Free Market and Capitalism

[Servia]

Is it wrong to think of free market and capitalism as being synonymous? If so, please explain the difference.

[The Garbage Disposal Unit]

I think it's wrong insofar as the "free market" has never really existed, and capitalism has always been premised on state power.

If there was ever a "free market" - as in a market that wasn't premised on state power - it certainly wasn't recognizably capitalist. David Graeber, for example, argues that the closest thing to a "free market" as it is generally conceived existed at the height of the . . . shit, one of the Caliphates, I don't remember which, sorry . . . uh . . . right, but, anyway, it only functioned largely because of certain religious restrictions (for example, on usury), on certain social principles and particular notions of "credit", as well as on the lack of the later European "persona ficta" (ie - non-people who can own property, engage with the courts, etc. - the most conspicuous contemporary example being the corporation).

Of course, I recognize that I'm kinda splitting hairs here, since, generally, yeah, the two are used interchangeably, or, alternatively, the latter ("the free market") is used to refer to an impossible idealist capitalist notion which has no precedent and makes zero sense.

[tuwix]

Is it wrong to think of free market and capitalism as being synonymous? If so, please explain the difference.



As predecessor said:

I think it's wrong insofar as the "free market" has never really existed

I'd add that it never will. The free market is only theoretical model of economy in which there is no interference beside force of supply and demand. Such circumstances will never take place because there will be always many different influences on market.
And capitalism is real system. Sometimes it's called wrongly as free market but distortion in terminology is a specialty of bourgeois media. For example, state capitalism is called 'communism' by them.

[Crabbensmasher]

It's open to debate, but I've always liked this explanation

Well, capitalism relies on the existence of private property. Private property relies on the existence of private property rights. The process of upholding these rights can only be done through a state (eg. police force). The existence of such necessitates at least a small form of intervention in the economy. Thus, the market is no longer entirely free. Free market capitalism, through this reasoning, is a contradiction in itself.

(obviously I'm being pretty loose as to what intervention means. Some people would probably disagree)

[Loony Le Fist]

Technically, I see the free-market as the idealized form of exchange under capitalism. Capitalism doesn't require the existence of a free-market (in fact in many ways it actually precludes it). A free-market is imagined as part of a certain fictional form of capitalism libertarians and anarcho-capitalists like to talk about.

I suppose my argument is over the term free. Free-markets aren't really free. Your freedom is limited by several factors, one of them being the amount you have to spend. To me, freedom implies a level playing field and the existence of good or better outcomes. There are powerful coercive factors involved in market decision making. Simply being free to make a decision among multiple bad alternatives is not truly freedom. One example would be job markets that are naturally monopsonistic.

A free-market should be more accurately called an unbound-market. It is a market where rules are essentially arbitrary. A market is only as good as what it is trying to optimize. A truly free market wouldn't be optimizing on any factor. It would be like a game without rules--meaningless. The most free market, is none at all.

Existing markets are systems designed to optimize for profit; that isn't the same as optimizing for efficient solutions, better solutions, or better deals for end consumers. Much time is spent in neoliberal economic publications trying to claim that profit is equivalent to all of those. But it's really a sleight of hand.

I drifted a bit there. :grin:

Just to sum up: capitalism is an economic system and the so-called free-market is a certain implementation of capitalism.

[Fegelnator]

Is it wrong to think of free market and capitalism as being synonymous? If so, please explain the difference.

Yes. For a free market, you'd have to have no oligopolies, no patents, no taxes, no subsidies, no copyright...

As a rule of thumb, you need a market where everyone is completely informed with perfect competition and no legal interference.

That has never existed.