In the last two posts (To read this series from the beginning, start here.), I’ve argued that the dogmatic worldview of the Free-marketers falls under its own weight on two points:
- It is impossible to have a modern market at all without government being intimately involved.
- Without outside constraints a free market will not remain free: it will come under the control of a tiny group of the very wealthy.
Ironically, those same points can lead us to a solution, by showing us how we can have a truly free market.
The problem, of course, centers on the meaning of the word “free”.
Up until now, I’ve accepted the definition of the Free-market cult, which defines “free” as meaning “free from government intervention”.
But the first point above makes it clear that whatever we mean by a free market, there is no such thing a market without government intervention.
The second point provides an alternative, which I would argue is the true meaning of freedom in regard to markets:
A free market is a market in which all the participants are
free from the dominance of the other participants.
Think about this for a moment in the context of any real transaction.
If I sell my baseball card to you, what makes it a free and fair trade?
Isn’t it the lack of coercion?
If I make the trade because
- you are holding a baseball bat over my head, or because
- you are holding my family hostage, or because
- you have a monopoly on the baseball card business and I have nowhere else to go,
then the trade is not a free (or fair) trade.
The value of what you give me will not equal the value of what you get from me, because you hold all the cards, and you can exert an unbalanced control over my trade decision.
All of those “market forces” we keep hearing about—which keep prices reasonable and goods and services flowing and people employed—all those market forces depend upon the uncoerced choices of thousands of people in the market place.
But, because of the second point above, the market itself tends to evolve in ways that coerce those choices.
So, two conclusions:
- The government cannot be separated from the market. We can only decide what role it will play, not whether it will play one.
- The government isn’t the main danger to a truly free market. The overriding danger is the growing power of the 1%—the pooling of wealth at the top where it can coerce the 99% and corrupt the government, undermining democracy.
This isn't just an economic issue, it's also an issue of freedom and democracy.
The obvious next question is to ask what role the government should play in order to curb the growing power of the 1%.
Before going any further, let’s be clear that this is not an attack on the people who make up that 1%.
It’s simply the necessary condition of making the market truly free, so those market forces can really do the job they are supposed to do—keep the economy flowing for everyone.
The problem isn’t the people at the top; it’s the pooling of wealth and power.
It’s also important to be clear, however, that limiting the wealth and power of the 1% is not in any way “unfair” to them.
No one earns that kind of money by the value of their work alone—they get that level of wealth and power because an uncontrolled market makes it possible to leverage the power of wealth to accumulate more wealth—but that “more wealth” was actually produced by the 99%.
So it makes absolute sense—both in terms of practicality and of fairness—for all of us, through our government, to level the playing field.
Next: Some ways to level
the playing field...