23 Things they Don't Tell You About CapitalismBy: Chang Ha-Joon
Major Topic: Economics
Minor Topic: Politics
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Thing 1: There Is No Such Thing as a Free Market
We are told that a market must be free in order to maximize the benefits to all people; that when the government interferes with the free market it necessarily introduces inefficiencies that make us all less well off and interfere with our right to choose. Who, other than ourselves, can possibly know what we want and, in the aggregate, who, other than the market, can tell us what we want?
The truth is a both little bit more complex and a little bit more simple: There is no such thing as a free market because every market has some rules. If the market looks free it is because we have accepted the rules so much that we do not even notice them anymore. But the truth is that every market has many rules that are arbitrary but necessary.
The freedom of the market is really a political decision as to what is morally acceptable in a society. If you agree with the morality that backs the rule then you see a free market without any interference. On the other hand if you see an unjust or unfair government intrusion into the market then you disagree with the moral principle that rule seeks to address.
For example if you believe that everyone should have the right to chose what to do you may be willing to support the freedom of children to work in factories if they so desire. On the other hand, if you believe that children should not be allowed to work and must spend their time in school you would support child labor laws. Today almost everyone believes that children should not work in factories. In the past most people thought that children should work in factories. Times have changed and so have attitudes. These attitudes are reflected in the rules of the market.
The author claims that everything in the economy is regulated by sometimes overt rules and at other times unspoken rules. All prices, all wages, all actions too, are in fact political decisions that could be different.
All this shows that the free market is a myth. In fact it is more than a myth: it is a tool of any one side in a moral and political debate. The key lesson is that when someone uses the free market as an argument it really reveals their moral and political interests and prejudices.
Added on: 2012-10-05 11:32:17
Text Crawl by: James McLaren
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