This is yet another term over which the majority of Americans harbor great confusion. So, in the interest of making it clearly understood as to how this term will be used on this board, let us define ‘The Free Market.’ We will start with the dictionary definition:
: an economy operating by free competition
OK, before we go any further, this definition demands that we understand what we mean by ‘Free.’ I have addressed this definition in my post, “What Is ‘Freedom?’” However, for the purposes of defining ‘The Free Market,’ let us understand that it refers to a system where the exchange of goods and services that is open to competition and regulated only by supply and demand. In other words, ‘The Free Market’ means there is little to no government regulation or control over the market.
Once we understand that ‘The Free Market’ is all about open competition, and is regulated not by government, but by the laws which govern supply and demand, then we have a fairly solid understanding of what we mean by, ‘The Free Market.’ However, while this definition is simply and easy to understand, it also gives rise to many objections — all of which will ultimately rest upon the assertion that the free market will lead to greed and corruption.
Well, as I explained in “What Is “‘Capitalism?’,” ‘The Free Market’ is a system, and systems are neither ‘good’ nor ‘evil;’ neither ‘greedy and corrupt,’ nor ‘benevolent and altruistic.’ How ‘The Free Market’ operates depends entirely upon the individuals that operate within it. Since the nature of any ‘Free Market’ depends upon the nature of those running it, this means — as with all humans — we will find both ‘good’ and ‘bad’ mixed together. Whether ‘The Free Market’ is more ‘good’ or more ‘evil’ in any given economy will then depend largely upon the culture, which is — in turn — intertwined with the government and religion.
Here’s the ‘take-away:’
‘The Free Market’ is a neutral system. It is neither ‘good’ nor ‘evil,’ but exists on a sliding scale. One one end, the more moral the culture and people, the less regulated and more ‘open’ the ‘Free Market’ will tend to be. On the other end of that scale, the more corrupt and immoral the people and their government, the more controlled and, thus, less ‘open’ the market will be.
The extremes on either end of this scale are both lawless. On one side, there is no law whatsoever: the market is governed by every individual trying to force their will upon every other individual. At the other extreme, there is total law, which is itself lawlessness because — ultimately — it comes down to one individual forcing his/her will upon all others. At best, ‘The Free Market’ can only exist or be understood in terms of ‘how free’ a given market may be. The fewer rules, the ‘more free’ the market — until there are too few rules to force individuals to self-regulate their own desires. And the more rules, the ‘less free’ a given market until it reaches a point where the individual no longer has control over their own affairs in the market. Thus, ‘The Free Market’ cannot exist on either end of this scale because ‘Freedom‘ cannot exist on either end of the scale and should be understood and discussed in terms of where a given market lies upon this scale.