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Markets are just an abstraction that's built on strong institutions: property rights, an inclusive justice system that can settle commercial disputes and punish

Markets are just an abstraction that's built on strong institutions: property rights, an inclusive justice system that can settle commercial disputes and punish the antisocial, a state that can tax that commercial activity and reinvest the proceeds into infrastructure. Without those institutions, markets cannot exist, you are just at the whim of a connected competitor, local gang leader, extractive and corrupt government official or unavoidable private monopoly that will fleece everything you create. Therefore you don't waste energy investing and creating for the market, and focus on extracting from someone else.

WalterBright 4y ago
Free markets require a government, and a government acts as guarantor of the rights needed for the free market to function. A free market is not a market without a government.
- manholio 4y ago
  Some form of government exists in any place on Earth - lest that territory is claimed by some other government. Yet, a large number of such entities are unable to guarantee those rights. The gap between the minimum common denominator of a state - ability to claim and hold a territory - and the stable an advanced state is made up by inclusive political institutions.
  - WalterBright 4y ago
    You can have free markets without inclusive institutions. Free markets require the government to guarantee rights to do what one wants to do, as long as it does not harm others. It also requires a government to enforce contracts and property rights. It requires equality under the law. Note that when I say "requires" I don't mean absolutely. The closer to this a society is, the more free market it is, and the better the free market performs.
    - manholio 4y ago
      > require the government to guarantee rights to do what one wants to do, as long as it does not harm others. It also requires a government to enforce contracts and property rights. That's far from sufficient for sustained economic growth. Most feudal societies had strong property rights - as long as you were on the good side of your king at least, and in times of peace. The population had strong individual autonomy and could even sell themselves into servitude, a right no modern state recognizes. But because all productive capital (land) was controlled by an extractive elite, and alternate forms of capital (human, technological) were undeveloped, such societies were not market economies in the modern sense and living in them was hell for most except select few. Freedom to do and own anything means nothing when you own nothing. > It requires equality under the law. A fair justice system is one of those fundamental inclusive institutions I talk about. We have problems achieving that goal even in the most developed countries.
WalterBright 4y ago
> punish the antisocial What do you mean by that?

WalterBright 4y ago

Free markets require a government, and a government acts as guarantor of the rights needed for the free market to function. A free market is not a market without a government.

manholio 4y ago
Some form of government exists in any place on Earth - lest that territory is claimed by some other government. Yet, a large number of such entities are unable to guarantee those rights. The gap between the minimum common denominator of a state - ability to claim and hold a territory - and the stable an advanced state is made up by inclusive political institutions.
- WalterBright 4y ago
  You can have free markets without inclusive institutions. Free markets require the government to guarantee rights to do what one wants to do, as long as it does not harm others. It also requires a government to enforce contracts and property rights. It requires equality under the law. Note that when I say "requires" I don't mean absolutely. The closer to this a society is, the more free market it is, and the better the free market performs.
  - manholio 4y ago
    > require the government to guarantee rights to do what one wants to do, as long as it does not harm others. It also requires a government to enforce contracts and property rights. That's far from sufficient for sustained economic growth. Most feudal societies had strong property rights - as long as you were on the good side of your king at least, and in times of peace. The population had strong individual autonomy and could even sell themselves into servitude, a right no modern state recognizes. But because all productive capital (land) was controlled by an extractive elite, and alternate forms of capital (human, technological) were undeveloped, such societies were not market economies in the modern sense and living in them was hell for most except select few. Freedom to do and own anything means nothing when you own nothing. > It requires equality under the law. A fair justice system is one of those fundamental inclusive institutions I talk about. We have problems achieving that goal even in the most developed countries.

WalterBright 4y ago

> punish the antisocial What do you mean by that?