4 ms·

Saw a great talk recently that explained there is no such thing as a free market. Any market needs government oversight and laws to exist. It needs government

Saw a great talk recently that explained there is no such thing as a free market. Any market needs government oversight and laws to exist. It needs government (courts) to enforce contractual obligations. It needs infrastructure to deliver goods (roads) and to run businesses (power; water; garbage; police). All successful markets have rules. The so called "free market" proponents simply lobby for the rules to be changed in such a way that those at the top make more money; they are almost never lobbying for extra actual net freedom, but just a different skew to the rules so that they can take home still more of the profits.

zzzcpan 10y ago
Sounds like a pro-government propaganda. Illegal market places exist and operate successfully despite breaking laws, hiding from the police and not having anyone to enforce contractual obligations.
- Spooky23 10y ago
  They tend to degrade into cartels. With the absence of courts, they do stuff like decapitate the competition.
  - icebraining 10y ago
    When only people who are willing to risk imprisonment participate in those markets, violence is to be expected, no? Extrapolating that to what would happen in an actual absence of law seems unsound.
    - xg15 10y ago
      That would explain the violence but not the cartels. In legal markets, monopolists have many other non-lethal but highly effective methods to eliminate competition without actually providing a better service - as shown in this article. (And yes, there are ways that work perfectly well without government intervention either, e.g. technical lock-in.)
    - Spooky23 10y ago
      Violence is only one expression of lawlessness. Price fixing, divvying up retail locations to minimize competition, etc are other more subtle things that happen.
      - icebraining 10y ago
        I'm not sure there's evidence that price fixing without the State's help can last for more than a few years, is there?
- int_19h 10y ago
  It all depends on your definition of "successfully". They are successful in a sense that they exist, and that money continues to flow. It doesn't mean that the social effects of such a market are beneficial. Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you").
  - zzzcpan 10y ago
    > Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you") I don't find this to be true, given that most are online markets.
    - int_19h 10y ago
      Even online illegal markets have coercion. Remember all that assassination stuff around Silk Road? But I also seriously doubt that most illegal markets are online. Even first world countries have actual physical black market networks for illegal goods. And if you venture into a country where corruption is routine (which is where most of the world lives), illegal markets are literally right around the corner - drugs, fake IDs, firearms, you name it. (Personal side note: it can be a very... eerie... experience when you happen to run into such a thing by accident, and realize just how close it was all the time.) And most of those physical markets definitely have coercion aplenty.
DasIch 10y ago
There is a difference between free markets and unregulated ones. An unregulated market is unlikely to be a free market, turn into one or stay one. Most self-proclaimed free market proponents aren't advocating for free markets at all and couldn't care less about free markets, they just want an unregulated one in which they can do whatever they want. Free markets are a tool, they don't always work (infrastructure, health care, other natural monopolies) and require careful maintenance in form of anti-trust regulation.
- icebraining 10y ago
  Why are these conversations always filled with claims, with few arguments and no evidence? Not to pick on you specifically, it's just frustrating to see this again and again.
  - DasIch 10y ago
    The reason for that is simply that most of the time people aren't just making claims, they're referencing claims - just like I have. The arguments and evidence you think my comment is missing, isn't actually missing it's just implied. The claims I made specifically are essentially just repeating what Adam Smith wrote in The Wealth of Nations in the 18th century. This is fairly basic economics. Also not sure what the curriculum in the US (or elsewhere) is like but I learned about this in high school (well, at a Gymnasium which is supposed to be more advanced but still). I wouldn't bother to provide arguments, evidence or any kind of proofs in a discussion involving high school mathematics either.
    - icebraining 10y ago
      Yes, your post was a poor choice for my reply, I apologize.
int_19h 10y ago
Part of it is terminological confusion, which is, to some extent, deliberate. The original definition of "free market", as defined by Smith, was all about free competition. In other words, a market with monopolies, cartels, and other forms of collusion or regulation that inhibit competition are not free, and this applies to monopolies and barriers to entry that arise naturally. Other classical economists generally used that definition. Smith also explicitly stated that an unregulated market will usually result in a monopoly, and that government intervening to prevent that is not a bad thing (while also calling against tariffs, government-protected monopolies etc). At some later point, the laissez-faire crowd basically asserted that 1) Smith was wrong (in that unregulated markets can be monopolized), and on the contrary 2) any government regulation makes market less competitive, and therefore 3) the only free market is unregulated market, effectively conflating the two terms. For those who don't subscribe to laissez-faire economic theories, it makes sense to continue using the traditional definition, and carefully distinguish the two.

zzzcpan 10y ago

Sounds like a pro-government propaganda. Illegal market places exist and operate successfully despite breaking laws, hiding from the police and not having anyone to enforce contractual obligations.

Spooky23 10y ago
They tend to degrade into cartels. With the absence of courts, they do stuff like decapitate the competition.
- icebraining 10y ago
  When only people who are willing to risk imprisonment participate in those markets, violence is to be expected, no? Extrapolating that to what would happen in an actual absence of law seems unsound.
  - xg15 10y ago
    That would explain the violence but not the cartels. In legal markets, monopolists have many other non-lethal but highly effective methods to eliminate competition without actually providing a better service - as shown in this article. (And yes, there are ways that work perfectly well without government intervention either, e.g. technical lock-in.)
  - Spooky23 10y ago
    Violence is only one expression of lawlessness. Price fixing, divvying up retail locations to minimize competition, etc are other more subtle things that happen.
    - icebraining 10y ago
      I'm not sure there's evidence that price fixing without the State's help can last for more than a few years, is there?
int_19h 10y ago
It all depends on your definition of "successfully". They are successful in a sense that they exist, and that money continues to flow. It doesn't mean that the social effects of such a market are beneficial. Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you").
- zzzcpan 10y ago
  > Many illegal markets are highly monopolized, often coercively (e.g. "if you try to sell here, we'll shoot you") I don't find this to be true, given that most are online markets.
  - int_19h 10y ago
    Even online illegal markets have coercion. Remember all that assassination stuff around Silk Road? But I also seriously doubt that most illegal markets are online. Even first world countries have actual physical black market networks for illegal goods. And if you venture into a country where corruption is routine (which is where most of the world lives), illegal markets are literally right around the corner - drugs, fake IDs, firearms, you name it. (Personal side note: it can be a very... eerie... experience when you happen to run into such a thing by accident, and realize just how close it was all the time.) And most of those physical markets definitely have coercion aplenty.

DasIch 10y ago

There is a difference between free markets and unregulated ones. An unregulated market is unlikely to be a free market, turn into one or stay one. Most self-proclaimed free market proponents aren't advocating for free markets at all and couldn't care less about free markets, they just want an unregulated one in which they can do whatever they want. Free markets are a tool, they don't always work (infrastructure, health care, other natural monopolies) and require careful maintenance in form of anti-trust regulation.

icebraining 10y ago
Why are these conversations always filled with claims, with few arguments and no evidence? Not to pick on you specifically, it's just frustrating to see this again and again.
- DasIch 10y ago
  The reason for that is simply that most of the time people aren't just making claims, they're referencing claims - just like I have. The arguments and evidence you think my comment is missing, isn't actually missing it's just implied. The claims I made specifically are essentially just repeating what Adam Smith wrote in The Wealth of Nations in the 18th century. This is fairly basic economics. Also not sure what the curriculum in the US (or elsewhere) is like but I learned about this in high school (well, at a Gymnasium which is supposed to be more advanced but still). I wouldn't bother to provide arguments, evidence or any kind of proofs in a discussion involving high school mathematics either.
  - icebraining 10y ago
    Yes, your post was a poor choice for my reply, I apologize.

int_19h 10y ago

Part of it is terminological confusion, which is, to some extent, deliberate. The original definition of "free market", as defined by Smith, was all about free competition. In other words, a market with monopolies, cartels, and other forms of collusion or regulation that inhibit competition are not free, and this applies to monopolies and barriers to entry that arise naturally. Other classical economists generally used that definition. Smith also explicitly stated that an unregulated market will usually result in a monopoly, and that government intervening to prevent that is not a bad thing (while also calling against tariffs, government-protected monopolies etc). At some later point, the laissez-faire crowd basically asserted that 1) Smith was wrong (in that unregulated markets can be monopolized), and on the contrary 2) any government regulation makes market less competitive, and therefore 3) the only free market is unregulated market, effectively conflating the two terms. For those who don't subscribe to laissez-faire economic theories, it makes sense to continue using the traditional definition, and carefully distinguish the two.