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The Free Market Isn't "Dead"

Over and over I keep reading about how the free market has our current crisis is the result of free market forces. Of course, nothing could be further from the truth. The crisis that we are experiencing is one of interventionism. It always strikes me as comical when I read that our financial markets have been operating on a basis of 'raw capitalism.'

But how can this be? Raw capitalism would not have a central bank. It would not have legal tender laws. It would not have regulations forcing banks to make loans to uncreditworty individuals. Unfortunately, these facts do not stop those who are just salivating at the possibility of another New Deal.

Could the free market ever be dead?

My response is: "It's not likely." We've seen many times that when governments regiment economic activities to a high degree, black markets begin to form. And black markets are actually free markets. Haven't you ever noticed that when hyperinflation occurs somewhere in the world, you always read the "official" inflation rates followed by the black market rates? The black market rates are always higher because the free market can't lie.

I even remember reading that were it not for the black market in the old Soviet Union, the poor Soviet people would have been much worse off. So if the free market wasn't even stamped out in the Soviet Union, I think it's kinda silly to already pronounce its death here.

All of the people making such proclamations may be jumping the gun a bit. It is during times of crisis that people become open to new ideas. When the Dow was trading at 14,000 and housing prices were doubling and tripling, trying to persuade people to free market ideas was tough...After all, they were comfortable.

But with the Dow plummeting, housing prices plummeting, and grocery bills climbing, openness to free market ideas are now on the table. Ears that were once closed are at least open. I'm not talking about the media or the news (even though Ron Paul has been on a lot lately) I'm referring to everyday people.

Those who yearn for another New Deal may be thinking they have another slam dunk ahead of them....and they might. But America in 2008 is not the same economically as it was in 1933...and the people may just be open for something that's really new:

A real free market.


Posted Oct 07 2008, 03:19 PM by ChrisR
Filed under:


Franklin wrote re: The Free Market Isn't "Dead"
on Wed, Oct 8 2008 10:58 AM

Chris, the so-called free-market has taken a hit, deserved or not.  Within the present lexicon, most citizens generally understand the "free market" as the present capitalist system as practiced in the U.S. -- probably the closest thing to a libertarian society on the planet.    Now before we libertarians take issue with the notion of "U.S. is free market," we must be prepared to discuss the level of regulation a true "free-marketer" desires.  

When pure leftists are faced with the fall of the Soviet Union, the fascism of China, the authoritarian rule of Cuba, they are quick to say, "That is unfair because those were not 'true' examples of communism.  They were perversions of the ideal."

Now, never mind that the communist approach is, pragmatically, a fairy tale, a fantasy, a denial of our human need for individuality and ultimately results in a fascist state.  The followers of Marx reiterate and reiterate and reiterate that leftist ideals have not been really tested in the manner that they recommend.

Most critics of the present financial debacle will point to deregulation (even though it is half-baked deregulation) and will say, "The free market failed."  Libertarians will respond with, "But this was not a 'true free market.' This was a perversion of the ideal."

Yeah, the same complaint as the Marxists, and that is why libertarians are often considered fringe nutcases.  Sadly.

Libertarians must be prepared to identify how much regulation is necessary. Even anarcho-capitlists understand that a Darwinian model is flawed since protection of property must be guaranteed; otherwise, we end up with tribal warfare.   Limiting our discussion to the libertarian guidelines of a court system, upholding contracts, guaranteeing right of transit via a roadway, the recognition of currency within the contractual paradigm, then we too are faced with a certain amount of regulation.  Like it or not, we need real-world examples.

So the discussion becomes, "How much" regulation?   If the "how much" metric cannot be defined or framed, then libertarians shall forever stay in the "idealistic kook" category, not living in the real world -- similar to Marxists who repeat, "That old-style Soviet communism was not what we meant!"  just as libertarians will be faced with 1990's style banking deregulation and cry, "That is not what we meant!"

Even libertarians, who are not anarchists, espouse some regulation.  

Austrians will recognize the so-called libertarian approach of Reagan was also perversion of the free-market.   But the Reagan years are usually considered the 'test" of conservative principles.  

So how do we define a free-market when not one libertarian can cite a workable, pure (and I mean, very pure) example of it in the country's last 200 years?



ChrisR wrote re: The Free Market Isn't "Dead"
on Wed, Oct 8 2008 2:49 PM make some very good points. You are correct that a "pure" free market has never existed in the U.S., and based on my understanding "pure" Communism did not exist in the Soviet Union. It is my understanding that market prices were used by the Soviets, as they gathered prices from the world markets.

If we are to always be mired in some form of "mixed" economy, then it is my hope to see free market ideas at least 'dominate'. At this country's founding, they did. Now?..Not nearly as much.

But as far as defining what a free market would look like...(in my reading) Rothbard has done the best job at showing how all public services could be done privately. I'm not saying that his is the final word, and I'm sure he wouldn't have said that himself, but his books "For a New Liberty" and "The Ethics of Liberty" are definitely beacons that point the way.

Doc Holiday wrote re: The Free Market Isn't "Dead"
on Sun, Oct 12 2008 9:06 AM

Your quite the fiscal luddite or just trolling for negative attention  The irony of these delusions is that the DJIA dropped 2000 points since you posted.

1. The "Ponzi Pyramid of Debt Death/Bretton Woods II" that was the world's financial system collapsed five weeks ago today. Tens of trillions of electronic fiat were evaporated from the servers and spreadsheets housing them.

2. Literally every single large financial instution failed, simultaneously. Worldwide.

3. The world's governments and central banks have been performing ever-greater and more desperate maneuvers to revive the now-decaying corpse, pumping in seven trillion fiat.

4. So far, their efforts have shown little success as the spillover effects on the credit and equity markets can no longer be hidden.

A full blown, up-in-your-face credit collapse and stock market colllapse has ensued. Again, worldwide.

5. Coming next: "Great Depression II Meets Mad Max".

6. Therefore, we're screwed and it's dieing and soon to be dead.

magazines214 wrote re: The Free Market Isn't "Dead"
on Fri, Oct 15 2010 5:11 AM

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