; and the Wilhide Exhaler, which falsely promised to cure tuberculosis and other pulmonary diseases. A reporter dubbed this exhibit "The American Chamber of Horrors," a title not far from the truth since all the products exhibited were legal under the existing law."
http://www.fda.gov/oc/history/historyoffda/section2.html

This type of law, in principle, is there to protect individual rights. This is the proper role of government. The actual implementation of the law is another question.

This sort of thing protects "me" from "you."

The main problem with the FDA of the past 50 years is that it thinks it's job is to protect "me" from "me."

Yes, adequately label things. Tell me exactly what I'm buying. Don't let someone sell me poison and tell me it's medicine. But what if I want to buy and consume "poison"? (Like say alcohol and nicotine? or maybe lsd and mdma?) That's where the FDA crosses the line, IMO.

Another place is where it fasttracks drugs for favored companies and they know they aren't safe and slowtrack or kill cheap effective drugs from unfavored companies. It's like we're back in the 1800s but now the government's in on the game.

Like I said I agree with the principle of the FDA, but not all of the practice.