Free market capitalism

[Bombay]

I'm not sure if this is supposed to be in "opposing ideologies" or here, but here it is:

What would happen if there were free markets with no (or very limited) state intervention? Many will argue that free markets would destroy themselves in a short time, but what exactly would happen? Why wouldn't free market capitalism work?

[the last donut of the night]

I'm not sure if this is supposed to be in "opposing ideologies" or here, but here it is:

What would happen if there were free markets with no (or very limited) state intervention? Many will argue that free markets would destroy themselves in a short time, but what exactly would happen? Why wouldn't free market capitalism work?

There is no such thing as a free market, so there's no need to speculate its existence. I mean, we can speculate the impact of unicorns on capitalism, but then we'd be doing that more for lulz than for anything.

[Os Cangaceiros]

Markets need state intervention.

As far as the possibility of a totally free market, see my sig. :)

[Bombay]

Aren't free markets possible at least in theory? I'm just curious what would happen because I don't understand economics that well.

What if Ron Paul was president? What would happen if he executed his wet dream (his version of free markets)?
edit. A few details of the problems of "free markets" would be appreciated,

[Zapatas Guns]

Aren't free markets possible at least in theory? I'm just curious what would happen because I don't understand economics that well.

What if Ron Paul was president? What would happen if he executed his wet dream (his version of free markets)?

First corporations/companies would cartelize and than they would form monopolies. Competition is a myth anyway. Large corporation do not fully compete with each other. The late Rockefeller said and I quote, "Competition is a sin."

The idea behind free market capitalism is that if everyone has pure competition that price will decrease and selection/ quality will increase as businesses move to attract you for your money. This rarely happens though.

Take McDonald's vs Burger King. If you order a Big Mac and they screw it up. If you get angry and choose not to do business with them anymore your other choice is Burger King. You do not really hurt McDonalds though because so many other people don't care about their business practices. Same thing when with the reverse. Your only real choice would be to avoid both and still you would not damage them. That is the reality of "free market" capitalism. Crappy quality, poor selection, and low wages are all you will get.

[Agnapostate]

"Free market" capitalism is literally an oxymoronic figment of imagination that cannot exist. It has no application outside of the textbook and the fantasies of starry-eyed utopians. Free markets, in the sense of an actual freedom from authoritarian labor market subordination and low barriers to entry in a competitive marketplace rather than concentrated oligopoly, requires socialism to exist, in the form of a market economy of labor-managed firms.

The minimization of regulatory structure would cause greater and greater inefficiency in the capitalist economy; the elimination of such structure would cause the capitalist economy to collapse altogether. Perhaps we should welcome the free marketers' proposals, as the collapse of capitalism is an aim of ours.

[TheSamsquatch]

The current idea of 'free market' is actually detrimental to one's freedom. Total contradiction.

[Klaatu]

Everyone likes sports, right? What if you went to a football game where there are no rules? The players can do just whatever they please... seems like it would degenerate into nothing less than a big brawl (?)

The point is that, so-called "free markets" need, at the very least, strict, enforceable rules, in order to function at all. Just as traffic needs stop lights, speed limits, drunk-driving laws, etc.

Even the human body must have tightly-controlled regulation: for example, what would happen if your liver were removed? :blink:

I believe that Socialism is the best form of the "free market," because it (a) plays by the rules and (b) is fairest to the largest number of participants. That is, no filthy-rich owners, whilst homeless people on the next block live in cardboard boxes... unable to find work.

[HEAD ICE]

"Free market" drivel may very well be internally consistent, if not convincing in theory. But that is all it is, a "theory" in the most vulgar definition of the word. It is only an idea, a thought, a fantasy.

"Free market" advocates will tell you things that sound very attractive and it may very well make sense ("if two people value each other's product more than their own, they engage in a voluntary trade that benefits them both and harms no one", "racism can not exist in the free market because businesses that don't cater to other races will lose business and those that don't hire minorities may very well lose a highly productive worker that will be reaped by a rival business"), but there is one big problem, and it is an obvious one and it crashes the whole idea down to the ground: reality. Real life is simply not like that. Other dynamics are at stake.

They will say (and they always fucking do) that we don't have a free market, and that it is a vision for the future. Another blindingly obvious fault is at play: they propose no strategy on how to get there. They have an idea that maybe consistent, but they have no plan on realizing it. It is a religion, a cult. The reasons why they don't offer a plan is two-fold:

A: When they do put forward a strategy, it is often so absurd on it's face that even the most naive will laugh it off. I've heard everything from "all we need to do is convince everyone in the world and the big owners of capital to give up their government protections and their power and what exists as a social safety net in favor of free market" (this also barely qualifies as a plan: how do you do this?), "elect the right people in office and privatize everything", and the more inventive "participate in a drop-out economy where we use our wonderful free market powers to out-compete the state." Ignore the plunder and death of how said capital is accumulated, ignore the power capital can wield, ignore all these things. The Branch Davidians made more sense.

B: They don't want a free market, instead they use the rhetoric and the tenets of their market religion to defend abuses by capitalism as it exists. [note: I do not accept the premises of people who support the free market, the "free market" is not preferable even in theory because it still retains class society and it will quickly revert to how capitalism presently exists]

Discussing the merits of the "free market" is like discussing the merits of a future society that uses dirt as fuel. It is a waste of time. You are debating a non-thing.

[automattick]

I'm not sure if this is supposed to be in "opposing ideologies" or here, but here it is:

What would happen if there were free markets with no (or very limited) state intervention? Many will argue that free markets would destroy themselves in a short time, but what exactly would happen? Why wouldn't free market capitalism work?

Capital is nothing but a series of contradictions, in fact as Marx had pointed out "Everything is a contradiction in capitalism."

Have you read Marx's Capital? In it, Marx proposes how a closed system the likes of which Ron Paul and Ayn Rand have been hoping for is theoretically impossible to do what they intend it to do.

I don't mean to just shamelessly promote my group, but send me a message if you would be interested in discussing aspects of Marx's Capital, which will hopefully create some interest for you to read it and think about it further.

[Proletarian Ultra]

There is no such thing as a free market, and here's why:

For a free market to exist you need to eliminate the use of force and fraud. Otherwise you won't have a market at all, just protection rackets and confidence swindles. Now, assume for a minute that 'fraud' and 'force' are easily defined. You have two laws, one says 'no fraud' and the other says 'no force'. You still need some kind of authority to enforce the two laws - even if it's a private contractor, as in 'anarcho'-capitalist fantasies, you still need it.

Any human authority is going to make mistakes. It will misidentify certain honest transactions as fraud, and certain voluntary transactions as force. At least some of this bias will necessarily be predictable, so some actors will be able to exploit it for their own gain. In effect, even if you have neutral laws and an enforcing authority that is trying to be honest, your enforcement authority will objectively be intervening in the market in favor of some actors - the ones who are smart enough to figure out where the law makes mistakes regularly.

And if you don't assume that 'force' and 'fraud' are straightforward concepts - which they're not - then you have to define them, and whatever definition you come up with will be partial and incomplete, and will necessarily favor some actors over others. Again, just to make the market work, you've already made the playing field un-level.

We're also assuming that the enforcing authority is completely honest, which it never is. No matter how stiff you make the penalties or how stringent you make inspection, there will be some level of corruption in any system. So from time to time the authority will intervene on behalf of the rich and dishonest against the poor and/or honest.

Then you have to spend something on common defense - whether through a state military or a 'private' contractor. Either way that's a sizable chunk of the economy directed by something other than variable consumer demand.

And if you want to have a common currency - no matter how you structure it, it ends up favoring some actors over others.

And all along we've assumed private property. Defining property is fucking thorny. At the very least we need some kind of standard of evidence for mediating disputes over who owns what. And we have to define the terms of restitution if someone's property has been wrongly alienated. Add in inheritance, salvage at sea, 'intellectual property', rental agreements and other contracts...you're making an awful lot of decision that will, again, favor some actors over others.

So even in the most minimal night-watchman state, you don't have a 'free market': you introduce de facto protections and subsidies for some economic actors over others just to set the market up. And of course there's no such thing as a minimal night-watchman state, so fuck that anyway. :lol:

[k101]

Picking up on Automatticks thread: The interesting thing about Das Kapital is that the state plays very little role in the 3 volumes. Marx is analyzing capital at the level of analysis of pure economics- of just the law of value unfolding in theoretical space. Now of course, historically the state was essential for the formation of capital. But Marx's argument is mostly a theoretical one, not historical, at least when it comes to the theoretical ordering of the various social relations of a capitalist society. When the law of value is left to do its own thing Marx claims that we get a society full of contradictions and social antagonism resulting in exploitation, violence, inequality and cyclical crisis. The state is necessarily sucked into this. It must attempt to keep the system working by backing it with the threat of violence. Right-wing libertarians argue that that state is preventing markets from working. But Marx argues that the contradictions of the market pull everything into their orbit, including the state.

So if you want to know what a free market looks like read Kapital.

[Agnapostate]

The market socialist (mutualist) author Kevin Carson, who's a figure of some reverence for the market anarchists (though all anti-capitalists can profit from his commentary), wrote on the disconnect between rightists' and pseudo-libertarians' use of free market rhetoric versus the axiomatic free market principles that they do not adhere to:


This school of libertarianism has inscribed on its banner the reactionary watchword: "Them pore ole bosses need all the help they can get." For every imaginable policy issue, the good guys and bad guys can be predicted with ease, by simply inverting the slogan of Animal Farm: "Two legs good, four legs baaaad." In every case, the good guys, the sacrificial victims of the Progressive State, are the rich and powerful. The bad guys are the consumer and the worker, acting to enrich themselves from the public treasury. As one of the most egregious examples of this tendency, consider Ayn Rand's characterization of big business as an "oppressed minority," and of the Military-Industrial Complex as a "myth or worse."

The ideal "free market" society of such people, it seems, is simply actually existing capitalism, minus the regulatory and welfare state: a hyper-thyroidal version of nineteenth century robber baron capitalism, perhaps; or better yet, a society "reformed" by the likes of Pinochet, the Dionysius to whom Milton Friedman and the Chicago Boys played Aristotle.

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 on the basis of "free market principles."

One of the most jaw-dropping exercises in vulgar libertarianism that I've seen is on the part of the Austrian economist and Objectivist George Reisman, who wrote a defensive obituary of Pinochet upon his death in 2006. Insisting that his terrorist purges were a defense of property rights, he referred back to a statement in his massive book Capitalism:


Even if a socialist government were democratically elected, its first act in office in implementing socialism would have to be an act of enormous violence, namely, the forcible expropriation of the means of production. The democratic election of a socialist government would not change the fact that the seizure of property against the will of its owners is an act of force. A forcible expropriation of property based on a democratic vote is about as peaceful as a lynching based on a democratic vote. It is a cardinal violation of individual rights.

The implicit premise is that ownership of the means of production in Chile exists according to libertarian norms of distributive justice. We know that this is false simply due to the mass dispossession of the Native American population throughout the Western Hemisphere, and since Chile was part of the colonial Spanish empire, there is aggression from the beginning. His "free market" rhetoric defends state-generated consequences.

[automattick]

As k101 wrote, the state must enforce economic policy that in order to ensure the smooth functioning of the system in that it continues to extract profits.

Just a note, because this is one area where I may cause disagreement with other comrades on, particularly when it comes to the role of the state. But before that, Let me just say that Keynesianism, the true target of what many in the right-wing circles have mistakenly called "Socialism" is just another face which capital takes.

In fact, most of the so-called "Socialist" parties of Europe are in fact Keynesians. There are no socialist countries, and never have been. There have been brief episodes in history where humanity has been able to grasp for air, negating commodity fetishism, theory of value, etc. I say this because I would hesitate to look at the failed projects as somehow overcoming capitalism, they were capitalists, just a left-wing variant called state capitalist.

[Agnapostate]

I don't know who disagrees with that, except some reformist like rgack. The role of governmental intervention in the capitalist economy is for macroeconomic stabilization, and as such, Keynesianism is simply the necessary mechanism for capitalism to survive. It's ultimately more anti-socialist than more rightist ideologies as a result.

[AK]

Aren't free markets possible at least in theory? I'm just curious what would happen because I don't understand economics that well.
Mutualism. A genuine free market is different from a normal market in which you are "free" to monopolise and privatise as much as you want. A genuine free market intends to keep capital in the hands of those who own it and not let it be swallowed up by parasitic corporations.

It is an anarchist tendency but I'm not sure if a state would arise or not - as would be the case in "anarcho"-capitalism. I mean, if everyone owns some means of production, then there would be no need for the state to keep the property-less at bay. But I oppose mutualism because people are still subject to the whims of the market and it lacks a working-class perspective to things - i.e., there is no workers' autonomy in mutualist theory (then again, there are no real "workers" in a mutualist sense).

[4 Leaf Clover]

the so called "free-market" is counter-revolution

[Bombay]

I'm not pro "free markets". Quite the opposite, just wanted to know WHY it sucks. I guess one problem would be the lack of democracy in "free market capitalism", the companies and corporations would have all the power so the people wouldn't control basically anything since the workers wouldn't be in control of the companies.

[automattick]

I don't know who disagrees with that, except some reformist like rgack. The role of governmental intervention in the capitalist economy is for macroeconomic stabilization, and as such, Keynesianism is simply the necessary mechanism for capitalism to survive. It's ultimately more anti-socialist than more rightist ideologies as a result

I just figured if he/she was asking about whether the free market could work out, they might also have considered Europe as having a socialist outlook, that's all. It was for clarification.

[Klaatu]

I'm not pro "free markets". Quite the opposite, just wanted to know WHY it sucks. I guess one problem would be the lack of democracy in "free market capitalism", the companies and corporations would have all the power so the people wouldn't control basically anything since the workers wouldn't be in control of the companies.

I can think of one good reason the free market sucks: Advertising. We are bombarded every day with tv ads enticing us to buy that artery-clogging triple bacon cheeseburger, wash it down with a pound of colored sugar-water. We are cajoled into buying tobacco, alcohol, drugs we don't need, new cars, new fashions, new-this and new-that. Modern products are intended to break, so we will buy a new one. How many trees are chopped down to deliver the daily barrage of junk mail?

I could go on for ten pages here, but the bottom line is that consumerism sucks. And we will pay dearly for our exploitation of this planet.

[Sperm-Doll Setsuna]

I can think of one good reason the free market sucks: Advertising. We are bombarded every day with tv ads enticing us to buy that artery-clogging triple bacon cheeseburger, wash it down with a pound of colored sugar-water. We are cajoled into buying tobacco, alcohol, drugs we don't need, new cars, new fashions, new-this and new-that. Modern products are intended to break, so we will buy a new one. How many trees are chopped down to deliver the daily barrage of junk mail?

I could go on for ten pages here, but the bottom line is that consumerism sucks. And we will pay dearly for our exploitation of this planet.

Indeed, that big load of junk mail I got today was so large the mail man couldn't get it in through the mail drop in one go, he had to stand there and shove it down.

They always go on about capitalist "product quality"; but what it really is, is a fine balance between the thing lasting long enough not to upset the consumer it broke too quickly, and breaking fast enough to make the consumer buy more of it.

[Proletarian Ultra]

I can think of one good reason the free market sucks: Advertising. We are bombarded every day with tv ads enticing us to buy that artery-clogging triple bacon cheeseburger, wash it down with a pound of colored sugar-water. We are cajoled into buying tobacco, alcohol, drugs we don't need, new cars, new fashions, new-this and new-that. Modern products are intended to break, so we will buy a new one. How many trees are chopped down to deliver the daily barrage of junk mail?

I could go on for ten pages here, but the bottom line is that consumerism sucks. And we will pay dearly for our exploitation of this planet.

Anti-Consumerism Hurts Workers, Builds Fascism.

[Klaatu]

Anti-Consumerism Hurts Workers, Builds Fascism.

Let's say that "consumerism under capitalism" is worker-exploitative and planet-exploitative, while "consumerism under socialism" would be more efficient and level-headed. I was just in two traffic jams today, and I noted that every car had but one human in it: the driver. We have no mass-transit in Detroit. How unplanned and inefficient. Everyone going separate ways, riding in their own smelly, personal sardine can.

And the spineless politicians don't dare raise taxes in order to build an electric trolley, which could run on the strip of land on the boulevard, because they are deathly afraid of backlash from the conservative voters who "want the govt out of the way." BTW, my state has the absolute WORST roads in the country. One road is so bad, I call it "Lunar Lane," with all of the bumps and craters on it...

The solution: (a) get rid of all conservatives, and then (b) get rid of capitalism. Then we can move on to a better future.

[Klaatu]

Indeed, that big load of junk mail I got today was so large the mail man couldn't get it in through the mail drop in one go, he had to stand there and shove it down.

I hear 'ya. I used to rent a PO box, and if I didn't empty it at least twice a week, it got too full. Once, I had to yank the papers out in shreds (which damaged the important mail!) I was thinking of making a short funny movie of this, me trying to pull big wads of trash out of my box, my foot against the wall for support...:D



They always go on about capitalist "product quality"; but what it really is, is a fine balance between the thing lasting long enough not to upset the consumer it broke too quickly, and breaking fast enough to make the consumer buy more of it.

It is true that they plan for things to break. The car companies actually started this trend; they call it "planned obsolescence."

[NGNM85]

Nobody in power sincerely believes in free markets. In a way, the financial elite are just as socialist as anyone here. The difference is the endeavor to use the state to channel wealth upwards, to themselves, at the expense of the majority. It's upside-down communism.

[mikelepore]

What would happen if there were free markets with no (or very limited) state intervention?

Little children working in factory sweatshops and down in the mines. With the absense of government inspectors, many lethal "accidents" where employers don't have fire exits, don't have safety covers on machines, don't have emergency power-off switches, etc. The most unhealthy conditions in meatpacking plants and in the kitchens of restaurants. The rivers, lakes and ground water poisoned by cancer-causing chemicals. Without codes and inspections, buildings collapsing on people. Without labelling requirements, no ability to tell the difference between medicine and snake-oil potions.

[Lumpen Bourgeois]

For a free market to exist you need to eliminate the use of force and fraud

Well, how are we defining a "free market" here?

If a "free market" is merely a market with very minimal to no state intervention(as it is usually conceived), then that could certainly exist and there are some historical and contemporary examples. In certain relatively isolated regions of the American West, some small close-knit communities who engage in exchange of goods and services with each other(i.e. a market) can and do operate without state authority, so I'd say they qualify as examples of a "free market" if we use the above definition.


The real issue should be whether or not such a society would always be pleasant to inhabit especially on a larger scale with much larger populations of people. I'm inclined to believe not given the existence of pervasive market failure (http://en.wikipedia.org/wiki/Market_failure#Marxian) generally and the difficulty of managing it on a large scale without state involvment.

[Agnapostate]

Yeah, that was a free market. Except for the unpleasant issue of the prior residents of the Old West and importation of new wage slaves and what not.

[iskrabronstein]

The essential problem with attempting to identify epochs in history characterized by a true free-market system is that at no point in the economic development of society have the conditions for a market system been established without a state either preparing the conditions for it, or actively sustaining it. In the history of many modern Western countries, this phase of development was accomplished by the dictatorship of the bourgeoisie - a flexible definition of this term could encompass historical events such as the English Civil War, culminating in the Glorious Revolution that installed a Dutch aristocrat as English king; the American and French Revolutions, which established in the American republic and the post-Napoleonic monarchies and dictatorships the conditions for direct or indirect bourgeois rule. Later revolutions which sought to accomplish the tasks of the bourgeois revolution were forced, due to the constantly developing nature of world capitalism, to rely increasingly on the revolutionary proletariat rather than the national bourgeoisie to be the leading force of the revolutionary coalition. This tendency, combined with the uneven development of capitalist infrastructure throughout the developing world, resulted in several abortive revolutions - I view the failure of the Chartist movement and the 1848 European revolutions, as well as the Paris Commune as symptomatic of this trend: the working class was forced by political circumstance to adopt a revolutionary program when the class organization was not developed enough to implement it.

These subjects are addressed in greater depth and theoretical richness by Trotsky, in the theories of permanent revolution and uneven and combined development.

What's more, the historical record shows that, concomitantly with the centralization of capital is necessarily a centralization of political authority - even in the absence of a traditional state apparatus. In the absence of a regulatory state, capitalist interests will centralize and grow in power until they have established a protectionist, monopolist infrastructure - essentially feudalist property relations based upon capitalist means of production. The development of British imperialism in India, as spearheaded by the British East India Company, is demonstrative of this trend. I think the analysis would also be fruitful when applied to modern neo-liberal imperialist policies.

http://www.marxists.org/archive/trotsky/1931/tpr/index.htm - Permanent Revolution

http://www.marxists.org/archive/novack/works/history/ch05.htm - Summary by George Novack of theory of uneven and combined development

[robbo203]

Mutualism. A genuine free market is different from a normal market in which you are "free" to monopolise and privatise as much as you want. A genuine free market intends to keep capital in the hands of those who own it and not let it be swallowed up by parasitic corporations.

It is an anarchist tendency but I'm not sure if a state would arise or not - as would be the case in "anarcho"-capitalism. I mean, if everyone owns some means of production, then there would be no need for the state to keep the property-less at bay. But I oppose mutualism because people are still subject to the whims of the market and it lacks a working-class perspective to things - i.e., there is no workers' autonomy in mutualist theory (then again, there are no real "workers" in a mutualist sense).

Quite. But then there is the problem of how to get from A to B. The above implies the break up and equitable distribution of means of production among the populace which is why mutualism is essentially a charming fairy tale story of a non viable future. The socialised nature of the production process points to socialism (aka communism) as the only way out of the morass of capitalism.

As for the anarcho-caps, when pushed for evidence to back up their dotty theory they will cite examples like medieval Iceland or modern day Somalia in which the central state has supposedly collapsed in the face of competing warlords. The boom in mobile phones usage in Somalia, for instance is sometimes cited as evidence of a flourishing free market in a nominally stateless society. It depends of course on your definition of a state whether the fiefdom of some aggrandising local warlord does not constitute a mini-state.

One final thing - just as markets cannot exist without the state so conversely states cannot exist without markets. At least not states in their modern sense. The two go together like siamese twins and should be put to the sword in like fashion

[Klaatu]

Well, how are we defining a "free market" here?

If a "free market" is merely a market with very minimal to no state intervention(as it is usually conceived), then that could certainly exist and there are some historical and contemporary examples. In certain relatively isolated regions of the American West, some small close-knit communities who engage in exchange of goods and services with each other(i.e. a market) can and do operate without state authority, so I'd say they qualify as examples of a "free market" if we use the above definition.

The real issue should be whether or not such a society would always be pleasant to inhabit especially on a larger scale with much larger populations of people. I'm inclined to believe not given the existence of pervasive market failure (http://en.wikipedia.org/wiki/Market_failure#Marxian) generally and the difficulty of managing it on a large scale without state involvment.

Weren't there places in the Old West, where one rich, powerful man "owned the town?" For many American western films, this is the plot (or part of the plot) of the story. For example, Clint Eastwood in the film "Pale Rider" battles a powerful mining company which is trying to run off a group of poor gold prospectors.

Perhaps free market might have been rarer than we think in the Old West? Perhaps there is the absence of state control, yet the powerful grip of dominant, ruthless private interests and even organized crime? My argument is that, sans state intervention, free markets degenerate into someone else's control, and sometimes this control may even be criminal organizations. We know this to be true from a careful study of history.