Are there any examples of the free market regulating itself?
I haven't looked into it much but there's ebay. Where seller ratings determine trustworthiness. And there's BBB: http://boston.bbb.org/
In general it's hard for there to be examples, currently in particular, because the government regulatory agencies fulfill that role, however poorly.
The Anarch is to the Anarchist what the Monarch is to the Monarchist.
I never really got into the whole "the market is self-regulating, the market corrects itself" argument.
But private regulation organizations (agencies that set quality standards and test) are far more common than people think:
Kind of explodes the whole misconception about the government being the only regulation that most liberals and conservatives seem to fall into, huh?
Well, consumers are, ultimately, the regulators of the free market at all times. If people will not buy a Zurg, then Zurgs cannot be profitably produced and go out of business. So only what people will willingly buy at a price that supports a profit can be produced in the free market. People will not buy poison. They might buy poison mis-labeled as "milk" or "medicine" but that mistake will not be repeated as the retailer who purchased the poison and the manufacturer of the poison are identified and sued into oblivion. The other producers of milk or medicine will want to know how the offending manufacturer was sabotaged by a malicious worker and take measures - purely out of regard their own self-interest - to ensure that such mistakes cannot occur in their facilities.
The statist lives in upside-down lala land where people throng to buy any damn thing no matter what it might have in it and eagerly shove it down their throats without the slightest regard of the dangers which it may pose to themselves. It's a wonder that we have been unable to construct a Communist Utopia given a canvas of human beings so completely devoid of self-concern, self-interest and basic common sense.
Consumer reporting businesses aggregate information that consumers want to know intensely enough that they are willing to pay for it. Reputable consumer reporting and rating agencies can be thought of as proxy regulators - they aggregate information for consumers and, to the extent that consumers trust and believe their information, they regulate the market. Bond ratings agencies, for example, perform precisely this role.
Preventing and prosecuting fraud is also well within the ability of the market to perform. In fact, if you think about it, almost all the work of fraud prevention is performed by private firms in their attempt to comply with regulations. The assumption is that - absent those regulations - no one would bother to prevent fraud in the market. This is simply not true. It is historically and theoretically false. There isn't even any reason to believe this is true. Why would a bond investor not care if the bonds he is buying are trash? Why would a bond rating agency that doesn't want to go bankrupt not care about the quality of its ratings? And so on. This reasoning is easily extended to any other good or service you care to mention.
While the above is only a half-joke, there is more:
- Food: http://mises.org/daily/5591/What-Will-Keep-Our-Food-Safe
- Machines (I think): http://en.wikipedia.org/wiki/Underwriters_Laboratories
- Standard Oil spent special care to keep its products top notch and when it once tried to collude with some French companies to decrease output and increase prices this was quickly fixed by new competing companies: http://wiki.mises.org/wiki/Standard_Oil
- Hill's private railroad company built high quality rails that constantly cut prices for consumers while all other subsidized and regulated companies had shoddy construction and hurt customers: http://mises.org/daily/2317#2
Oops, wrong thread.
You don't just say "wow, I hit you" when you bump into someone.
You say sorry and you ask whether you can make it up to the affected party. Geez.
A Primer on Regulation