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A free market implies that supply and demand are reached naturally without intervention by government: either in fixing prices, setting quotas, or giving specia

A free market implies that supply and demand are reached naturally without intervention by government: either in fixing prices, setting quotas, or giving special consideration to some firms over others. The term "free market" does not imply that there are not courts of law or private property rights. Perhaps too many think "anarchy" when they read "free market."

cmurf 11y ago
The argument in the book under discussion is that the natural balance of supply and demand is favoring the seller, who is exploiting the buyer in ways the buy isn't aware of, and is complex and fast enough that a regulatory paradigm can't mitigate. A "free market" is an attempt to simulate a perfect market, which is a theoretical construct that doesn't exist. One of the things it requires is perfect information among all parties in the buy and sell process. Courts and property rights are one way of trying to simulate that perfect market, and thereby create a free market. But this isn't actually working well enough, is the book's argument, there's still an imbalance that favors exploiters, i.e. the free market isn't providing enough information for buyers to make properly informed decisions rather than manipulated ones.
- vezzy-fnord 11y ago
  Free markets don't require perfect information, I'm not sure where you came up with that. Perfect information is an assumption used in general equilibrium models, that's really it. I think you might have meant perfect competition. Free markets don't need perfect competition, either. That's just a neoclassical assumption, again for modeling convenience.
dragonwriter 11y ago
> The term "free market" does not imply that there are not courts of law or private property rights. Courts of law don't provide any recourse for abuses in trade unless there are laws regulating trade.
- clarkmoody 11y ago
  Courts can recognize violations of private property rights without regulating trade...
  - dragonwriter 11y ago
    > Courts can recognize violations of private property rights without regulating trade... Which certainly addresses things like conversion (the civil parallel to theft), but doesn't address consumer recourse, which is what was asked about and is expressly about trade.

cmurf 11y ago

The argument in the book under discussion is that the natural balance of supply and demand is favoring the seller, who is exploiting the buyer in ways the buy isn't aware of, and is complex and fast enough that a regulatory paradigm can't mitigate. A "free market" is an attempt to simulate a perfect market, which is a theoretical construct that doesn't exist. One of the things it requires is perfect information among all parties in the buy and sell process. Courts and property rights are one way of trying to simulate that perfect market, and thereby create a free market. But this isn't actually working well enough, is the book's argument, there's still an imbalance that favors exploiters, i.e. the free market isn't providing enough information for buyers to make properly informed decisions rather than manipulated ones.

vezzy-fnord 11y ago
Free markets don't require perfect information, I'm not sure where you came up with that. Perfect information is an assumption used in general equilibrium models, that's really it. I think you might have meant perfect competition. Free markets don't need perfect competition, either. That's just a neoclassical assumption, again for modeling convenience.

dragonwriter 11y ago

> The term "free market" does not imply that there are not courts of law or private property rights. Courts of law don't provide any recourse for abuses in trade unless there are laws regulating trade.

clarkmoody 11y ago
Courts can recognize violations of private property rights without regulating trade...
- dragonwriter 11y ago
  > Courts can recognize violations of private property rights without regulating trade... Which certainly addresses things like conversion (the civil parallel to theft), but doesn't address consumer recourse, which is what was asked about and is expressly about trade.