The Meaning of a Free Market

There’s something that’s always bothered me about the concept of a free market, and I suspect it bothers others too. A free market is supposed to allow the free interactions of its many participants. Intervention by the state is exactly what doesn’t happen in a free market, by definition.

But the state is composed of people too. It’s an organization – a unique one, for sure, but an organization nonetheless. Why treat it as something extraneous to the market, imposing on it from without? Why not consider state regulations of the market to be just the contributions of one of many market actors in a free market? Isn’t the state/market distinction ultimately arbitrary? What, in principle, is so different about the state?

Behind these questions lies an important insight into how to best bring about the emergence of a truly free market.

 

Let’s first imagine that a free market is simply everyone doing whatever they choose.  Of course, this doesn’t mean everyone has unlimited options. Each person’s actions will impose constraints on the actions of everyone else. I cannot, for example, buy eggs if no one around me sells eggs. These inevitable constraints aside, let’s not stipulate any other limitations.

This scenario is “free market” at its extreme: it lets the “free it all!” disposition run full throttle to its logical endpoint.

Notice that this state of affairs is what we already have. Everyone – including all market actors, including the state – is already doing whatever they choose within the constraints imposed by the actions of others.…

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