There's No Such Thing as a "Free Market!"

There's No Such Thing as a "Free Market!"
July 31, 2012

One of the greatest fictions that has been perpetrated by the current incarnation of the Republican Party over the last 32 years is their notion of a “free market.” They often express their belief in this silly concept in the same way they express belief in God. That's not to say there is no God, but their belief that “In the Free Market, all things are possible” sounds more like an article of faith than a statement of fact.

To hear Republicans tell it these days, only a purely capitalist system can work, economically. And yet, there is no such thing as a “free market” in a purely capitalist system. In such a system, Joe Blow creates a product, manufactures and sells it, and makes a profit. Then, someone copies that product and sells it cheaper, putting the actual creator out of business. A third entity could then copy the same product, sell it cheaper still, and put the previous seller out of business. Or someone with a lot of money could conceivably build the product, sell them for a penny, put everyone else out of business, and control the market and the price.

The ultimate aim of every player in a purely capitalist system is to become the only one on the block, and to eliminate competition, in order to increase profits every year.

The Founding Fathers understood this, even more than 200 years ago, when capitalism in its current form was an experiment. That's why they imbued the government with the power -- no, make that the obligation -- to “regulate commerce.”

Not only is the right wing wrong when they claim the “free market” does everything right; they're also wrong when they suggests that a "free market" even exists. And to make it a trifecta, they are also wrong when they claim socialism is antithetical to a strong capitalist system. The fact is, the strongest capitalist systems in the world recognize that not everything should be subject to the "free market." Like health care, for example. Health care is a right, and rights simply can't be subject to the whims of the market. Some aspects of a free society have to be socialized. It's why you have one phone line and one electrical line into your home. Would it make sense to have 20 electric companies each with their own line into your home? Of course not. So you have one electric company's line, and you get to choose which supplier can provide you with electricity. Unless you belong to a coop; then you're just a socialist, you know. At least, according to Republicans.

Ironically, the Republican attempts to deregulate absolutely everything actually undermines the capitalism they claim to love so much. Not only that, but they're actually violating one of the government's primary imperatives under the Constitution, which is to regulate commerce and keep the playing field level.

The Commerce Clause exists because the Founders had just fallen victim to a system in which their ability to make money was based on which companies paid off the Crown. They wanted to create a society wherein economic opportunity was available to everyone. A society moves forward only if opportunity exists for everyone. An absolutely free market, if it did exist, would eliminate opportunity, not enhance it.

Governments in successful capitalist systems always regulate their markets, because that's how the game is played. They provide prospective employees with productive employees through public education. They provide highways and transportation corridors, so that commercial enterprises can maximize revenue. They put rules in place to ensure that companies with deep pockets can't close off a market to any new, more innovative players, or drive everyone else out of business. And they make sure all rules apply equally to everyone, regardless of size.

We used to have a solid capitalist foundation and the healthiest economy in the world, bar none. We still have a strong economy, but it's not because of anything we've done in the last 32 years, since neocons took greater control of the system to create their fantasy "free market" system.

A market is NEVER "free." The only difference between various markets is simply who controls each one. Think about it; is there a free market for oil? Of course not; the base price is set by cartels nd speculators, and passed on by oil companies, who also participate in the cartels. How about retail? Perhaps you can come up with an original product or service and build a store around it, but it's more difficult with the national chains dominating things.

That's what happens when the federal government cedes its solemn duty to regulate commerce. What has gotten better, economically speaking, during this era of "free markets" and "deregulation"? Well, before then, a family could own a home and raise a family on one modest income. Not anymore. If you'd like to start your own business, what sort of business would you like? There aren't many left to choose from, because huge conglomerates have "chain stored" the entire country. if you're a good cook, you might be able to start a restaurant, but be prepared, because the chain restaurants have reduced the available supply of food, and also forced the price of real estate up, so the space will cost you. Of course, there's always multi-level marketing, but you'd better come up with a new one, because the top tiers of the existing ones are taken.

The "free market" is not natural and organic; it's actually quite brutal. We need regulation to keep the market "free" to any great degree. If you want workers to be guaranted a living wage, you'll need regulation, becaue rational capitalists see every dollar they spent as "lost profit."

Has the government over-regulated at times? Absolutely. Some regulations are downright onerous. But just because some government regulations are absurd, it doesn't follow that all government regulation is absurd.

And can we please get off this notion that everything the government does is wrong, and that privatizing everything is better for everyone. That's absurd. I seem to remember a major economic collapse that happened a few years back, and it seems to me it was the government that bailed out private industry, not the other way around. And please stop whining about the bail-outs. If the banks had collapsed, your bank account and the bank account of your boss would have gone bye-bye. But the point is, it's usually government that bails out private enterprise, not the other way around. So, the concept that our health and safety should be in the hands of "market-based" forces just doesn't pass a reasonable smell test. It's really simple; government is accountabe to us. Private enterprise is only accountable to its owners and stockholders.

We are the richest country in the world, but we are falling behind in the global economy, precisely because of a misguided belief in a fantasy the right likes to call "the free market." Regulating commerce is the government's job, as spelled out in the country's guiding legal document. The last time we tried capitalism with no regulation before, it led to several depressions (and many other recessions) during the 19th Century, culminating in the Great Depression of the 1930s. With government guidance and regulation since then, we have yet to see a depression, although we missed one by a hair in 2008-2009. The reason we came close to depression then is because the government ignored the economic engine, and let the fantasy "free market" work. As usual, it didn't, precisely because it doesn't exist. Markets need regulation. Without regulation, markets are guided by crooks, and crooks spoil the economy, they don't make it better.