Free market

For the trade policy, see Free trade.

In economics, a free market is a system in which the prices for goods and services are determined by the open market and by consumers.

• One of the most prevalent ideological mantras of Western capitalism is that the market should rule. But as the latest health and economic crises demonstrate, capitalists soon forget their worship of the market when times get tough. They scream for government money, and plenty of it. It turns out that “the market” is fine when it comes to whipping workers to accept lower wages, but when it comes to lower profits, the market can go hang.
  • Tom Bramble, Everyone's a socialist in a crisis, 21 March 2020, Red Flag.

• Every student with the misfortune to have studied economics at school or university will know that “the market” is the god before which we must all kneel. Markets bring consumers and producers together to ensure an equilibrium of supply and demand, the textbooks tell us. We may all be individuals each pursuing our own private interests, but this selfish endeavour miraculously results in an optimum outcome for all. You don’t even have to step inside a classroom to have received this lesson. It’s rammed home in normal times in every newspaper, in every news bulletin on the TV, in every politician’s speech. Just listen to them. Governments can’t expand spending on Newstart because “the markets” won’t allow it. Governments shouldn’t ramp up public housing because that will throw property markets into a spin. Competition should be opened between universities because a market in education will sift out the bad providers from the good. The champions of the market, if challenged to explain how it is that markets consistently result in supplies of goods lurching from shortages to gluts, point to the economic dysfunction of the old Soviet Union as proof that if “planning” replaces the market, a much bigger disaster ensues. It doesn’t take an Einstein to see what rubbish this is. The last thing any capitalist wants is “free competition”, because that might squeeze their profits. Just look at how the supermarkets have destroyed small shops or how any new industry that emerges is soon dominated by three or four companies globally.
  • Tom Bramble, Everyone's a socialist in a crisis, 21 March 2020, Red Flag.

• But there’s another angle to this. Capitalists preach “the market” for the working class – stand on your own two feet, don’t rely on the government – but themselves sponge off the public big time. Just look at the billions in subsidies and tax concessions the fossil fuel companies, huge enterprises for the most part, extract from state and federal governments in Australia. The vehicle manufacturers raked in hundreds of millions a year from the Australian government for decades until deciding it wasn’t enough and went overseas. This is why big companies and industry groups hire armies of former politicians to lobby on their behalf in the offices of premiers and prime ministers – there’s money in government coffers and they want it. And while the capitalists talk about “the market” setting wages for workers, in reality, they don’t really allow the market to do the job. They use the whole apparatus of state repression, the industrial tribunals, the police, the courts to suppress workers’ rights to organise to pursue their demands. But when a crisis hits all the bullshit about the market is thrown to the winds. And that is just what we are seeing now. Faced with the collapse of the capitalist economy, for the second time in a dozen years, with massive bankruptcies on the table and the stock market plunging by more than 30 percent and more to come, fervent advocates of the free market are now embracing government intervention to save their skins.
  • Tom Bramble, Everyone's a socialist in a crisis, 21 March 2020, Red Flag.

• The current crisis demonstrates not only that all the ideological nonsense about the virtues of the free market is quickly thrown overboard when capitalist interests are threatened, but also that the idea that governments are essentially powerless in the face of the markets is rubbish. Governments are not helpless victims who cannot do anything in the face of “economic reality”. In the normal course of events, when we demand things like better welfare, health care or education, governments tell us that it isn’t possible.
  • Tom Bramble, Everyone's a socialist in a crisis, 21 March 2020, Red Flag.

• The current crisis demonstrates not only that all the ideological nonsense about the virtues of the free market is quickly thrown overboard when capitalist interests are threatened, but also that the idea that governments are essentially powerless in the face of the markets is rubbish. Governments are not helpless victims who cannot do anything in the face of “economic reality”. In the normal course of events, when we demand things like better welfare, health care or education, governments tell us that it isn’t possible.
  • Tom Bramble, Everyone's a socialist in a crisis, 21 March 2020, Red Flag.

• So, in an economic emergency, few of the usual rules apply. Governments can marshal the resources and can threaten the narrow interests of private businesses. Hardcore libertarians despise these measures as rampant socialism. From their perspective, they’re right: the very existence of such programs is condemnation of the free market capitalist model that they promote. But they are best seen only as another approach to the management of the capitalist economy. The fact that governments across the OECD are now prepared to spend trillions of dollar to save the financial system from collapse only confirms that the world economy cannot be left safely in the hands of “the market”. And, the situation clearly confirms that when the capitalist class and governments deem it necessary to save their system, lots of measures they once denounced as “unaffordable”, not permitted by the condition of “the economy”, are actually affordable and permitted. Governments can act when required. The ideological justifications of yesterday are revealed as threadbare. But nor are government interventions of this nature geared towards the interests of the working class, only the interests of the bosses.
  • Tom Bramble, Everyone's a socialist in a crisis, 21 March 2020, Red Flag.

• Vulgar libertarian apologists for capitalism use the term "free market" in an equivocal sense: they seem to have trouble remembering, from one moment to the next, whether they’re defending actually existing capitalism or free market principles. So we get the standard boilerplate article arguing that the rich can’t get rich at the expense of the poor, because "that’s not how the free market works"—implicitly assuming that this is a free market. When prodded, they’ll grudgingly admit that the present system is not a free market, and that it includes a lot of state intervention on behalf of the rich. But as soon as they think they can get away with it, they go right back to defending the wealth of existing corporations.
  • Kevin Carson, Studies in Mutualist Political Economy (2007), chapter 4.

• So, recently, though it wasn’t reported here, there were negotiations with Australia to establish what’s called a free trade agreement.... The negotiations were held up for some time because the United States was objecting to Australia’s highly efficient health care system. ... Why was the U.S. objecting to the Australian system? Well, because the Australian system is evidence-based... They have to provide evidence that the drug actually does something, that it is better than some cheaper thing that’s already on the market. That evidence-based approach, the U.S. negotiators argued, is interference with free markets, because corporations must have the right to deceive... The claim itself is kind of amusing, I mean, even if you believe the free market rhetoric for a moment. The main purpose of advertising is to undermine markets. If you go to graduate school and you take a course in economics, you learn that markets are systems in which informed consumers make rational choices. That’s what’s so wonderful about it. But that’s the last thing that the state corporate system wants. It is spending huge sums to prevent that.
  • Noam Chomsky, Interviewed at 25th anniversary of the International Relations Center in Santa Fe, New Mexico, January 26, 2005

• As the most powerful state, the U.S. makes its own laws, using force and conducting economic warfare at will. It also threatens sanctions against countries that do not abide by its conveniently flexible notions of "free trade." In one important case, Washington has employed such threats with great effectiveness (and GATT approval) to force open Asian markets for U.S. tobacco exports and advertising, aimed primarily at the growing markets of women and children. The U.S. Agriculture Department has provided grants to tobacco firms to promote smoking overseas. Asian countries have attempted to conduct educational anti-smoking campaigns, but they are overwhelmed by the miracles of the market, reinforced by U.S. state power through the sanctions threat. Philip Morris, with an advertising and promotion budget of close to $9 billion in 1992, became China's largest advertiser. The effect of Reaganite sanction threats was to increase advertising and promotion of cigarette smoking (particularly U.S. brands) quite sharply in Japan, Taiwan, and South Korea, along with the use of these lethal substances. In South Korea, for example, the rate of growth in smoking more than tripled when markets for U.S. lethal drugs were opened in 1988. The Bush Administration extended the threats to Thailand, at exactly the same time that the "war on drugs" was declared; the media were kind enough to overlook the coincidence, even suppressing the outraged denunciations by the very conservative Surgeon-General. Oxford University epidemiologist Richard Peto estimates that among Chinese children under 20 today, 50 million will die of cigarette-related diseases...
  • Noam Chomsky, In Tony Evans (ed.), Human Rights Fifty Years on: A Reappraisal, 1997

• The excesses are not abnormalities but are exactly how we would expect unregulated markets to work, especially when capital has the law and politics on its side. Monopolies can charge a high price when consumers (once known as patients) do not react or when they move to another provider, and thus an unconscious roadside casualty is the perfect victim. In retrospect it is not so surprising that free markets, or at least free markets with a government that permits and encourages rent seeking by the rich, should produce not equality but an extractive elite that predates on the population at large. Utopian rhetoric about freedom has led to an unjust social dystopia, not for the first time. Free markets with rent seekers are not he same as competitive markets; indeed, they are often exactly the opposite.
  • Angus Deaton, Economics in America: An Immigrant Economist Explores the Land of Inequality Princeton University Press (2023), ISBN 978-0691247625, p. 95

• Greg, what are you talking about? Ending corruption? Like there’s a version of this society that isn’t corrupt? Corruption isn’t the exception, it’s the norm. It’s baked in. The whole idea of using markets to figure out who gets what is predicated on corruption—it’s a way to paper over the fact that some people get a lot, most of us get not much, and so we invent a deus ex machina called market forces that hands out money based on merit. How do we know that the market is giving it to deserving people? Well, look at all the money they have! It’s just circular reasoning.
  • Cory Doctorow, The Man Who Sold the Moon in Ed Finn & Kathryn Cramer (eds.) Hieroglyph: Stories and Visions for a Better Future (2014), ISBN 978-0-06-220469-1, p. 150

• The free market system is implied, Hayek felt, by his ontology in order to attain maximum human productivity, the highest standard of living for all—the utilitarian-liberal-socialist-communist-libertarian goal. The division and paucity of individual knowledge renders a market economy necessary for optimal economic productivity. The utilization and communication of information and knowledge are critical.
  • Alan Ebenstein, Hayek's Journey: The Mind of Friedrich Hayek (2003), Ch. 10. Epistemology, Psychology, and Methodology

• Slavery was a byproduct of the quest for profit—economic actors were the architects of the slave plantation systems that came to dominate American society from the Southern United States to the Caribbean and Brazil. It was merchants and planters, not statesmen and jurists, who determined that slave labor was more profitable than free. ... This history constitutes a welcome corrective to the fashionable view that free markets automatically promote social justice.
  • Eric Foner, "Plantation Profiteering" The Nation March 31, 1997 p. 25

• Now, as then, commerce unrestrained by social control ends up stripping economic relations of all moral content, while the drive toward fulfilling market demands at the lowest possible price creates widespread indifference to the conditions under which marketable goods are produced. Today’s Chinatown sweatshops and Third World child labor factories are the functional equivalents of colonial slavery in that the demands of the consumer and the profit drive of the entrepreneur overwhelm the rights of those whose labor actually produces the salable commodity.
  • Eric Foner, "Plantation Profiteering" The Nation March 31, 1997 p. 28

• Underlying most arguments against the free market is a lack of belief in freedom itself.
  • Milton Friedman, Capitalism & Freedom (1962).

• Faith in natural order and market efficiency forecloses a full normative assessment of market outcomes. ... It effectively depoliticizes the market itself and its outcomes. It is only when the illusion of natural order is lifted that a real problem arises: that of the justice of the organizational rules and their distributional consequences.
  • Bernard Harcourt, The Illusion of Free Markets: Punishment and the Myth of Natural Order (2011), p. 32.

• If by free market one means a market that is autonomous and spontaneous, free from political controls, then there is no such thing as a free market at all. It is simply a myth.
  • Michael Hardt and Antonio Negri, in Multitude, p. 167.

• People commonly think of neoliberalism as an ideology that promotes totally free markets, where the state retreats from the scene and abandons all interventionist policies. But if we step back a bit, it becomes clear that the extention of neoliberalism has entailed powerful new forms of state intervention. The creation of a global 'free market' required not only violent coups and dictatorships backed by Western governments, but also the invention of a totalizing global bureaucracy – the World Bank, the IMF, the WTO and bilateral free-trade agreements – with reams of new laws, backed up by the military power of the United States. In other words, an unprecedented expansion of state power was necessary to force countries around the world to liberalize their markets against their will. As the global south has known ever since the Opium Wars in 1842, when British gunboats invaded China in order to knock down China's trade barriers, free trade has never actually been about freedom. On the contrary, as we have seen, free trade has a tendency to gradually undermine national sovereignty and electoral democracy.
  • Jason Hickel, The Divide: A Brief Guide to Global Inequality and its Solutions (2018) p. 218

• [Securing] resources for large-scale economic transformational change [...] can be achieved by a government committed to subordinating markets in money, goods and services to regulatory democracy [...]. 'Free-market' neoliberal economic policies that detach markets from society's oversight achieve the reverse. They are designed to subject markets to private, not public, democratic authority.
  • Lewis, Clive (2019). "A Green New Deal". This Is Not a Drill: An Extinction Rebellion Handbook. London: Penguin Books. pp. 155-161. ISBN 9780141991443. 

• Government doesn’t "intrude" on the "free market." It creates the market. ... Those who argue for "less government" area really arguing for a different government – often one that favors them or their patrons.
  • Robert Reich, Saving Capitalism: For the Many, Not the Few, 2015.

• Whatever their limitations, Freud and Marx developed complex and subtle theories of human nature grounded in their observation of individual and social behavior. The crackpot rationalism of free-market economics merely relies on an abstract model of how people "must" behave.
  • Ellen Willis, Letter to The New York Times (27 February 1997)

• Capitalism
• Economics
• Economic inequality
• Economic liberalism
• Free trade
• Ideology
• Laissez-faire
• Liberalism
• Market
• Market failure
• Market socialism