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Million Dollar Free Market Question

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Ian posted on Thu, May 17 2012 6:44 AM

Does the free market have some rules and regulations? 

Example:

You're late making a credit card payment, and the bank now wants to charge you 50% interest?  Or the banks, etc trying to make contract changes to your accounts, etc...after the fact.

 

I have always thought that the free market has some (very little) rules and regulations vs. laisez-faire (absolutlely no rules). 

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There needs to be a distinction between free-market forces (Smith's invisible hand) and "rules and regulations". When we talk about rules and regs, we're talking about statists ruling from on high. Their rules and regs are "intended" to create favorable circumstances for the market, but unintended consequences, and the broken window fallacy (if you don't know, read Bastiat) almost always pervert their outcomes.

You should look more into the idea of libertarianism, which uses the Non-Agression Principle and Self-ownership as foundational building blocks for the philosophy. Those two ideas, or forces, tend to be all the rules and regulations that regular human beings need. Laissez-faire refers to no governmental intervention into the market. 

Edited to add: the free market definitely does have rules. This is a common misconception of the idea of anarchic markets. The point is that there is no one making the decision for you. You are in charge of all of your money, debt, credit, etc. Laissez-faire markets and free markets are the same thing, as far as I understand.

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First off, welcome to the forum!  You're definitely in the right place.

Definitely check out The Ultimate Beginner meta-thread for a comprehensive collection of relevant links and threads.  I think you'll find it really useful.  (Also be sure to check out the welcome link there for forum tips and how-to's)

As for your question, jdk pretty much hit it.  Check out some of those resources in the meta-thread to help get a better understanding.  I recommend "What Libertarianism Is" and the "Law Without Government" series by our own Graham Wright.

 

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z1235 replied on Thu, May 17 2012 8:08 AM

Ian, welcome!

Ian:

Does the free market have some rules and regulations?

Yes. Private property: Do not aggress against other people's persons or property. If this rule is satisfied, you are free to do anything and enter into any exchanges (voluntary, by definition) you want. 

You're late making a credit card payment, and the bank now wants to charge you 50% interest?

In a free market, being "late" means you broke the contract you had voluntarily entered which oftentimes is equivalent to aggressing against someone's person or property. Not paying back your loan is theft which is aggression. The repercussions from your (in)action may be stipulated in the contract, and that may include paying 50% interest. 

Or the banks, etc trying to make contract changes to your accounts, etc...after the fact.

In a free market, no party could (legitimately) change the contract without the agreement of the other party. The damaged party would seek tort via its protection/defense/insurance agency which would try to settle the dispute with the other party's agency directly or by taking the dispute to a (private) arbitrator/court. Today, such one-sided contract changes can easily occur if the statutory (centrally planned and enforced) "rules and regulations" allow them (i.e. make them "legal" or "legitimate"). "Rules and regulations" are typically there to enforce someone's monopoly privilege/status and not, as you may have been told, to protect the consumer/society from the greed of the free market. Orwell. 

I have always thought that the free market has some (very little) rules and regulations vs. laisez-faire (absolutlely no rules).

The two terms are synonymous. 

 
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Ian replied on Thu, May 17 2012 5:27 PM

TY all for your expeditios replies. 

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