Glenn Greenwald’s comments regarding the vague terms that control our public policy provoked me to revisit the extremely vague term, “free market.” “Free market” is a prime example of a vague term that is used for formulating anti-public policy.
It is routinely suggested by our alleged leaders that “free market” refers to the freedom to choose where to spend one’s money. On a day to day basis, this idea seems reasonable. It evokes the image of people selecting fruits and vegetables at an open-air produce market.
Modern “free market” policies extend far beyond individual buying decisions, however. In practice, government policies favoring the “free market” prohibit government from “freely” governing. “Free market” policies allow those with large amounts of money to usurp government policy. Policies that favor a wide-open “free market” take political power from ordinary citizens and hand that power to govern to large private for-profit corporations and wealthy individuals. “Free market” is a clever phrase for those who want an economic market that amounts to a baseball game without umpires, a market where corporations “freely” monopolize entire industries by scooping up the competitors, immunizing themselves from liability by buying favorable new laws, jacking up the prices and then giving the consumers the “freedom” to buy from among limited high-priced options. Modern “free market” policies give financially powerful entities the “freedom” to operate free of any government oversight, and the “freedom” to tell consumers to take-it-or-leave-it.
The telecoms are good examples: Americans have the “freedom” to buy (or not) telephone/internet service that ranks as some of the most expensive worldwide, from a consolidated industry that provides some of the slowest internet service worldwide. Too bad there’s no longer an umpire to break up this monopolistic abuse, so that consumers might have real freedom to choose. If American consumers want fast and cheap broadband, they retain only the freedom to leave the United States and move to one of the countries that regulates the markets and prohibits monopolies, thus encouraging real competition and giving consumers real freedom of choice.
[T]here is no such thing as a Free Market. None. Someone always dominates it, controls it, and usually to the detriment of someone else.
The modern concept of “free market” has also come to embody the concept of money=speech, meaning that big industries, such as telecoms, fossil-energy, defense industry, insurance, banking and pharma have the “freedom” to purchase members of Congress to make laws that severely limit consumer choices on a day to day basis. “Free market” means that powerful corporate players with huge teams of lobbyists can use massive amounts of money to enhance their “freedom” to rewrite laws in order that ordinary Americans have “freedom” to exercise fewer choices on a day to day basis. Ordinary Americans retain their “freedom” to have fewer choices. That is what the “free market” has come to mean.
“Free market” thus means two things that are antithetical: A) The freedom of business to either serve or abuse ordinary Americans, and B) The freedom of Americans to choose from whatever trickles down through a corrupted Congress and the monopolistic market it allows. These two things are often dramatically at odds with each other. “Free market” thus means a willingness on behalf of Congress to allow a lopsided war dominated by highly-monied corporate players, who have won (through campaign contributions and lobbyists) the “freedom” to purchase “legal rights” to abuse small businesses and consumers. Because Congress has been bought, it has allowed many industries (media, energy, insurance, finance) to shrink to the extent that local markets have become dominated by what Dylan Ratigan calls “corporate communism.”
And isn’t it amazing that the darlings of the “free market” advocates, corporations and families, are both highly regulated entities. Corporations have hefty binders of policies and procedures that coordinate and guide corporate operations, and they cannot operate without such self-imposed regulations. Families (at least families that aren’t dysfunctional) operate with self-legislated rules and understandings regarding how to spend money, how to raise the children, have to arrange a vacation and how to operate the household. Any entity consisting of a group of individuals requires coordination through regulations. Every organization decides at the outset whether it wants to be a fruitful garden or a wild and unregulated jungle. Every functional aggregate entity in nature operates through some sort of regulation. But somehow, it is alleged by many politicians that a nation of more than 300,000,000 people can get along without careful planning and regulation. And the replies to the urging for reasonable regulation is this bit of religion: “What are you, communists? Socialists?” As though in violation of the fallacy of the excluded middle, the only alternative to over-regulation is the absence of all regulations? How about reasonable regulation, the kind that allows complex organizations to grow? As Bill Moyers states, “Laissez-faire” is French for turning off the alarm until the burglars have made their getaway.” The fervent unexamined belief in the “free market” is a dangerous religious belief. The idea of free market fundamentalists, that good things will simply happen in a systematic way is based upon a huge mistaken assumption that all people are selfish and rational and that this selfish rationality will drive the system in a coherent way.
When you next hear the term “free market,” ask “free for whom?” Construed broadly, the term “free market is incredibly vague, which is why (as Glenn Greenwald notes) it is a favorite term to be bandied about by those well-monied entities that increasingly own and operate Congress. Our market includes numerous players with opposing interests. And when you next hear someone urge that “government regulation is an attack on capitalism,” remind the speaker that unregulated capitalism invites attacks on the freedoms of ordinary Americans, and that regulated capitalism is the only way to optimize individual freedom. Again, the question is “free for whom?”
It certainly appears to be as though you might be talking about corporatism…and not “true” free market capitalism.
It’s ok, a lot of people make that mistake.
Deregulation dramatically increases system instability. Wild swings dramatically increase the potential profits. What would otherwise be criminal behavior actually encourages stingy or fearful people to move their stagnant money into the market because of the large potential profit and without regard for risks. In the lee or fallout of criminal enterprises, there is a withdrawal from the market but it will soon be back. The idea since Reagan was to make recessions short, because people were tired by the malaise of a long shallow recession, but being short they must also be very deep. The only problem with the current system is that the next criminal enterprise hasn’t started picking up yet.
Drangsorian,
Econ 101 class taught me, and others that took the class, that a free market is a venue where every buyer and every seller has free access to to each other. The class also taught that free markets do not exist in reality, however near free markets exist for short periods of time in small venues such as farmer’s markets and flea markets. In a true free market, every seller sells an identical product, and has an equal share of sales in the market. Also all sellers have an equal demand for the product.
The mythical free market is used demonstrate the “law of supply and demand”. under the rather strictly defined conditions, when demand is high and the supply is low, prices and profits increase, and when demand is low and supply is high, prices and profits decrease. This is because the only way sellers can compete between each other while selling identical products is though pricing.
Capitalism, on the other hand is collecting money from the use of what one owns. Capitalism is not about buying and selling, but about controlling the venue. To provide ever increasing profit margins, the favored practice is to create artificial shortages while using applied psychology to inflate demand.
Demand is the wild horse in the equation. Demand is driven largely by perception, by belief, and by conscription. Demand cannot be easily controlled, but it can be manipulated.
Consider the iPhone. Apple did not invent the cellphone. They did not invent the smart phone, nor did they invent any of the technology used in the iPhone. What Apple did was package a lot of existing technologies into a product, then artificially create a demand for that product. Initially the iPhone was only available for use on a single cellular provider, and pricing agreements with that provider provided the illusion of a reasonable price, while in fact the discount in the price of the phone was subsidized through the two year service contract. This is anything but a free market in the true sense.
Mitt Romney now seems to be gushing over the power of regulation. http://www.huffingtonpost.com/2012/03/09/mitt-romney-chinese-regulators_n_1334799.html
A belated comment—what most people seem to mean when they use the term “Free Market” is Open Access Market, which is quite a different thing than what is meant by corporate America. For one thing, no market is “free”—someone always owns it, even if for a short time, and the owner dictates who gets to play. For another “Free” is something that does not exist in nature the way we mean it. We mean something like unprejudiced egalitarianism. For something like that to exist, there must be rules, and if there are rules, then there are gatekeepers.
I will wholeheartedly endorse the idea of an Open Access Market—but someone has to keep it open, which means regulation.
Here’s yet another example of the “free market” at work or, rather, the wild west. Next time someone preaches to you that we need to get government off our backs to help the economy, tell them about my home-town company, Mallinkrodt: 1) “The company’s generic oxycodone played a big role in the U.S. opioid epidemic, and court documents showed that an aggressive sales culture caused employees to ignore warning signs of overprescribing by “pill mills.” 2) “The larger specialty drug unit, however, was battling with government agencies over Acthar, which went from about $50 a dose in 2001 to $39,000 a dose in 2019.”
https://www.stltoday.com/business/columns/david-nicklaus/nicklaus-failed-strategy-and-opioid-scandal-push-mallinckrodt-into-bankruptcy/article_2a962302-f4e0-5c54-bb7d-59d4f95fe146.html#utm_source=stltoday.com&utm_campaign=%2Fnewsletter-templates%2Ftrending&utm_medium=PostUp&utm_content=0351c505f98115622e9fb2f106726a37711db694
There are a good many terms thrown about in the comments. I’ll first address the wild west, which is often used to describe a lawless environment in which someone with an advantage outside price, quality and customer intimacy, is able to use raw power to force the market to perform to his/her advantage. When capital, either financial or human, is forced to do something, that is the antithesis of capitalism. Capitalism is simply the free movement of capital, both financial and human, to where it can be most effectively or efficiently used.
Enforcing the “no wild west” status is done by the community as part of the social contract. Community enforcement does not scale well, so at some point in size and/or complexity a central authority must take over enforcement. This becomes regulation, which is not inherently bad. When the social contract as understood by the community is enforced, most people are fine with it. When it exceeds the community’s understanding, it’s often harmful.
The best example is probably the Clean Water Act, which applies to the navigable waterways of the U.S. Zealous regulators have elected to define drainage ditches as navigable waterways, along with seasonal creeks and damp spots. Protection of these navigable waterways is required, so not only the drainage ditch or seasonal creek is protected, but a buffer zone around the “navigable waterway” is implemented. The result is hundreds of thousands of acres locked against any form of development.
In the case of Mallinckrodt, things are not as clear as you might wish. The entire topic of orphan drugs is a mess of regulation, litigation, no incentives to develop or manufacture drugs, and the fact that some people die from lack of orphan drugs is used to justify unlimited expenditure of resources to prevent those deaths. Or, to force private companies to accept liabilities it otherwise does not need to.The alternative is that patients with orphan diseases are abandoned.
In the case of “pill mills” over-prescribing opioids, the Federal Government is far better equipped to monitor the situation than any private firm. Prescriptions for controlled substances require a DEA number; only the Federal Government has the authority to compel reporting. Expecting Maalinckrodt to have information typically only available through enforcement of regulations is unreasonable.