I thought this week I might say a few words about conservative “free market” rhetoric. It involves a sort and level of bad economics beyond even what I normally discuss, and I don’t often bother. But there’s a lot of it about, so maybe worthwhile.
Starting at the most basic level, it may be sensible to contrast the idea of a “free market” with how economists discuss market structures and attributes in real neoclassical welfare economics, where one will likely never hear that funny phrase. In real neoclassical welfare economics, a certain theoretical market structure, the so-called “perfectly competitive market,” without so called “market failures,” is presented as normatively laudable relative to the considerations in that restricted ethical half-theory. A “free market” defined as whatever real market structure happens to exist with whatever market failures happen to apply is not cast as particularly normatively laudable. So in real neoclassical welfare economics there’s nothing special about a “free market,” defined in that way. Making any given “free market” into any semblance of a theoretical “perfectly competitive market” defined using various false but simplifying assumptions like full information, full rationality, and so, may take quite a lot of regulation and is hardly “free” in that sense.
This suggests potential equivocation on the term “free” in the popular mind such as, perhaps, once the conditions of a supposedly laudable “perfectly competitive market” are implemented to whatever degree, consumers and business are “free” to act under those legal conditions. That possibility seems a good segue to the level of confusion I’m usually on about, why calling any real approximation of a “perfectly competitive market” a “free market” is rhetorically misleading, which is that all markets rest on coercive laws relating to economic power. In a democracy, the coercive laws on economic power that underlie real markets are based in the views of the voters on the ethics of the definition, distribution, use of economic power in markets to resolve particular or all interpersonal conflicts of preferences. Yes, one is then free to act under the conditions stipulated by those laws, but then one is always free to act under the conditions stipulated by laws and other external factors; there’s nothing conceptually special about doing that in a market setting.
Let’s have an example. If society decides to allocate scarce vaccines according to economic power in markets, then those with economic power, and the requisite desire, will be free to get the vaccine if they choose, never mind their medical need. However, if voters decide for ethical reasons to allocate the scare resource of the vaccine by medical need, then those with medical need, and the requisite desire, will be free to get the vaccine if they choose, never mind their economic power. Which situation is more free? It’s just one more aspect of looking at the ethics of resolving interpersonal conflicts of preferences. One person may attach great significance to the setting up of laws relating to economic power, markets, another to considerations that may apply only in particular cases. The point is the same considerations, voter ethics expressed via democratic government, operate in both cases, the setting up of laws relating to economic power and markets, and the setting up of laws relating to vaccine distribution. Proposed distinctions are awkward.
This leads some to the notion the reason laws relating to economic power are normatively significant is not because they’re from voter ethics expressed via democracy, but the essentially anti-democracy view they’re significant on some other basis, not involving voters. This, in turn, leads some to the notion people are “free” when voters cannot express their ethical values via democratic government, and thus are free under fascism, in the case of undemocratic government expressing conservative ethics on economic power. The idea “freedom” is when government expresses one’s own views on the ethics of economic power and prevents other voters getting involved can also lead to the sort of fake anarchism / crypto-fascism one finds in creeds like “libertarianism” and “Austrian” economics.
When you encounter people talking about “free markets,” please understand that phrase has the markings of anti-democracy bad economics in the conservative style all over it. Have a care. It’s not real economics but rhetoric, designed to deceive, mislead, manipulate. When people talk about “free markets,” they’re not trying to sincerely discuss any result from real neoclassical welfare economics, they’re playing insincere rhetorical word games to create confusion and conflict about economic and ethical issues.
