in defense of the free market

8/13/2019 In Defense of the Free Market

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In Defense of the Free Market:An Introduction to the Benefits of Laissez Faire

Will Porter

In my short time affiliated with the libertarian movement, I‟ve been time and again forced to sit

through one anti-market rant after another. In hopes to put these fallacious arguments to rest forgood, I will attempt here to address them, and prove them as nothing short of dead wrong.

First, before I get too ahead of mys elf, I should just explain what the „free market‟actually is, as in the true definition. A market that could be considered “free” is one which is freefrom legitimized coercion, or really any coercion for that matter. Any situation of trade thatinvolves only voluntary interaction can properly be called free. It is indeed true that, in anexchange, both parties benefit, each believing they‟re getting the better deal. On a broad scale,this is what comprises a market, a matrix of consenting trade between two or more parties. Thissimple definition will be referred to several times as I go through just a few of the many commonarguments aimed at the market system.

The first objection to free trade that should be addressed is the argument that marketscause, or lead to, exploitation of workers . This claim was made quite popular by the socio-economic and political theorist, Karl Marx. Marx thought that the competitive nature ofcapitalism created a situation where laborers must viciously battle each other for work, andultimately for survival. There are many problems with this theory, but I should address the mostobvious flaw. While it is true that workers compete with one another for labor positions, Marx(& many others) fails to take into account the competition engaged in on the part of theemployers. It is Employers that must compete for labor, in the same way that they compete forany other input material. An employer must outbid the next man if he wishes to get the labor heseeks. This would lead me to believe that this competition actually drives wages up, not down.But instead of talking about pure high theory, let‟s take a look at real life, at history. Without any of the government controls that so many anti-market advocates cry for, during the 19 th centuryreal wages increased four-fold. How are we to explain this with the Marxian theory ofexploitation? If competition in the labor market is supposed to cause a steady decrease in wages,why has reality shown us that the exact opposite is true? This is because competition for laboractually yields an increase in real wages. The wages that workers are paid (the price of labor) are

not decided arbitrarily by the employer, as many seem to think, they are decided by the complexgrid of competition in which employers engage in, as all goods and services in the market are.

Not only wages themselves go up though, the general amount of stuff produced in the economyincreases, therefore making each worker‟s paycheck stretch further.

Now that we‟ve gotten explo itation of workers out of the way, what can we say about theconsumer? Surely if workers aren‟t being exploited, the consumer must be. This is because we



all know that capitalism is exploitive in one way or another, right? No, actually, not at all. In afree market capitalist society, consumers are constantly the sole focus of production. Anentrepreneur or a business owner only produces goods to sell to consumers. Consumers only

purchase the good if it fits somewhere high enough on their value-scale that they value the goodhigher than the price being ask ed for it, otherwise they wouldn‟ t buy it. This comes back to ourdefinition of a free market and free trade, voluntary trade between two or more parties. The

producer of this product hopes to earn more from the transaction than he put into it, as does theconsumer. This is called “profit”. Profit has especially been the target of anti -market sentiment.It is equated with “greed” and the “evils” of capitalism. Profit though, is quite literally embeddedwithin our nature as human beings! It is an economic fact that we seeks to expropriate the mostfrom our environment while at the same time exerting as little energy as possible. Leftist anti-market advocates will have you believe that consumers are always given the short end of thestick , thanks to profit. The claim is that because of profit, producers will cut corners andsacrifice quality, all in order to line their pockets with as much money as humanly possible.

With the smallest amount of economic knowledge and a drop of reason I think we canquickly refute this claim. As I have stated above, consumers are the sole focus of a capitalisteconomy, producers always aim to meet consumers‟ needs as best as possible. I t is this thatcreates profit, satisfaction of consumer s‟ wants or needs, not the cutting of corners or thecreation of a sub-par product. As consumer demand is met and products are purchased, profit isearned. This profit is reinvested back into the production process, rather than solely on personalconsumption by the greedy capitalist as many seem to believe. The result of this is that eithermore goods can be produced, or that the quality of the goods increases, both of which are to thetotal benefit of the consumer. For there to be a greater quantity of goods in a market, the scarcity

of said good goes down, along with the price. If the quality of the good is increased, there arenow better, more durable, more desirable goods available, which can possibly lower prices of theless quality goods of the same type. Once again though, let‟s step away from economic theoryand just look at reality. Are goods, say cars, of better quality now than they were 50 years ago?What about the amount of cars available overall? The answer should be obvious; this is due tocapital accumulation and reinvestment into the production process. Goods slowly become moreabundant, are offered at a higher quality, and at a lower price. This process has allowed all of usa dramatically higher quality of life; we are in debt to such a wonderful system.

The best part about all of the above is that, as our definition tells us, all of this is

accomplished in a spontaneous and voluntary fashion, no government necessary whatsoever. Upuntil now we‟ve only needed to know what markets are, here I‟d like to introduce the concept ofthe government and show how it directly contrasts to a market system. The government, more

properly deemed the state, is an entity which works in a manner precisely opposite to howmarkets work. Where markets work on a purely voluntary basis, governments work withcoercion. Where markets produce and provide to the greatest extent possible, governmentshamper and destroy to the same degree. Markets can only properly function without major



interference and intervention from the state. Given the coercive nature of the state, all it can possibly do is fetter a market and bog it down with mandates and regulations. The people withthe loudest cry for more government regulation are the ones in need most of economic education.This brings us to our next objection to markets, that without regulations, corporations will runrampant and destroy the economy.

This claim assumes that first there were no regulations, and things were just amess. People were starving in the streets, half naked, one-armed children laboring in coal mines,

pretty much death and destruction all around. But one day, the wonderful government camealong and fixed all of this! They wrote down some words on a fancy piece of paper, called it“legislation”, and boom, the world‟s woes were no more. Typically this is the sentiment that

people have, to some degree or another. This claim completely fails to take into account the production process that I explained above. Markets can‟t jus t instantly create mass amounts ofwealth and cure poverty, not all at once. Capital accumulation takes time; this is what caused thegradual reduction of child labor and poverty over all. While we still do have some poverty in theworld, it wasn‟t until t he advent of the modern market and production system that even allowedus to complain about such poverty, before that poverty was simply an unavoidable fact of life. As

better, more efficient means of production are invested in; products become available in higherabundance, at a lower price, and usually at a better quality than before. It is this that pulls anduplifts entire societies out of poverty, not the government, not regulations or laws. The morerecent economic crises have given raise to many clai ms that “we need more regulation!” Whatthese people fail to realize is the staggering amount of regulations that we already have. Eachyear, 70,000 pages are added to the Code of Federal Regulations. If this isn‟t a highly regulatedeconomy, I‟m not sure what is.

This final objection that I‟d like to look at is more of a general idea than a specific claim;it is that corporations are the ultimate source of unaccountable corruption. First, why dothese people always assume that the government isn‟t also full of corrupt or unruly characters?Why is it always the private sector that harbors the greater evils of humanity? If we actually lookat reality, we can see that political leaders of many shades and flavors are greatly to blame forsome of the most heinou s atrocities mankind has ever known. We don‟t see entrepreneurssending armies overseas to kill and destroy; nor do they even have the power to do so. Put

plainly, the idea that we need to be saved from the market by the government is a frighteningone. The private sector, which as I‟ve stated , has been the greatest source of wealth and the

largest eliminator of poverty known to man, is not at all evil, exploitative, corrupt, or dangerous per se . While this corruption is certainly possible, there is nothing inherently bad about a market.This cannot be said about governments. Governments, by their very nature, rely on coercion andviolence. They do not gain resources through trade or voluntary interaction; they take what theywant by force, and imprison or kill those who resist them. They start wars, they inhibit andinterfere with economies (through things such as price controls, regulations, tariffs, exclusivecontracts, tax subsidies, tax impositions, guaranteed credit, grants, licensing, minimal prices,



permits, patents, certifications, bail outs, nationalizations, etc. ad nauseum ) they steal money,they kill, they kidnap, they torture. Nothing about the government should be looked upon with asense of security or gratitude, just about everything they do is to the utter detriment of the rest ofmankind. In fact, businesses in the private sector are typically only engaged in serious corruptionwith the assistance of the government. I do not deny the fact that there has indeed beencorruption on the behalf of private actors within the private sector, but it is of little significancewhen you take a look at the past acts of evil carried out by various governments and stateinstitutions in the past and in the present.

Largely, if we are to point the finger of blame at some single system or institution for themajority of this world‟s problems, it should most definitely not be at the market. If we are toscrew on our heads a little tighter, shed the propaganda spread so virulently throughout oursociety, we begin to see a clear picture. The picture is one that shows the government, the state

being the greater enemy of mankind, and the market the only possible escape. The just society built upon consenting interaction, upon voluntary trade, is our only possible hope for a betterfuture. We can testify with reason and ethics on our side that the market system bears results indirect opposition to that of the state, creation over destruction, voluntarism over coercion, lifeover death.

in defense of the free market

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