Mark Twain said that a book considered a classic was one that “… people praise and don’t read.”
Similarly, “free markets” are things that people praise and studiously avoid. Clever use of the word “free” is part of it, making it sound like a noble ideal. But substitute the more correct “unregulated” or “unfettered” for “free,” and it gives you a better idea of what is really going on.
People hate free markets, and with good reason. They are destructive of life, business, and freedom itself. “Free” markets expose everyone to competition, a destructive force. Price competition drives companies out of business. Competition for market share drives price cutting, with the same result. There is security in free markets, but only to the degree one is insulated from competition. Freedom from competition is market power. But it is not a free market.
It is said that competition fosters innovation and invention, but in truth most of that goes on in the public sector, too often as military spending. In addition, some public universities still engage in research and development, and eschew patents on new ideas and inventions. Competition, on the other hand, demands that innovation be shrouded in secrecy. Competition is the anti-public good.
Here’s an interesting passage from Quigley’s Tragedy and Hope, written in the 1960’s:
Business hates competition. Such competition might appear in various forms: (a) prices; b) for raw materials; (c) for markets; (d) potential competition (creation of new enterprises in the same activity); (e) for labor. All these make planning difficult, and jeopardize profits. Businessmen prefer to get together with competitors so that they can cooperate to exploit consumers to the benefit of profits instead of competing with each other to the injury of profits.
Put much more succinctly by Dwayne Andreas of Archer Daniels Midlands, “… competitors … are our friends and the customer is our enemy,” and “free markets exist only in the speeches of politicians.”
That’s not malcontents in a big system, but rather spokesmen for the system itself. They are publicly saying what everyone knows privately, that competition is a destructive force, and not creatively so. We are fortunate to still have semblance of an anti-competitive system, with protection built in for poor, disabled. Labor unions are still legal. We have wage and hour and minimum wage laws.
We are missing the exercise of raw power of strong over weak in “free markets,” and so are mostly without slavery and sweatshops. Our corporations have to go abroad to avail themselves of those luxuries, and to be free to pollute as they can. By and large, the United States does not have free markets. I am thankful for that.
I am also grateful to Big Swede, my inspiration for this post. Thanks man. You’re the wind beneath my wings.