The Free Market Theory

The idea that “we should all act in our own self-interest” was quite appealing to wealthy Americans…

Okay, back to reality… The free market ideology has been around, in one form or another, for centuries. In America, it started with Adam Smith and his book “The Wealth of Nations” in 1776. It lingered around for a couple of centuries in the writings and musings of social and economic theorists around the world, but it never really got much attention. It finally got a big push forward around 1947 when some of these theorists (including Friedman), along with the financial backing of a handful of wealthy American businessmen, got together atop Mont Pelerin in Switzerland to work out their free market vision of our future. Here are some basic free market concepts discussed and refined by the Mont Pelerin Society; an organization that still exists today.

• The foundational idea of the free market ideology is that of “the liberty of man” (okay, so far so good).
• Building on this is the belief that we should always act only in our own self-interest. If everyone did this then the “invisible hand” (Adam Smith) of the Free Market would magically create balance or equilibrium in our economy. (The idea that “we should all act in our own self-interest” was quite appealing to wealthy Americans and prompted their financial support of the MPS)
• In a Free Market economy, we all determine what is produced and consumed based on our informed decisions. Inferior products and services are not consumed and will either be improved or disappear. This fosters innovation and competition, both of which will create better products and better prices.
• Ideally, only individuals (not the government) should own property, resources, and production capacity, and only they should decide how to best use them. 
• Importantly, these personal freedoms are to be self-regulating interactions within a self-regulating market which requires that government oversight and regulations are as close to zero as possible (this is another reason why the wealthy Americans supported the MPS!)
• The free market does not insist that all of the above are required in full, but the closer we get to them, the closer we get to some optimally efficient and fair society.

It should be mentioned Adam Smith’s “invisible hand” and other early free-market thoughts were overplayed by those promoting the modern-day free market. Smith was actually in favor of regulation, etc. Likewise, even though the Mt. Perlin folks were hardly saints, even some of their work was hijacked by their wealthy American corporatists who tailored them (and the MPS itself) to better suit their needs – corporate America has always been good at that…

The Free Market Reality

The free market is a pipedream that has been turned into one of the biggest and most dangerous cons in the history of man.

Like with any other ideology, the free market is not based on facts, data, or even observation – it is based only and exclusively on the theoretical thoughts of an ideal society (ideal in the minds of some). The cool thing about the free market being more of an ideology is that it doesn’t need to be proven out or undergo rigorous validation. Even better, as an ideology, it can be aggrandized, glorified, and exploited – making it even more appealing to corporatists.  The free market is a pipedream that has been turned into one of the biggest and most dangerous cons in the history of man. Sadly, the well-funded free market con artists have lured humanity down a very dangerous path. Below are some examples that show that the free market is a load of crap just like those who espouse it – there, I said it.

Lobbyists – The idea of a free market is that you succeed based on the quality of the product that you offer and that you get ahead by your merits. The free market says nothing about getting ahead by paying off government officials to ensure your product is protected or changing regulations regarding the safety of your product or its production. The fact that lobbying has become its own industry shows just how far off we are from a free market. The folks who push the free market ideology are the same people who push for more money in politics – that alone shows that the free market is a con.

Our own best interest – The acceptance of “every man for himself” is great in theory but it generates cheating and corruption. Innovation falters as folks take shortcuts to get ahead. Producers take shortcuts in the safety of their products or the responsible manufacturing of their products. They trick us into buying their inferior or dangerous products and services. The wealthiest use their checkbooks and the above-mentioned lobbyists to control our government and weaken its protection of us – but that’s ok because they are acting in their own self-interest. A side effect of this is that growth falters as companies learn to profit from scheming instead of innovating. The free market theory, formulated in a vacuum devoid of reality, does not consider greed or a tilted playing field, but in practice, that is what it is all about

Informed decisions – A free market only works when people can make informed decisions that are in their own best interest – choosing the products and services that are best for them. When a company hides misleading information (everything from food additives to pollution to predatory lending) then we can’t make those decisions. Our government does its best to check for things like contaminated food, dangerous toys, or harmful medicines all across the country – but it is hard to keep up with all the cloak-and-dagger activities of corporate America. Just think if that “minimal government” was NOT checking things at all – it would take years for consumers to notice any sort of trend that would indicate that they are being poisoned by a product – if they notice at all. Regulation and oversight are required so that we have the information that we need to make decisions and to protect ourselves, but free market folks want to minimize these protections – of course.

Small government – Corporate America has turned the “minimized government” concept into a gold mine. It’s more than just their crusade to eliminate laws and regulations related to pollution, food safety, consumer protection, and worker safety. Other areas include loosening controls on the offshoring of jobs and profits, pushing for self-regulated industries (think the 2008 banking crisis), and deregulating dark money (so they can corner even more of the free market). Not only do they want to obliterate government regulation, but they also want to obliterate our government itself. They want to eliminate as many government services as possible, including the EPA and FDA – all in the name of “freedom”. If there is money to be made then they want to privatize government those services – imagine for-profit companies controlling our education and water supplies. None of this does any favors for the rest of us – in fact, we have been and will continue to pay dearly for our “small government”. Is that what Friedman was talking about when he claimed his free market would allow us to “help one another”?

Well… not that small – Corporate America is always running back to the government for help, looking for yet another tax break, more subsidies, free innovation, protection from competition, or help when expanding into foreign markets. Other than tax breaks and some subsidies, this reliance on our government is fine and often necessary for our economy to advance. But this is pretty hypocritical for the free market folks who despise our government and continually defund it. Corporate America views our government as a tool for them to maximize wealth – nothing else.

The other side of small – It is important to realize that the free market types who rely on the government (for much more than what is mentioned above) are the first to flip out over the government doing anything to prop up the average American. The list is long: minimum wage increases, healthcare, investments in education and infrastructure, etc. When free market proponents hear these, they are quick to throw out the “rugged individualism”, “pull yourselves up by your bootstraps”, “welfare state”, or “socialism” rhetoric. Corporatists are driven to chip away at our government, but only where it works for us. They justify their actions by claiming that a big and encroaching government is wasting your tax dollars and taking your freedom. They execute it by lobbying for lopsided tax breaks that force our government to cut back, but you’ll never see those tax breaks impact government programs that favor the wealthy. Their government programs are saved, and ours are minimized. They get the tax break and you lose the services. They grow stronger and we grow weaker – welcome to “the magic of the market”.

The bullshit of “balance” – Influence over government creates policies that tilt the playing field and remove the idea of getting ahead based on your merit. Tax codes that favor wealth over labor slowly but consistently put more money in the hands of the wealthy. Inconsistent application of laws and penalties unfairly punish certain people while letting others walk (remember who got punished for causing the 2008 financial crisis? I can’t). when the wealthy control government they control the rules – the economy will continue to be tilted in their favor.

The cost of “free” – In addition to countless tax breaks and subsidies, corporate America also “externalizes” the cost of the damage that they cause (cigarettes, pollutants, additives, climate change, etc.). That typically means that taxpayers pay for things like increased healthcare costs, oil spill clean-ups, superfund sites, etc. In terms of the free market, externalizing costs hides the lack of merit of a product or service as well as the actual cost – we might pay a little less upfront but we all pay more later. Do you ever wonder how much a gallon of gasoline really costs? The free market thugs want to keep the government out of their way until there is a mess to clean up. Climate change is going to cost us dearly if it isn’t already too late. Climate change will be our ultimate sacrifice for the free market.

The Free Market Damage

Since it is impossible to prove that they work or not, perhaps the only measure of an ideology’s success is the number of people who have accepted the rhetoric. In the case of the free market, the rhetoric has been very appealing in two ways. The first is its hypnotic appeal to us common folks. Who wouldn’t want an economy and society that relies strictly on “freedom”, “liberty”, “individualism”, “nature”, etc? The second is its “invisible hand” which works for corporations and the wealthy. They can get away with a lot in a free market economy that is “natural and inevitable, existing outside and beyond government. So whatever inequality or insecurity it generates is beyond our control” – isn’t that convenient?

To get us to buy in on all this, free market proponents portray our government as encroaching, overreaching, and taking our freedoms away (look closely at President Reagan’s quote above). These are the battle cries of the Libertarians. They have been very successful at this and many of us have been convinced that we should tear our government down, but without knowing why. Corporate America is using its fat wallet and the free market ideology to lead us down a path that will take us to an economy, and even a society, controlled by the wealthy.

In the corporatized implementation of the free market, liberty is only for the wealthy. They use their power and reach into government to tilt the playing more and more to their advantage. They get ahead, not based on their merits, but on “fixing the system”, allowing themselves to more efficiently act in their own interest compared to everyone else. Ultimately this creates enough economic disparity to destroy a society.

One example of the far-reaching impact of the free market is in manufacturing. To increase profits, many manufacturers have moved their production overseas (to China, for example). So while it *might* reduce our costs at the check-out line, it definitely kills jobs here at home. Fewer regulations overseas reduce the safety of the products, increase pollution for everyone, and contribute to climate change. Densely populated manufacturing areas are created which leads to poor working/living conditions, underpaid workers living in squalor, and increases the chance of pandemics. The products are lower in quality, sometimes dangerous, and often need replacement – forcing the above cycle to continue. Longer-term and more significant impacts include the loss of critical manufacturing skills here at home and funding the growth of China’s military.

Free market proponents sometimes use the excuse of needing to be competitive, but the only reason there is this offshoring competition in the first place is that manufacturers were allowed and incentivized to do this. If these incentives are reversed to lure manufacturing back home, it would provide a more balanced benefit to more people – but this is counter to the self-interest of the manufacturers and they have much more influence over our government than we do.

The free market ideology has left most of us in the dust. It has slowly destroyed our planet, made us obese, riddled our bodies with toxic substances, and emptied our wallets. As it turns out, the free market is really just an excuse to exploit us. Polluting, poisoning, and exploiting will never be “optimal”. There will always be imbalance and losers when wealthier and more powerful people act in their own self-interest. We know from our own experience that people who act in their own self-interest are the biggest assholes in our lives – the same can be said about free market proponents.

President Reagan was right – the free market really is magic – it is an illusion performed with sleight of hand and distraction.