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Wikipedia

Free market

In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any other external authority. Proponents of the free market as a normative ideal contrast it with a regulated market, in which a government intervenes in supply and demand by means of various methods such as taxes or regulations. In an idealized free market economy, prices for goods and services are set solely by the bids and offers of the participants.

Scholars contrast the concept of a free market with the concept of a coordinated market in fields of study such as political economy, new institutional economics, economic sociology and political science. All of these fields emphasize the importance in currently existing market systems of rule-making institutions external to the simple forces of supply and demand which create space for those forces to operate to control productive output and distribution. Although free markets are commonly associated with capitalism in contemporary usage and popular culture, free markets have also been components in some forms of market socialism.[1]

Historically, free market has also been used synonymously with other economic policies. For instance proponents of laissez-faire capitalism, may refer to it as free market capitalism because they claim it to achieve the most economic freedom.[2] In practice, governments usually intervene to reduce externalities such as greenhouse gas emissions; although they may use markets to do so, such as carbon emission trading.[3]

Economic systems

Capitalism

Capitalism is an economic system based on the private ownership of the means of production and their operation for profit.[4][5][6][7] Central characteristics of capitalism include capital accumulation, competitive markets, a price system, private property and the recognition of property rights, voluntary exchange, and wage labor.[8][9] In a capitalist market economy, decision-making and investments are determined by every owner of wealth, property or production ability in capital and financial markets whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.[10]

Economists, historians, political economists and sociologists have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free-market capitalism, state capitalism and welfare capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership,[11] obstacles to free competition and state-sanctioned social policies. The degree of competition in markets and the role of intervention and regulation as well as the scope of state ownership vary across different models of capitalism.[12][13] The extent to which different markets are free and the rules defining private property are matters of politics and policy. Most of the existing capitalist economies are mixed economies that combine elements of free markets with state intervention and in some cases economic planning.[14]

Market economies have existed under many forms of government and in many different times, places and cultures. Modern capitalist societies—marked by a universalization of money-based social relations, a consistently large and system-wide class of workers who must work for wages (the proletariat) and a capitalist class which owns the means of production—developed in Western Europe in a process that led to the Industrial Revolution. Capitalist systems with varying degrees of direct government intervention have since become dominant in the Western world and continue to spread. Capitalism has been shown to be strongly correlated with economic growth.[15]

Georgism

For classical economists such as Adam Smith, the term free market refers to a market free from all forms of economic privilege, monopolies and artificial scarcities.[2] They say this implies that economic rents, which they describe as profits generated from a lack of perfect competition, must be reduced or eliminated as much as possible through free competition.

Economic theory suggests the returns to land and other natural resources are economic rents that cannot be reduced in such a way because of their perfect inelastic supply.[16] Some economic thinkers emphasize the need to share those rents as an essential requirement for a well functioning market. It is suggested this would both eliminate the need for regular taxes that have a negative effect on trade (see deadweight loss) as well as release land and resources that are speculated upon or monopolised, two features that improve the competition and free market mechanisms. Winston Churchill supported this view by the following statement: "Land is the mother of all monopoly".[17] The American economist and social philosopher Henry George, the most famous proponent of this thesis, wanted to accomplish this through a high land value tax that replaces all other taxes.[18] Followers of his ideas are often called Georgists or geoists and geolibertarians.

Léon Walras, one of the founders of the neoclassical economics who helped formulate the general equilibrium theory, had a very similar view. He argued that free competition could only be realized under conditions of state ownership of natural resources and land. Additionally, income taxes could be eliminated because the state would receive income to finance public services through owning such resources and enterprises.[19]

Laissez-faire

The laissez-faire principle expresses a preference for an absence of non-market pressures on prices and wages such as those from discriminatory government taxes, subsidies, tariffs, regulations, or government-granted monopolies. In The Pure Theory of Capital, Friedrich Hayek argued that the goal is the preservation of the unique information contained in the price itself.[20]

According to Karl Popper, the idea of the free market is paradoxical, as it requires interventions towards the goal of preventing interventions.[2]

Although laissez-faire has been commonly associated with capitalism, there is a similar economic theory associated with socialism called left-wing or socialist laissez-faire, also known as free-market anarchism, free-market anti-capitalism and free-market socialism to distinguish it from laissez-faire capitalism.[21][22][23] Critics of laissez-faire as commonly understood argue that a truly laissez-faire system would be anti-capitalist and socialist.[24][25] American individualist anarchists such as Benjamin Tucker saw themselves as economic free-market socialists and political individualists while arguing that their "anarchistic socialism" or "individual anarchism" was "consistent Manchesterism".[26]

Socialism

Various forms of socialism based on free markets have existed since the 19th century. Early notable socialist proponents of free markets include Pierre-Joseph Proudhon, Benjamin Tucker and the Ricardian socialists. These economists believed that genuinely free markets and voluntary exchange could not exist within the exploitative conditions of capitalism. These proposals ranged from various forms of worker cooperatives operating in a free-market economy such as the mutualist system proposed by Proudhon, to state-owned enterprises operating in unregulated and open markets. These models of socialism are not to be confused with other forms of market socialism (e.g. the Lange model) where publicly owned enterprises are coordinated by various degrees of economic planning, or where capital good prices are determined through marginal cost pricing.

Advocates of free-market socialism such as Jaroslav Vanek argue that genuinely free markets are not possible under conditions of private ownership of productive property. Instead, he contends that the class differences and inequalities in income and power that result from private ownership enable the interests of the dominant class to skew the market to their favor, either in the form of monopoly and market power, or by utilizing their wealth and resources to legislate government policies that benefit their specific business interests. Additionally, Vanek states that workers in a socialist economy based on cooperative and self-managed enterprises have stronger incentives to maximize productivity because they would receive a share of the profits (based on the overall performance of their enterprise) in addition to receiving their fixed wage or salary. The stronger incentives to maximize productivity that he conceives as possible in a socialist economy based on cooperative and self-managed enterprises might be accomplished in a free-market economy if employee-owned companies were the norm as envisioned by various thinkers including Louis O. Kelso and James S. Albus.[27]

Socialists also assert that free-market capitalism leads to an excessively skewed distributions of income and economic instabilities which in turn leads to social instability. Corrective measures in the form of social welfare, re-distributive taxation and regulatory measures and their associated administrative costs which are required create agency costs for society. These costs would not be required in a self-managed socialist economy.[28]

Criticism of market socialism comes from two major directions. Economists Friedrich Hayek and George Stigler argued that socialism as a theory isn't conducive to democratic systems[29] and even the most benevolent state would face serious implementation problems.[30]

More modern criticism of socialism and market socialism implies that even in a democratic system, socialism cannot reach the desired efficient outcome. This argument holds that democratic majority rule becomes detrimental to enterprises and industries, and that the formation of interest groups distorts the optimal market outcome.[31]

Concepts

Economic equilibrium

 
A diagram showing the "effects of price freedom"

The general equilibrium theory has demonstrated that, under certain theoretical conditions of perfect competition, the law of supply and demand influences prices toward an equilibrium that balances the demands for the products against the supplies.[32][full citation needed] At these equilibrium prices, the market distributes the products to the purchasers according to each purchaser's preference or utility for each product and within the relative limits of each buyer's purchasing power. This result is described as market efficiency, or more specifically a Pareto optimum.

Low barriers to entry

A free market does not directly require the existence of competition; however, it does require a framework that freely allows new market entrants. Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.

Perfect competition and market failure

An absence of any of the conditions of perfect competition is considered a market failure. Regulatory intervention may provide a substitute force to counter a market failure, which leads some economists to believe that some forms of market regulation may be better than an unregulated market at providing a free market.[2]

Spontaneous order

Friedrich Hayek popularized the view that market economies promote spontaneous order which results in a better "allocation of societal resources than any design could achieve".[33] According to this view, market economies are characterized by the formation of complex transactional networks that produce and distribute goods and services throughout the economy. These networks are not designed, but they nevertheless emerge as a result of decentralized individual economic decisions. The idea of spontaneous order is an elaboration on the invisible hand proposed by Adam Smith in The Wealth of Nations. About the individual, Smith wrote:

By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of it. By pursuing his own interest, he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.[34]

Smith pointed out that one does not get one's dinner by appealing to the brother-love of the butcher, the farmer or the baker. Rather, one appeals to their self-interest and pays them for their labor, arguing:

It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.[35]

Supporters of this view claim that spontaneous order is superior to any order that does not allow individuals to make their own choices of what to produce, what to buy, what to sell and at what prices due to the number and complexity of the factors involved. They further believe that any attempt to implement central planning will result in more disorder, or a less efficient production and distribution of goods and services.

Critics such as political economist Karl Polanyi question whether a spontaneously ordered market can exist, completely free of distortions of political policy, claiming that even the ostensibly freest markets require a state to exercise coercive power in some areas, namely to enforce contracts, govern the formation of labor unions, spell out the rights and obligations of corporations, shape who has standing to bring legal actions and define what constitutes an unacceptable conflict of interest.[36]

Supply and demand

Demand for an item (such as a good or service) refers to the economic market pressure from people trying to buy it. Buyers have a maximum price they are willing to pay for an item, and sellers have a minimum price at which they are willing to offer their product. The point at which the supply and demand curves meet is the equilibrium price of the good and quantity demanded. Sellers willing to offer their goods at a lower price than the equilibrium price receive the difference as producer surplus. Buyers willing to pay for goods at a higher price than the equilibrium price receive the difference as consumer surplus.[37]

The model is commonly applied to wages in the market for labor. The typical roles of supplier and consumer are reversed. The suppliers are individuals, who try to sell (supply) their labor for the highest price. The consumers are businesses, which try to buy (demand) the type of labor they need at the lowest price. As more people offer their labor in that market, the equilibrium wage decreases and the equilibrium level of employment increases as the supply curve shifts to the right. The opposite happens if fewer people offer their wages in the market as the supply curve shifts to the left.[37]

In a free market, individuals and firms taking part in these transactions have the liberty to enter, leave and participate in the market as they so choose. Prices and quantities are allowed to adjust according to economic conditions in order to reach equilibrium and allocate resources. However, in many countries around the world governments seek to intervene in the free market in order to achieve certain social or political agendas.[38] Governments may attempt to create social equality or equality of outcome by intervening in the market through actions such as imposing a minimum wage (price floor) or erecting price controls (price ceiling). Other lesser-known goals are also pursued, such as in the United States, where the federal government subsidizes owners of fertile land to not grow crops in order to prevent the supply curve from further shifting to the right and decreasing the equilibrium price. This is done under the justification of maintaining farmers' profits; due to the relative inelasticity of demand for crops, increased supply would lower the price but not significantly increase quantity demanded, thus placing pressure on farmers to exit the market.[39] Those interventions are often done in the name of maintaining basic assumptions of free markets such as the idea that the costs of production must be included in the price of goods. Pollution and depletion costs are sometimes not included in the cost of production (a manufacturer that withdraws water at one location then discharges it polluted downstream, avoiding the cost of treating the water), therefore governments may opt to impose regulations in an attempt to try to internalize all of the cost of production and ultimately include them in the price of the goods.

Advocates of the free market contend that government intervention hampers economic growth by disrupting the efficient allocation of resources according to supply and demand while critics of the free market contend that government intervention is sometimes necessary to protect a country's economy from better-developed and more influential economies, while providing the stability necessary for wise long-term investment. Milton Friedman argued against central planning, price controls and state-owned corporations, particularly as practiced in the Soviet Union and China[40] while Ha-Joon Chang cites the examples of post-war Japan and the growth of South Korea's steel industry as positive examples of government intervention.[41]

Criticism

Critics of a laissez-faire free market have argued that in real world situations it has proven to be susceptible to the development of price fixing monopolies.[42] Such reasoning has led to government intervention, e.g. the United States antitrust law. Critics of the free market also argue that it results in significant market dominance, inequality of bargaining power, or information asymmetry, in order to allow markets to function more freely.

Critics of a free market often argue that some market failures require government intervention.[43] Economists Ronald Coase, Milton Friedman, Ludwig von Mises, and Friedrich Hayek have responded by arguing that markets can internalize or adjust to supposed market failures.[43]

Two prominent Canadian authors argue that government at times has to intervene to ensure competition in large and important industries. Naomi Klein illustrates this roughly in her work The Shock Doctrine and John Ralston Saul more humorously illustrates this through various examples in The Collapse of Globalism and the Reinvention of the World.[44] While its supporters argue that only a free market can create healthy competition and therefore more business and reasonable prices, opponents say that a free market in its purest form may result in the opposite. According to Klein and Ralston, the merging of companies into giant corporations or the privatization of government-run industry and national assets often result in monopolies or oligopolies requiring government intervention to force competition and reasonable prices.[44] Another form of market failure is speculation, where transactions are made to profit from short term fluctuation, rather from the intrinsic value of the companies or products. This criticism has been challenged by historians such as Lawrence Reed, who argued that monopolies have historically failed to form even in the absence of antitrust law.[45][unreliable source?] This is because monopolies are inherently difficult to maintain as a company that tries to maintain its monopoly by buying out new competitors, for instance, is incentivizing newcomers to enter the market in hope of a buy-out. Furthermore, according to writer Walter Lippman and economist Milton Friedman, historical analysis of the formation of monopolies reveals that, contrary to popular belief, these were the result not of unfettered market forces, but of legal privileges granted by government.[46][unreliable source?]

American philosopher and author Cornel West has derisively termed what he perceives as dogmatic arguments for laissez-faire economic policies as free-market fundamentalism. West has contended that such mentality "trivializes the concern for public interest" and "makes money-driven, poll-obsessed elected officials deferential to corporate goals of profit – often at the cost of the common good".[47] American political philosopher Michael J. Sandel contends that in the last thirty years the United States has moved beyond just having a market economy and has become a market society where literally everything is for sale, including aspects of social and civic life such as education, access to justice and political influence.[48] The economic historian Karl Polanyi was highly critical of the idea of the market-based society in his book The Great Transformation, stating that any attempt at its creation would undermine human society and the common good:[49] "Ultimately...the control of the economic system by the market is of overwhelming consequence to the whole organization of society; it means no less than the running of society as an adjunct to the market. Instead of economy being embedded in social relations, social relations are embedded in the economic system."[50]

David McNally of the University of Houston argues in the Marxist tradition that the logic of the market inherently produces inequitable outcomes and leads to unequal exchanges, arguing that Adam Smith's moral intent and moral philosophy espousing equal exchange was undermined by the practice of the free market he championed. According to McNally, the development of the market economy involved coercion, exploitation and violence that Smith's moral philosophy could not countenance. McNally also criticizes market socialists for believing in the possibility of fair markets based on equal exchanges to be achieved by purging parasitical elements from the market economy such as private ownership of the means of production, arguing that market socialism is an oxymoron when socialism is defined as an end to wage labour.[51]

See also

Notes

  1. ^ Bockman, Johanna (2011). Markets in the name of Socialism: The Left-Wing origins of Neoliberalism. Stanford University Press. ISBN 978-0804775663.
  2. ^ a b c d Popper, Karl (1994). The Open Society and Its Enemies. Routledge Classics. p. 712. ISBN 978-0415610216.
  3. ^ "Finance & Development". Finance & Development | F&D. from the original on 2022-09-15. Retrieved 2022-09-15.
  4. ^ Zimbalist, Sherman and Brown, Andrew, Howard J. and Stuart (1988). Comparing Economic Systems: A Political-Economic Approach. Harcourt College Pub. pp. 6–7. ISBN 978-0155124035. Pure capitalism is defined as a system wherein all of the means of production (physical capital) are privately owned and run by the capitalist class for a profit, while most other people are workers who work for a salary or wage (and who do not own the capital or the product).
  5. ^ Rosser, Mariana V.; Rosser, J Barkley (2003). Comparative Economics in a Transforming World Economy. MIT Press. p. 7. ISBN 978-0262182348. In capitalist economies, land and produced means of production (the capital stock) are owned by private individuals or groups of private individuals organized as firms.
  6. ^ Chris Jenks. Core Sociological Dichotomies. "Capitalism, as a mode of production, is an economic system of manufacture and exchange which is geared toward the production and sale of commodities within a market for profit, where the manufacture of commodities consists of the use of the formally free labor of workers in exchange for a wage to create commodities in which the manufacturer extracts surplus value from the labor of the workers in terms of the difference between the wages paid to the worker and the value of the commodity produced by him/her to generate that profit." London; Thousand Oaks, CA; New Delhi. Sage. p. 383.
  7. ^ Gilpin, Robert (2018). The Challenge of Global Capitalism : The World Economy in the 21st Century. ISBN 978-0691186474. OCLC 1076397003.
  8. ^ Heilbroner, Robert L. "Capitalism" 28 October 2017 at the Wayback Machine. Steven N. Durlauf and Lawrence E. Blume, eds. The New Palgrave Dictionary of Economics. 2nd ed. (Palgrave Macmillan, 2008) doi:10.1057/9780230226203.0198.
  9. ^ Louis Hyman and Edward E. Baptist (2014). American Capitalism: A Reader 22 May 2015 at the Wayback Machine. Simon & Schuster. ISBN 978-1476784311.
  10. ^ Gregory, Paul; Stuart, Robert (2013). The Global Economy and its Economic Systems. South-Western College Pub. p. 41. ISBN 978-1285-05535-0. Capitalism is characterized by private ownership of the factors of production. Decision making is decentralized and rests with the owners of the factors of production. Their decision making is coordinated by the market, which provides the necessary information. Material incentives are used to motivate participants.
  11. ^ Gregory and Stuart, Paul and Robert (2013). The Global Economy and its Economic Systems. South-Western College Pub. p. 107. ISBN 978-1285-05535-0. Real-world capitalist systems are mixed, some having higher shares of public ownership than others. The mix changes when privatization or nationalization occurs. Privatization is when property that had been state-owned is transferred to private owners. Nationalization occurs when privately owned property becomes publicly owned.
  12. ^ Macmillan Dictionary of Modern Economics, 3rd Ed., 1986, p. 54.
  13. ^ Bronk, Richard (Summer 2000). "Which model of capitalism?". OECD Observer. Vol. 1999, no. 221–22. OECD. pp. 12–15. from the original on 6 April 2018. Retrieved 6 April 2018.
  14. ^ Stilwell, Frank. "Political Economy: the Contest of Economic Ideas". First Edition. Oxford University Press. Melbourne, Australia. 2002.
  15. ^ Sy, Wilson N. (18 September 2016). "Capitalism and Economic Growth Across the World". Rochester, NY. SSRN 2840425. For 40 largest countries in the International Monetary Fund (IMF) database, it is shown statistically that capitalism, between 2003 and 2012, is positively correlated significantly to economic growth. {{cite journal}}: Cite journal requires |journal= (help)
  16. ^ Adam Smith, The Wealth of Nations Book V, Chapter 2, Part 2, Article I: Taxes upon the Rent of Houses.
  17. ^ House Of Commons May 4th; King's Theatre, Edinburgh, July 17
  18. ^ Backhaus, "Henry George's Ingenious Tax," pp. 453–458.
  19. ^ Bockman, Johanna (2011). Markets in the name of Socialism: The Left-Wing origins of Neoliberalism. Stanford University Press. p. 21. ISBN 978-0804775663. For Walras, socialism would provide the necessary institutions for free competition and social justice. Socialism, in Walras's view, entailed state ownership of land and natural resources and the abolition of income taxes. As owner of land and natural resources, the state could then lease these resources to many individuals and groups which would eliminate monopolies and thus enable free competition. The leasing of land and natural resources would also provide enough state revenue to make income taxes unnecessary, allowing a worker to invest his savings and become 'an owner or capitalist at the same time that he remains a worker.
  20. ^ Hayek, Friedrich (1941). The Pure Theory of Capital.
  21. ^ Chartier, Gary; Johnson, Charles W. (2011). Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty. Brooklyn, NY:Minor Compositions/Autonomedia
  22. ^ "It introduces an eye-opening approach to radical social thought, rooted equally in libertarian socialism and market anarchism." Chartier, Gary; Johnson, Charles W. (2011). Markets Not Capitalism: Individualist Anarchism Against Bosses, Inequality, Corporate Power, and Structural Poverty. Brooklyn, NY: Minor Compositions/Autonomedia. p. back cover.
  23. ^ "But there has always been a market-oriented strand of libertarian socialism that emphasizes voluntary cooperation between producers. And markets, properly understood, have always been about cooperation. As a commenter at Reason magazine's Hit&Run blog, remarking on Jesse Walker's link to the Kelly article, put it: "every trade is a cooperative act." In fact, it's a fairly common observation among market anarchists that genuinely free markets have the most legitimate claim to the label "socialism." "Socialism: A Perfectly Good Word Rehabilitated" 2016-03-10 at the Wayback Machine by Kevin Carson at website of Center for a Stateless Society.
  24. ^ Nick Manley, "Brief Introduction To Left-Wing Laissez Faire Economic Theory: Part One" 2021-08-18 at the Wayback Machine.
  25. ^ Nick Manley, "Brief Introduction To Left-Wing Laissez Faire Economic Theory: Part Two" 2021-05-16 at the Wayback Machine.
  26. ^ Tucker, Benjamin (1926). Individual Liberty: Selections from the Writings of Benjamin R. Tucker. New York: Vanguard Press. pp. 1–19.
  27. ^ "Cooperative Economics: An Interview with Jaroslav Vanek" 2021-08-17 at the Wayback Machine. Interview by Albert Perkins. Retrieved March 17, 2011.
  28. ^ The Political Economy of Socialism, by Horvat, Branko (1982), pp. 197–198.
  29. ^ Hayek, F. (1949-03-01). "The Intellectuals and Socialism". University of Chicago Law Review. 16 (3): 417–433. doi:10.2307/1597903. ISSN 0041-9494. JSTOR 1597903. from the original on 2022-10-27. Retrieved 2022-10-27.
  30. ^ Stigler, George J. (1992). "Law or Economics?". The Journal of Law & Economics. 35 (2): 455–468. doi:10.1086/467262. ISSN 0022-2186. JSTOR 725548. S2CID 154114758. from the original on 2022-10-27. Retrieved 2022-10-27.
  31. ^ Shleifer, Andrei; Vishny, Robert W (1994). "Politics of Market Socialism" (PDF). Journal of Economic Perspectives. 8 (2): 165–176. doi:10.1257/jep.8.2.165. S2CID 152437398. (PDF) from the original on 2014-02-02.
  32. ^ Theory of Value by Gérard Debreu.
  33. ^ Hayek cited. Petsoulas, Christina. Hayek's Liberalism and Its Origins: His Idea of Spontaneous Order and the Scottish Enlightenment. Routledge. 2001. p. 2.
  34. ^ Smith, Adam (1827). The Wealth of Nations. Book IV. p. 184 2023-01-18 at the Wayback Machine.
  35. ^ Smith, Adam (1776). "2". The Wealth of Nations. Vol. 1. London: W. Strahan and T. Cadell.
  36. ^ Hacker, Jacob S.; Pierson, Paul (2010). Winner-Take-All Politics: How Washington Made the Rich Richer – and Turned Its Back on the Middle Class. Simon & Schuster. p. 55.
  37. ^ a b Judd, K. L. (1997). "Computational economics and economic theory: Substitutes or complements?" (PDF). Journal of Economic Dynamics and Control. 21 (6): 907–942. doi:10.1016/S0165-1889(97)00010-9. S2CID 55347101. (PDF) from the original on 2020-05-20. Retrieved 2019-08-08.
  38. ^ . Archived from the original on 2014-05-22. Retrieved 2014-06-06.
  39. ^ "Farm Program Pays $1.3 Billion to People Who Don't Farm". Washington Post. 2 July 2006. from the original on 4 September 2021. Retrieved 3 June 2014.
  40. ^ "Ip, Greg and Mark Whitehouse, "How Milton Friedman Changed Economics, Policy and Markets", Wall Street Journal Online (November 17, 2006)" (PDF). (PDF) from the original on 2010-06-25.
  41. ^ "Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism", Ha-Joon Chang, Bloomsbury Press, ISBN 978-1596915985[page needed]
  42. ^ Tarbell, Ida (1904). The History of the Standard Oil Company. McClure, Phillips and Co.
  43. ^ a b "Free market". Encyclopædia Britannica. from the original on 2022-10-20. Retrieved 2022-10-15.
  44. ^ a b Saul, John The End of Globalism.
  45. ^ "Cliche #41: "Rockefeller’s Standard Oil Company Proved That We Needed Anti-Trust Laws to Fight Such Market Monopolies" 2017-02-16 at the Wayback Machine, The Freeman, January 23, 2015. Retrieved December 20, 2016.
  46. ^ "Why We Need To Re-think Friedman's Ideas About Monopolies". ProMarket. 2021-04-25. from the original on 2021-09-27. Retrieved 2021-09-27.
  47. ^ "Cornel West: Democracy Matters" 2014-10-15 at the Wayback Machine, The Globalist, January 24, 2005. Retrieved October 9, 2014.
  48. ^ Michael J. Sandel (June 2013). Why we shouldn't trust markets with our civic life 2015-05-21 at the Wayback Machine. TED. Retrieved January 11, 2015.
  49. ^ Henry Farrell (July 18, 2014). The free market is an impossible utopia 2015-09-15 at the Wayback Machine. The Washington Post. Retrieved January 11, 2015.
  50. ^ Polanyi, Karl (2001-03-28). The Great Transformation: The Political and Economic Origins of Our Time. Beacon Press. p. 60. ISBN 978-0-8070-5642-4. from the original on 2023-01-04. Retrieved 2023-01-04.
  51. ^ McNally, David (1993). Against the Market: Political Economy, Market Socialism and the Marxist Critique. Verso. ISBN 978-0860916062.

Further reading

  • Adler, Jonathan H. “Excerpts from ‘About Free-Market Environmentalism.’” In Environment and Society: A Reader, edited by Christopher Schlottmann, Dale Jamieson, Colin Jerolmack, Anne Rademacher, and Maria Damon, 259–264. New York University Press, 2017. doi:10.2307/j.ctt1ht4vw6.38.
  • Althammer, Jörg. “Economic Efficiency and Solidarity: The Idea of a Social Market Economy.” Free Markets with Sustainability and Solidarity, edited by Martin Schlag and Juan A. Mercaso, Catholic University of America Press, 2016, pp. 199–216, doi:10.2307/j.ctt1d2dp8t.14.
  • Baradaran, Mehrsa. “The Free Market Confronts Black Poverty.” The Color of Money: Black Banks and the Racial Wealth Gap, Harvard University Press, 2017, pp. 215–246, JSTOR j.ctv24w649g.10.
  • Barro, R.J. (2003). Nothing is Sacred: Economic Ideas for the New Millennium. The MIT Press. MIT Press. ISBN 978-0262250511. from the original on 2023-01-18. Retrieved 2022-03-11.
  • Basu, K. (2016). Beyond the Invisible Hand: Groundwork for a New Economics. Princeton University Press. ISBN 978-0691173696. LCCN 2010012135. from the original on 2023-01-18. Retrieved 2022-03-11.
  • Baumol, William J. (2014). The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism. Princeton University Press. ISBN 978-1400851638. from the original on 2023-01-18. Retrieved 2022-03-11.
  • Block, Fred and Somers, Margaret R. (2014). The Power of Market Fundamentalism: Karl Polanyi's Critique 2021-04-29 at the Wayback Machine. Harvard University Press. ISBN 0674050711. JSTOR j.ctt6wpr3f.7.
  • Boettke, Peter J. "What Went Wrong with Economics?", Critical Review Vol. 11, No. 1, pp. 35, 58 2007-12-01 at the Wayback Machine.
  • Boudreaux, Donald (2008). "Free-Market Economy". In Hamowy, Ronald (ed.). Archived copy. The Encyclopedia of Libertarianism. Thousand Oaks, CA: Sage; Cato Institute. pp. 187–189. ISBN 978-1412965804. LCCN 2008009151. OCLC 750831024. from the original on 2023-01-09. Retrieved 2022-03-20.{{cite encyclopedia}}: CS1 maint: archived copy as title (link)
  • Burgin, A. (2012). The Great Persuasion: Reinventing Free Markets since the Depression. Harvard University Press. ISBN 978-0674067431. LCCN 2012015061. from the original on 2023-01-18. Retrieved 2022-03-11.
  • Chua, Beng Huat. “Disrupting Free Market: State Capitalism and Social Distribution.” Liberalism Disavowed: Communitarianism and State Capitalism in Singapore, Cornell University Press, 2017, pp. 98–122, JSTOR 10.7591/j.ctt1zkjz35.7.
  • Cox, Harvey (2016). The Market as God 2016-11-11 at the Wayback Machine. Harvard University Press. ISBN 978-0674659681.
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External links

  • "Free market" at Encyclopædia Britannica
  • looks at how communication, coordination and cooperation interact to make free markets work

free, market, economic, systems, where, markets, either, free, regulated, primary, allocation, mechanism, market, economy, free, enterprise, redirects, here, other, uses, free, enterprise, disambiguation, economics, free, market, economic, system, which, price. For economic systems where markets either free or regulated are the primary allocation mechanism see Market economy Free enterprise redirects here For other uses see Free enterprise disambiguation In economics a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers Such markets as modeled operate without the intervention of government or any other external authority Proponents of the free market as a normative ideal contrast it with a regulated market in which a government intervenes in supply and demand by means of various methods such as taxes or regulations In an idealized free market economy prices for goods and services are set solely by the bids and offers of the participants Scholars contrast the concept of a free market with the concept of a coordinated market in fields of study such as political economy new institutional economics economic sociology and political science All of these fields emphasize the importance in currently existing market systems of rule making institutions external to the simple forces of supply and demand which create space for those forces to operate to control productive output and distribution Although free markets are commonly associated with capitalism in contemporary usage and popular culture free markets have also been components in some forms of market socialism 1 Historically free market has also been used synonymously with other economic policies For instance proponents of laissez faire capitalism may refer to it as free market capitalism because they claim it to achieve the most economic freedom 2 In practice governments usually intervene to reduce externalities such as greenhouse gas emissions although they may use markets to do so such as carbon emission trading 3 Contents 1 Economic systems 1 1 Capitalism 1 2 Georgism 1 3 Laissez faire 1 4 Socialism 2 Concepts 2 1 Economic equilibrium 2 2 Low barriers to entry 2 3 Perfect competition and market failure 2 4 Spontaneous order 2 5 Supply and demand 3 Criticism 4 See also 5 Notes 6 Further reading 7 External linksEconomic systems EditCapitalism Edit Capitalism is an economic system based on the private ownership of the means of production and their operation for profit 4 5 6 7 Central characteristics of capitalism include capital accumulation competitive markets a price system private property and the recognition of property rights voluntary exchange and wage labor 8 9 In a capitalist market economy decision making and investments are determined by every owner of wealth property or production ability in capital and financial markets whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets 10 Economists historians political economists and sociologists have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice These include laissez faire or free market capitalism state capitalism and welfare capitalism Different forms of capitalism feature varying degrees of free markets public ownership 11 obstacles to free competition and state sanctioned social policies The degree of competition in markets and the role of intervention and regulation as well as the scope of state ownership vary across different models of capitalism 12 13 The extent to which different markets are free and the rules defining private property are matters of politics and policy Most of the existing capitalist economies are mixed economies that combine elements of free markets with state intervention and in some cases economic planning 14 Market economies have existed under many forms of government and in many different times places and cultures Modern capitalist societies marked by a universalization of money based social relations a consistently large and system wide class of workers who must work for wages the proletariat and a capitalist class which owns the means of production developed in Western Europe in a process that led to the Industrial Revolution Capitalist systems with varying degrees of direct government intervention have since become dominant in the Western world and continue to spread Capitalism has been shown to be strongly correlated with economic growth 15 Georgism Edit Main article Georgism For classical economists such as Adam Smith the term free market refers to a market free from all forms of economic privilege monopolies and artificial scarcities 2 They say this implies that economic rents which they describe as profits generated from a lack of perfect competition must be reduced or eliminated as much as possible through free competition Economic theory suggests the returns to land and other natural resources are economic rents that cannot be reduced in such a way because of their perfect inelastic supply 16 Some economic thinkers emphasize the need to share those rents as an essential requirement for a well functioning market It is suggested this would both eliminate the need for regular taxes that have a negative effect on trade see deadweight loss as well as release land and resources that are speculated upon or monopolised two features that improve the competition and free market mechanisms Winston Churchill supported this view by the following statement Land is the mother of all monopoly 17 The American economist and social philosopher Henry George the most famous proponent of this thesis wanted to accomplish this through a high land value tax that replaces all other taxes 18 Followers of his ideas are often called Georgists or geoists and geolibertarians Leon Walras one of the founders of the neoclassical economics who helped formulate the general equilibrium theory had a very similar view He argued that free competition could only be realized under conditions of state ownership of natural resources and land Additionally income taxes could be eliminated because the state would receive income to finance public services through owning such resources and enterprises 19 Laissez faire Edit Main article Laissez faire The laissez faire principle expresses a preference for an absence of non market pressures on prices and wages such as those from discriminatory government taxes subsidies tariffs regulations or government granted monopolies In The Pure Theory of Capital Friedrich Hayek argued that the goal is the preservation of the unique information contained in the price itself 20 According to Karl Popper the idea of the free market is paradoxical as it requires interventions towards the goal of preventing interventions 2 Although laissez faire has been commonly associated with capitalism there is a similar economic theory associated with socialism called left wing or socialist laissez faire also known as free market anarchism free market anti capitalism and free market socialism to distinguish it from laissez faire capitalism 21 22 23 Critics of laissez faire as commonly understood argue that a truly laissez faire system would be anti capitalist and socialist 24 25 American individualist anarchists such as Benjamin Tucker saw themselves as economic free market socialists and political individualists while arguing that their anarchistic socialism or individual anarchism was consistent Manchesterism 26 Socialism Edit Main article Socialism See also Socialist economics Various forms of socialism based on free markets have existed since the 19th century Early notable socialist proponents of free markets include Pierre Joseph Proudhon Benjamin Tucker and the Ricardian socialists These economists believed that genuinely free markets and voluntary exchange could not exist within the exploitative conditions of capitalism These proposals ranged from various forms of worker cooperatives operating in a free market economy such as the mutualist system proposed by Proudhon to state owned enterprises operating in unregulated and open markets These models of socialism are not to be confused with other forms of market socialism e g the Lange model where publicly owned enterprises are coordinated by various degrees of economic planning or where capital good prices are determined through marginal cost pricing Advocates of free market socialism such as Jaroslav Vanek argue that genuinely free markets are not possible under conditions of private ownership of productive property Instead he contends that the class differences and inequalities in income and power that result from private ownership enable the interests of the dominant class to skew the market to their favor either in the form of monopoly and market power or by utilizing their wealth and resources to legislate government policies that benefit their specific business interests Additionally Vanek states that workers in a socialist economy based on cooperative and self managed enterprises have stronger incentives to maximize productivity because they would receive a share of the profits based on the overall performance of their enterprise in addition to receiving their fixed wage or salary The stronger incentives to maximize productivity that he conceives as possible in a socialist economy based on cooperative and self managed enterprises might be accomplished in a free market economy if employee owned companies were the norm as envisioned by various thinkers including Louis O Kelso and James S Albus 27 Socialists also assert that free market capitalism leads to an excessively skewed distributions of income and economic instabilities which in turn leads to social instability Corrective measures in the form of social welfare re distributive taxation and regulatory measures and their associated administrative costs which are required create agency costs for society These costs would not be required in a self managed socialist economy 28 Criticism of market socialism comes from two major directions Economists Friedrich Hayek and George Stigler argued that socialism as a theory isn t conducive to democratic systems 29 and even the most benevolent state would face serious implementation problems 30 More modern criticism of socialism and market socialism implies that even in a democratic system socialism cannot reach the desired efficient outcome This argument holds that democratic majority rule becomes detrimental to enterprises and industries and that the formation of interest groups distorts the optimal market outcome 31 Concepts EditEconomic equilibrium Edit Main article Economic equilibrium A diagram showing the effects of price freedom The general equilibrium theory has demonstrated that under certain theoretical conditions of perfect competition the law of supply and demand influences prices toward an equilibrium that balances the demands for the products against the supplies 32 full citation needed At these equilibrium prices the market distributes the products to the purchasers according to each purchaser s preference or utility for each product and within the relative limits of each buyer s purchasing power This result is described as market efficiency or more specifically a Pareto optimum Low barriers to entry Edit Main article Barriers to entry A free market does not directly require the existence of competition however it does require a framework that freely allows new market entrants Hence competition in a free market is a consequence of the conditions of a free market including that market participants not be obstructed from following their profit motive Perfect competition and market failure Edit Main articles Perfect competition and Market failure An absence of any of the conditions of perfect competition is considered a market failure Regulatory intervention may provide a substitute force to counter a market failure which leads some economists to believe that some forms of market regulation may be better than an unregulated market at providing a free market 2 Spontaneous order Edit Main article Spontaneous order See also Invisible hand Friedrich Hayek popularized the view that market economies promote spontaneous order which results in a better allocation of societal resources than any design could achieve 33 According to this view market economies are characterized by the formation of complex transactional networks that produce and distribute goods and services throughout the economy These networks are not designed but they nevertheless emerge as a result of decentralized individual economic decisions The idea of spontaneous order is an elaboration on the invisible hand proposed by Adam Smith in The Wealth of Nations About the individual Smith wrote By preferring the support of domestic to that of foreign industry he intends only his own security and by directing that industry in such a manner as its produce may be of the greatest value he intends only his own gain and he is in this as in many other cases led by an invisible hand to promote an end which was no part of his intention Nor is it always the worse for society that it was no part of it By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it I have never known much good done by those who affected to trade for the public good 34 Smith pointed out that one does not get one s dinner by appealing to the brother love of the butcher the farmer or the baker Rather one appeals to their self interest and pays them for their labor arguing It is not from the benevolence of the butcher the brewer or the baker that we expect our dinner but from their regard to their own self interest We address ourselves not to their humanity but to their self love and never talk to them of our own necessities but of their advantages 35 Supporters of this view claim that spontaneous order is superior to any order that does not allow individuals to make their own choices of what to produce what to buy what to sell and at what prices due to the number and complexity of the factors involved They further believe that any attempt to implement central planning will result in more disorder or a less efficient production and distribution of goods and services Critics such as political economist Karl Polanyi question whether a spontaneously ordered market can exist completely free of distortions of political policy claiming that even the ostensibly freest markets require a state to exercise coercive power in some areas namely to enforce contracts govern the formation of labor unions spell out the rights and obligations of corporations shape who has standing to bring legal actions and define what constitutes an unacceptable conflict of interest 36 Supply and demand Edit Main article Supply and demand Demand for an item such as a good or service refers to the economic market pressure from people trying to buy it Buyers have a maximum price they are willing to pay for an item and sellers have a minimum price at which they are willing to offer their product The point at which the supply and demand curves meet is the equilibrium price of the good and quantity demanded Sellers willing to offer their goods at a lower price than the equilibrium price receive the difference as producer surplus Buyers willing to pay for goods at a higher price than the equilibrium price receive the difference as consumer surplus 37 The model is commonly applied to wages in the market for labor The typical roles of supplier and consumer are reversed The suppliers are individuals who try to sell supply their labor for the highest price The consumers are businesses which try to buy demand the type of labor they need at the lowest price As more people offer their labor in that market the equilibrium wage decreases and the equilibrium level of employment increases as the supply curve shifts to the right The opposite happens if fewer people offer their wages in the market as the supply curve shifts to the left 37 In a free market individuals and firms taking part in these transactions have the liberty to enter leave and participate in the market as they so choose Prices and quantities are allowed to adjust according to economic conditions in order to reach equilibrium and allocate resources However in many countries around the world governments seek to intervene in the free market in order to achieve certain social or political agendas 38 Governments may attempt to create social equality or equality of outcome by intervening in the market through actions such as imposing a minimum wage price floor or erecting price controls price ceiling Other lesser known goals are also pursued such as in the United States where the federal government subsidizes owners of fertile land to not grow crops in order to prevent the supply curve from further shifting to the right and decreasing the equilibrium price This is done under the justification of maintaining farmers profits due to the relative inelasticity of demand for crops increased supply would lower the price but not significantly increase quantity demanded thus placing pressure on farmers to exit the market 39 Those interventions are often done in the name of maintaining basic assumptions of free markets such as the idea that the costs of production must be included in the price of goods Pollution and depletion costs are sometimes not included in the cost of production a manufacturer that withdraws water at one location then discharges it polluted downstream avoiding the cost of treating the water therefore governments may opt to impose regulations in an attempt to try to internalize all of the cost of production and ultimately include them in the price of the goods Advocates of the free market contend that government intervention hampers economic growth by disrupting the efficient allocation of resources according to supply and demand while critics of the free market contend that government intervention is sometimes necessary to protect a country s economy from better developed and more influential economies while providing the stability necessary for wise long term investment Milton Friedman argued against central planning price controls and state owned corporations particularly as practiced in the Soviet Union and China 40 while Ha Joon Chang cites the examples of post war Japan and the growth of South Korea s steel industry as positive examples of government intervention 41 Criticism EditSee also Criticism of capitalism Critics of a laissez faire free market have argued that in real world situations it has proven to be susceptible to the development of price fixing monopolies 42 Such reasoning has led to government intervention e g the United States antitrust law Critics of the free market also argue that it results in significant market dominance inequality of bargaining power or information asymmetry in order to allow markets to function more freely Critics of a free market often argue that some market failures require government intervention 43 Economists Ronald Coase Milton Friedman Ludwig von Mises and Friedrich Hayek have responded by arguing that markets can internalize or adjust to supposed market failures 43 Two prominent Canadian authors argue that government at times has to intervene to ensure competition in large and important industries Naomi Klein illustrates this roughly in her work The Shock Doctrine and John Ralston Saul more humorously illustrates this through various examples in The Collapse of Globalism and the Reinvention of the World 44 While its supporters argue that only a free market can create healthy competition and therefore more business and reasonable prices opponents say that a free market in its purest form may result in the opposite According to Klein and Ralston the merging of companies into giant corporations or the privatization of government run industry and national assets often result in monopolies or oligopolies requiring government intervention to force competition and reasonable prices 44 Another form of market failure is speculation where transactions are made to profit from short term fluctuation rather from the intrinsic value of the companies or products This criticism has been challenged by historians such as Lawrence Reed who argued that monopolies have historically failed to form even in the absence of antitrust law 45 unreliable source This is because monopolies are inherently difficult to maintain as a company that tries to maintain its monopoly by buying out new competitors for instance is incentivizing newcomers to enter the market in hope of a buy out Furthermore according to writer Walter Lippman and economist Milton Friedman historical analysis of the formation of monopolies reveals that contrary to popular belief these were the result not of unfettered market forces but of legal privileges granted by government 46 unreliable source American philosopher and author Cornel West has derisively termed what he perceives as dogmatic arguments for laissez faire economic policies as free market fundamentalism West has contended that such mentality trivializes the concern for public interest and makes money driven poll obsessed elected officials deferential to corporate goals of profit often at the cost of the common good 47 American political philosopher Michael J Sandel contends that in the last thirty years the United States has moved beyond just having a market economy and has become a market society where literally everything is for sale including aspects of social and civic life such as education access to justice and political influence 48 The economic historian Karl Polanyi was highly critical of the idea of the market based society in his book The Great Transformation stating that any attempt at its creation would undermine human society and the common good 49 Ultimately the control of the economic system by the market is of overwhelming consequence to the whole organization of society it means no less than the running of society as an adjunct to the market Instead of economy being embedded in social relations social relations are embedded in the economic system 50 David McNally of the University of Houston argues in the Marxist tradition that the logic of the market inherently produces inequitable outcomes and leads to unequal exchanges arguing that Adam Smith s moral intent and moral philosophy espousing equal exchange was undermined by the practice of the free market he championed According to McNally the development of the market economy involved coercion exploitation and violence that Smith s moral philosophy could not countenance McNally also criticizes market socialists for believing in the possibility of fair markets based on equal exchanges to be achieved by purging parasitical elements from the market economy such as private ownership of the means of production arguing that market socialism is an oxymoron when socialism is defined as an end to wage labour 51 See also EditBinary economics Crony capitalism Economic liberalism Freedom of choice Free price system Grey market Left wing market anarchism Market economy Neoliberalism Participatory economics Quasi market Self managed economy Transparency market Notes Edit Bockman Johanna 2011 Markets in the name of Socialism The Left Wing origins of Neoliberalism Stanford University Press ISBN 978 0804775663 a b c d Popper Karl 1994 The Open Society and Its Enemies Routledge Classics p 712 ISBN 978 0415610216 Finance amp Development Finance amp Development F amp D Archived from the original on 2022 09 15 Retrieved 2022 09 15 Zimbalist Sherman and Brown Andrew Howard J and Stuart 1988 Comparing Economic Systems A Political Economic Approach Harcourt College Pub pp 6 7 ISBN 978 0155124035 Pure capitalism is defined as a system wherein all of the means of production physical capital are privately owned and run by the capitalist class for a profit while most other people are workers who work for a salary or wage and who do not own the capital or the product Rosser Mariana V Rosser J Barkley 2003 Comparative Economics in a Transforming World Economy MIT Press p 7 ISBN 978 0262182348 In capitalist economies land and produced means of production the capital stock are owned by private individuals or groups of private individuals organized as firms Chris Jenks Core Sociological Dichotomies Capitalism as a mode of production is an economic system of manufacture and exchange which is geared toward the production and sale of commodities within a market for profit where the manufacture of commodities consists of the use of the formally free labor of workers in exchange for a wage to create commodities in which the manufacturer extracts surplus value from the labor of the workers in terms of the difference between the wages paid to the worker and the value of the commodity produced by him her to generate that profit London Thousand Oaks CA New Delhi Sage p 383 Gilpin Robert 2018 The Challenge of Global Capitalism The World Economy in the 21st Century ISBN 978 0691186474 OCLC 1076397003 Heilbroner Robert L Capitalism Archived 28 October 2017 at the Wayback Machine Steven N Durlauf and Lawrence E Blume eds The New Palgrave Dictionary of Economics 2nd ed Palgrave Macmillan 2008 doi 10 1057 9780230226203 0198 Louis Hyman and Edward E Baptist 2014 American Capitalism A Reader Archived 22 May 2015 at the Wayback Machine Simon amp Schuster ISBN 978 1476784311 Gregory Paul Stuart Robert 2013 The Global Economy and its Economic Systems South Western College Pub p 41 ISBN 978 1285 05535 0 Capitalism is characterized by private ownership of the factors of production Decision making is decentralized and rests with the owners of the factors of production Their decision making is coordinated by the market which provides the necessary information Material incentives are used to motivate participants Gregory and Stuart Paul and Robert 2013 The Global Economy and its Economic Systems South Western College Pub p 107 ISBN 978 1285 05535 0 Real world capitalist systems are mixed some having higher shares of public ownership than others The mix changes when privatization or nationalization occurs Privatization is when property that had been state owned is transferred to private owners Nationalization occurs when privately owned property becomes publicly owned Macmillan Dictionary of Modern Economics 3rd Ed 1986 p 54 Bronk Richard Summer 2000 Which model of capitalism OECD Observer Vol 1999 no 221 22 OECD pp 12 15 Archived from the original on 6 April 2018 Retrieved 6 April 2018 Stilwell Frank Political Economy the Contest of Economic Ideas First Edition Oxford University Press Melbourne Australia 2002 Sy Wilson N 18 September 2016 Capitalism and Economic Growth Across the World Rochester NY SSRN 2840425 For 40 largest countries in the International Monetary Fund IMF database it is shown statistically that capitalism between 2003 and 2012 is positively correlated significantly to economic growth a href Template Cite journal html title Template Cite journal cite journal a Cite journal requires journal help Adam Smith The Wealth of Nations Book V Chapter 2 Part 2 Article I Taxes upon the Rent of Houses House Of Commons May 4th King s Theatre Edinburgh July 17 Backhaus Henry George s Ingenious Tax pp 453 458 Bockman Johanna 2011 Markets in the name of Socialism The Left Wing origins of Neoliberalism Stanford University Press p 21 ISBN 978 0804775663 For Walras socialism would provide the necessary institutions for free competition and social justice Socialism in Walras s view entailed state ownership of land and natural resources and the abolition of income taxes As owner of land and natural resources the state could then lease these resources to many individuals and groups which would eliminate monopolies and thus enable free competition The leasing of land and natural resources would also provide enough state revenue to make income taxes unnecessary allowing a worker to invest his savings and become an owner or capitalist at the same time that he remains a worker Hayek Friedrich 1941 The Pure Theory of Capital Chartier Gary Johnson Charles W 2011 Markets Not Capitalism Individualist Anarchism Against Bosses Inequality Corporate Power and Structural Poverty Brooklyn NY Minor Compositions Autonomedia It introduces an eye opening approach to radical social thought rooted equally in libertarian socialism and market anarchism Chartier Gary Johnson Charles W 2011 Markets Not Capitalism Individualist Anarchism Against Bosses Inequality Corporate Power and Structural Poverty Brooklyn NY Minor Compositions Autonomedia p back cover But there has always been a market oriented strand of libertarian socialism that emphasizes voluntary cooperation between producers And markets properly understood have always been about cooperation As a commenter at Reason magazine s Hit amp Run blog remarking on Jesse Walker s link to the Kelly article put it every trade is a cooperative act In fact it s a fairly common observation among market anarchists that genuinely free markets have the most legitimate claim to the label socialism Socialism A Perfectly Good Word Rehabilitated Archived 2016 03 10 at the Wayback Machine by Kevin Carson at website of Center for a Stateless Society Nick Manley Brief Introduction To Left Wing Laissez Faire Economic Theory Part One Archived 2021 08 18 at the Wayback Machine Nick Manley Brief Introduction To Left Wing Laissez Faire Economic Theory Part Two Archived 2021 05 16 at the Wayback Machine Tucker Benjamin 1926 Individual Liberty Selections from the Writings of Benjamin R Tucker New York Vanguard Press pp 1 19 Cooperative Economics An Interview with Jaroslav Vanek Archived 2021 08 17 at the Wayback Machine Interview by Albert Perkins Retrieved March 17 2011 The Political Economy of Socialism by Horvat Branko 1982 pp 197 198 Hayek F 1949 03 01 The Intellectuals and Socialism University of Chicago Law Review 16 3 417 433 doi 10 2307 1597903 ISSN 0041 9494 JSTOR 1597903 Archived from the original on 2022 10 27 Retrieved 2022 10 27 Stigler George J 1992 Law or Economics The Journal of Law amp Economics 35 2 455 468 doi 10 1086 467262 ISSN 0022 2186 JSTOR 725548 S2CID 154114758 Archived from the original on 2022 10 27 Retrieved 2022 10 27 Shleifer Andrei Vishny Robert W 1994 Politics of Market Socialism PDF Journal of Economic Perspectives 8 2 165 176 doi 10 1257 jep 8 2 165 S2CID 152437398 Archived PDF from the original on 2014 02 02 Theory of Value by Gerard Debreu Hayek cited Petsoulas Christina Hayek s Liberalism and Its Origins His Idea of Spontaneous Order and the Scottish Enlightenment Routledge 2001 p 2 Smith Adam 1827 The Wealth of Nations Book IV p 184 Archived 2023 01 18 at the Wayback Machine Smith Adam 1776 2 The Wealth of Nations Vol 1 London W Strahan and T Cadell Hacker Jacob S Pierson Paul 2010 Winner Take All Politics How Washington Made the Rich Richer and Turned Its Back on the Middle Class Simon amp Schuster p 55 a b Judd K L 1997 Computational economics and economic theory Substitutes or complements PDF Journal of Economic Dynamics and Control 21 6 907 942 doi 10 1016 S0165 1889 97 00010 9 S2CID 55347101 Archived PDF from the original on 2020 05 20 Retrieved 2019 08 08 Chapter 20 Reasons for government intervention in the market Archived from the original on 2014 05 22 Retrieved 2014 06 06 Farm Program Pays 1 3 Billion to People Who Don t Farm Washington Post 2 July 2006 Archived from the original on 4 September 2021 Retrieved 3 June 2014 Ip Greg and Mark Whitehouse How Milton Friedman Changed Economics Policy and Markets Wall Street Journal Online November 17 2006 PDF Archived PDF from the original on 2010 06 25 Bad Samaritans The Myth of Free Trade and the Secret History of Capitalism Ha Joon Chang Bloomsbury Press ISBN 978 1596915985 page needed Tarbell Ida 1904 The History of the Standard Oil Company McClure Phillips and Co a b Free market Encyclopaedia Britannica Archived from the original on 2022 10 20 Retrieved 2022 10 15 a b Saul John The End of Globalism Cliche 41 Rockefeller s Standard Oil Company Proved That We Needed Anti Trust Laws to Fight Such Market Monopolies Archived 2017 02 16 at the Wayback Machine The Freeman January 23 2015 Retrieved December 20 2016 Why We Need To Re think Friedman s Ideas About Monopolies ProMarket 2021 04 25 Archived from the original on 2021 09 27 Retrieved 2021 09 27 Cornel West Democracy Matters Archived 2014 10 15 at the Wayback Machine The Globalist January 24 2005 Retrieved October 9 2014 Michael J Sandel June 2013 Why we shouldn t trust markets with our civic life Archived 2015 05 21 at the Wayback Machine TED Retrieved January 11 2015 Henry Farrell July 18 2014 The free market is an impossible utopia Archived 2015 09 15 at the Wayback Machine The Washington Post Retrieved January 11 2015 Polanyi Karl 2001 03 28 The Great Transformation The Political and Economic Origins of Our Time Beacon Press p 60 ISBN 978 0 8070 5642 4 Archived from the original on 2023 01 04 Retrieved 2023 01 04 McNally David 1993 Against the Market Political Economy Market Socialism and the Marxist Critique Verso ISBN 978 0860916062 Further reading EditAdler Jonathan H Excerpts from About Free Market Environmentalism In Environment and Society A Reader edited by Christopher Schlottmann Dale Jamieson Colin Jerolmack Anne Rademacher and Maria Damon 259 264 New York University Press 2017 doi 10 2307 j ctt1ht4vw6 38 Althammer Jorg Economic Efficiency and Solidarity The Idea of a Social Market Economy Free Markets with Sustainability and Solidarity edited by Martin Schlag and Juan A Mercaso Catholic University of America Press 2016 pp 199 216 doi 10 2307 j ctt1d2dp8t 14 Baradaran Mehrsa The Free Market Confronts Black Poverty The Color of Money Black Banks and the Racial Wealth Gap Harvard University Press 2017 pp 215 246 JSTOR j ctv24w649g 10 Barro R J 2003 Nothing is Sacred Economic Ideas for the New Millennium The MIT Press MIT Press ISBN 978 0262250511 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Basu K 2016 Beyond the Invisible Hand Groundwork for a New Economics Princeton University Press ISBN 978 0691173696 LCCN 2010012135 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Baumol William J 2014 The Free Market Innovation Machine Analyzing the Growth Miracle of Capitalism Princeton University Press ISBN 978 1400851638 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Block Fred and Somers Margaret R 2014 The Power of Market Fundamentalism Karl Polanyi s Critique Archived 2021 04 29 at the Wayback Machine Harvard University Press ISBN 0674050711 JSTOR j ctt6wpr3f 7 Boettke Peter J What Went Wrong with Economics Critical Review Vol 11 No 1 pp 35 58 Archived 2007 12 01 at the Wayback Machine Boudreaux Donald 2008 Free Market Economy In Hamowy Ronald ed Archived copy The Encyclopedia of Libertarianism Thousand Oaks CA Sage Cato Institute pp 187 189 ISBN 978 1412965804 LCCN 2008009151 OCLC 750831024 Archived from the original on 2023 01 09 Retrieved 2022 03 20 a href Template Cite encyclopedia html title Template Cite encyclopedia cite encyclopedia a CS1 maint archived copy as title link Burgin A 2012 The Great Persuasion Reinventing Free Markets since the Depression Harvard University Press ISBN 978 0674067431 LCCN 2012015061 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Chua Beng Huat Disrupting Free Market State Capitalism and Social Distribution Liberalism Disavowed Communitarianism and State Capitalism in Singapore Cornell University Press 2017 pp 98 122 JSTOR 10 7591 j ctt1zkjz35 7 Cox Harvey 2016 The Market as God Archived 2016 11 11 at the Wayback Machine Harvard University Press ISBN 978 0674659681 Cremers Jan and Ronald Dekker Labour Arbitrage on European Labour Markets Free Movement and the Role of Intermediaries Towards a Decent Labour Market for Low Waged Migrant Workers edited by Conny Rijken and Tesseltje de Lange Amsterdam University Press 2018 pp 109 128 JSTOR j ctv6hp34j 7 de La Pradelle M and Jacobs A and Katz J 2006 Market Day in Provence Fieldwork Encounters And Discoveries Ed Robert Emerson And Jack Katz University of Chicago Press ISBN 978 0226141848 LCCN 2005014063 Archived from the original on 2023 01 18 Retrieved 2022 03 11 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Eichner M 2019 The Free Market Family How the Market Crushed the American Dream and How It Can Be Restored Oxford University Press ISBN 978 0190055486 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Ferber M A and Nelson J A 2009 Beyond Economic Man Feminist Theory and Economics University of Chicago Press ISBN 978 0226242088 Archived from the original on 2023 01 18 Retrieved 2022 03 11 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Fox M B and Glosten L and Rauterberg G 2019 The New Stock Market Law Economics and Policy Columbia University Press ISBN 978 0231543934 LCCN 2018037234 Archived from the original on 2022 10 24 Retrieved 2022 10 24 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Friedman M and Friedman R D 1962 Capitalism and Freedom Phoenix Book business economics University of Chicago Press ISBN 978 0226264011 LCCN 62019619 Archived from the original on 2023 01 18 Retrieved 2022 03 11 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Garrett G and Bates R H and Comisso E and Migdal J and Lange P and Milner H 1998 Partisan Politics in the Global Economy Cambridge Studies in Comparative Politics Cambridge University Press ISBN 978 0521446907 LCCN 97016731 Archived from the original on 2023 01 18 Retrieved 2022 03 11 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Group of Lisbon Staff and Cara J 1995 Limits to Competition MIT Press ISBN 978 0262071642 LCCN 95021461 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Harcourt Bernard E 2011 The Illusion of Free Markets Punishment and the Myth of Natural Order Harvard University Press ISBN 978 0674059368 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Hayek Friedrich A 1948 Individualism and Economic Order Chicago University of Chicago Press vii 271 1 Helleiner Eric Pickel Andreas 2005 Economic Nationalism in a Globalizing World Cornell studies in political economy Cornell University Press ISBN 978 0801489662 LCCN 2004015590 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Higgs Kerryn The Rise of Free Market Fundamentalism Collision Course Endless Growth on a Finite Planet The MIT Press 2014 pp 79 104 JSTOR j ctt9qf93v 11 Holland Eugene W Free Market Communism Nomad Citizenship Free Market Communism and the Slow Motion General Strike NED New edition University of Minnesota Press 2011 pp 99 140 JSTOR 10 5749 j ctttsw4g 8 Hoopes James Corporations as Enemies of the Free Market Corporate Dreams Big Business in American Democracy from the Great Depression to the Great Recession Rutgers University Press 2011 pp 27 32 JSTOR j ctt5hjgkf 8 Howell D R 2005 Fighting Unemployment The Limits of Free Market Orthodoxy Fighting Unemployment The Limits of Free Market Orthodoxy Oxford University Press ISBN 978 0195165852 LCCN 2004049283 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Jonsson Orn D and Rognvaldur J Saemundsson Free Market Ideology Crony Capitalism and Social Resilience Gambling Debt Iceland s Rise and Fall in the Global Economy edited by E Paul Durrenberger and Gisli Palsson University Press of Colorado 2015 pp 23 32 JSTOR j ctt169wdcd 8 Kuhner T K 2014 Capitalism v Democracy Money in Politics and the Free Market Constitution Stanford University Press ISBN 978 0804791588 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Kuttner Robert The Man from Red Vienna review of Gareth Dale Karl Polanyi A Life on the Left Columbia University Press 381 pp The New York Review of Books vol LXIV no 20 21 December 2017 pp 55 57 In sum Polanyi got some details wrong but he got the big picture right Democracy cannot survive an excessively free market and containing the market is the task of politics To ignore that is to court fascism Robert Kuttner p 57 Lowe A and Adolph L and Pulrang S and Nell E J 1976 The Path of Economic Growth Cambridge University Press ISBN 978 0521208888 LCCN 75038186 Archived from the original on 2023 01 18 Retrieved 2022 03 11 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link McGowan T 2016 Capitalism and Desire The Psychic Cost of Free Markets Columbia University Press ISBN 978 0231542210 LCCN 2016005309 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Mittermaier Karl and Isabella Mittermaier Free Market Dogmatism and Pragmatism In The Hand Behind the Invisible Hand Dogmatic and Pragmatic Views on Free Markets and the State of Economic Theory 1st ed 23 26 Bristol University Press 2020 doi 10 2307 j ctv186grks 10 Newland Carlos Is Support for Capitalism Declining around the World A Free Market Mentality Index 1990 2012 The Independent Review vol 22 no 4 Independent Institute 2018 pp 569 583 JSTOR 26591762 Noriega Roger F and Andres Martinez Fernandez The Free Market Moment Making Grassroots Capitalism Succeed Where Populism Has Failed American Enterprise Institute 2016 JSTOR resrep03243 Orlowska Agnieszka Toward Mutual Understanding Respect and Trust On Past and Present Dog Training in Poland Free Market Dogs The Human Canine Bond in Post Communist Poland edited by Michal Piotr Pregowski and Justyna Wlodarczyk Purdue University Press 2016 pp 35 60 doi 10 2307 j ctt16314wm 7 Ott Julia C The Free and Open Market Responds When Wall Street Met Main Street Harvard University Press 2011 pp 36 54 JSTOR j ctt2jbtz3 5 Palda Filip 2011 Pareto s Republic and the New Science of Peace 2011 Home Archived 2022 01 27 at the Wayback Machine chapters online Published by Cooper Wolfling ISBN 978 0987788009 Philippon Thomas The Rise in Market Power The Great Reversal How America Gave Up on Free Markets Harvard University Press 2019 pp 45 61 JSTOR j ctv24w62m5 7 Quiggin John 2019 Economics in Two Lessons Why Markets Work So Well and Why They Can Fail So Badly Princeton University Press ISBN 978 0691217420 Archived from the original on 2023 01 18 Retrieved 2022 03 11 Roberts Alasdair The Market Comes Back The End of Protest How Free Market Capitalism Learned to Control Dissent Cornell University Press 2013 pp 41 57 JSTOR 10 7591 j ctt20d88nv 6 Robin Ron Castrophobia and the Free Market The Wohlstetters Moral Economy The Cold World They Made The Strategic Legacy of Roberta and Albert Wohlstetter Harvard University Press 2016 pp 118 138 JSTOR j ctv253f7gh 8 Sandel Michael J 2013 What Money Can t Buy The Moral Limits of Markets Farrar Straus and Giroux ISBN 0374533652 Sim Stuart Neoliberalism Financial Crisis and Profit Addicted to Profit Reclaiming Our Lives from the Free Market Edinburgh University Press 2012 pp 70 95 JSTOR 10 3366 j ctt1g0b72g 9 Singer Joseph W Why Consumer Protection Promotes the Free Market No Freedom without Regulation The Hidden Lesson of the Subprime Crisis Yale University Press 2015 pp 58 94 JSTOR j ctt175729r 5 Sloman Peter Welfare in a Neoliberal Age The Politics of Redistributive Market Liberalism In The Neoliberal Age Britain since the 1970s edited by Aled Davies Ben Jackson and Florence Sutcliffe Braithwaite 75 93 UCL Press 2021 JSTOR j ctv1smjwgq 11 Starrett D A and Hahn F H 1988 Foundations in Public Economics Cambridge Economic Handbooks Cambridge University Press ISBN 978 0521348010 LCCN 87027892 a href Template Cite book html title Template Cite book cite book a CS1 maint multiple names authors list link Stiglitz Joseph 1994 Whither Socialism Cambridge Massachusetts MIT Press Symons Michael Free The Market It s Been Captured by Capitalism Meals Matter A Radical Economics Through Gastronomy Columbia University Press 2020 pp 225 246 JSTOR 10 7312 symo19602 15 Sunstein C R 1999 Free Markets and Social Justice Oxford University Press ISBN 978 0195356175 Tanzi V 2011 Government versus Markets The Changing Economic Role of the State Cambridge University Press ISBN 978 1139499736 Taylor Lance 2011 Maynard s Revenge The Collapse of Free Market Macroeconomics Harvard University Press doi 10 2307 j ctv1m592k8 12 ISBN 978 0674059535 Tomasi J 2013 Free Market Fairness Princeton University Press ISBN 978 0691158143 LCCN 2011037125 pp 226 266 JSTOR j ctt7stpz 12 Turner A 2012 Economics After the Crisis Objectives and Means Lionel Robbins Lectures MIT Press ISBN 978 0262300995 Verhaeghe Paul 2014 What About Me The Struggle for Identity in a Market Based Society Scribe Publications ISBN 1922247375 Vogel S K 1998 Freer Markets More Rules Regulatory Reform in Advanced Industrial Countries Cornell paperbacks Cornell University Press ISBN 978 0801485343 LCCN 96005054 Zeitlin Steve and Bob Holman Free Market Flavor Poetry of the Palate The Poetry of Everyday Life Storytelling and the Art of Awareness 1st ed Cornell University Press 2016 pp 127 131 JSTOR 10 7591 j ctt1d2dmnj 17 External links Edit Wikiquote has quotations related to Free market Free market at Encyclopaedia Britannica Free Enterprise The Economics of Cooperation looks at how communication coordination and cooperation interact to make free markets work Retrieved from https en wikipedia org w index php title Free market amp oldid 1153466120, wikipedia, wiki, book, books, library,

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