There is no Such Thing as a Free Market and There Never Was

All my adult life I have believed in the free market and I still do. Herein lies the problem, there is no such thing and there never was except in some Platonic Ideal existing outside of reality.

Deep down I have always known this to be true. I have seen government interference, corporate interference, labor union interference and military interference, academic interference and religious interference into a supposedly free market. These factions and their adherents have sought to tip the theoretically level playing field of a free market towards a favorable outcome to themselves.

Even Adam Smith, the coiner of the phrase "invisible hand", knew this. His work is littered with references to temptations to interference and he probably reserves his strongest warnings against the interference of capitalists’ whom he, not knowing the word, calls merchants or masters. For example:

"We rarely hear, it has been said of the combination of masters, though frequently of those of the workman. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject." Ch. VIII

And the one I like best;

"People of the same trade seldom meet even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Ch. X Part II

I think I naively assumed that there were enough natural checks and balances in the flow of this soup that it equaled out on a swings and roundabout way. I no longer believe this to be true. On the contrary I believe that the power to tilt the market has been handed to large corporations and very rich individuals who can of course hide behind large and small corporations.

What crystallized it for me was reading Robert Reich’s Book, Saving Capitalism: For the Many, Not the Few. Part of its charm is that I really would like to save Capitalism and for everyone. I think that is a noble cause. I think that Western Democratic Capitalism, while not perfect and in need of constant vigilant attention, is most likely to provide what Adam Smith called a flourishing and happy society. Flourishing and Happy sounds just fine to me.

There is a lot in Reich’s Book and I recommend it to everyone. The key is an early message when he points out that full debate about society is often derailed in a meaningless debate between government interference and the free market. As he puts it in Chapter 1, “Few ideas have more profoundly poisoned the minds of more people that the notion of a 'free market' existing somewhere in the universe, into which the government 'intrudes'.” He argues -- and he has my support -- that there is always government interference. The question should be to what end in theory is government interfering and what is being achieved by that interference? The book argues, and I agree, that the balance of influence has been tilted dangerously towards the rich, both as individuals and corporations, and what Reich calls "countervailing power" that was available to most the population is disappearing. I believe that way leads to despotism.