Disparaging Free Markets--Despite Their Superior Results


As long as I can remember, market mechanisms (self-ownership and liberty in the economic sphere) have been widely disparaged. That disrespect for letting others choose their own arrangements voluntarily, despite both unmatched results and superior ethics (e.g., not violating “thou shalt not steal“), has always been a depressing commentary on economic misunderstanding.

But it largely results from fake news, from before that was a “big thing.”

People are inundated with undeservedly negative misrepresentations about market arrangements and undeservedly positive misrepresentations about government throughout their lives, emanating everywhere from the mainstream media to elite universities.

The underappreciation of what individuals can accomplish without violence, and the overselling of government dictates backed by the threat of violence as offering solutions, places a heavy thumb on people’s evaluation scales in favor of the state.

Say we were analyzing some new government policy. If we were being intellectually honest, we would do our best to identify and estimate the magnitudes of all the beneficial and adverse consequences. Then we would evaluate whether we believed the benefits justified the costs.

Suppose we agreed that the costs outweighed the benefits by $5 million, expressed in monetary terms. Would we agree in opposing that intervention? Not necessarily, if we thought important other things were not equal.

What if you thought that the market process harmed society, beyond the results generated? You would include that in your evaluation. If you believed that extra harm imposed $8 million in added costs to those in society, it would override other considerations, and government intervention would “win” your endorsement even when it “loses” in terms of results.

By attributing a great enough weight to supposed harms from market processes, almost any government intervention could be claimed as justifiable. And even convincing demonstrations of government inadequacies and failures would then do little to dent backing for foolish interventions.

Such cases include viewing markets as meanly competitive (even “cutthroat”) and miserly, versus “cooperative and generous” government, or that market arrangements “use (or exploit) people,” and encourage greed and misbehavior, because “they make everything about money.”

Such beliefs would dramatically distort people’s judgments. Where government is also falsely viewed as having wisdom for every issue and balm for every hurt, the biases compound.

For example, consider believing that market behavior represents “dog eat dog,” Darwinian “survival of the fittest.”

Given that real incomes and the sustainable population of the earth both accelerated only after the idea of respecting individuals’ property rights and the Industrial Revolution began to take hold, such views are preposterous. Market arrangements, instead, have made far more people far more fit—for not just survival, but prosperity.

“Dog eat dog” imagery is also preposterous. It ignores production and exchange. As Adam Smith noted, dogs do not produce for, nor exchange with, one another, unlike humans’ “propensity to truck and barter.” The resulting zero-sum circumstances can produce vicious behavior.

But for people coordinated by market mechanisms, each person must first benefit others by attracting their voluntary cooperation, before he or she can employ the resources acquired to procure more of what they want. Voluntary production and exchange turns a zero-sum game in their absence into a massively positive-sum game, where benefiting myself is a byproduct of benefiting others.

Further, those not absolutely best at something in free markets don’t die. Everyone continues to benefit from markets’ superior production and exchange results, and flexible prices direct each of us toward what we do relatively better for others.

What dies are actually products and services that consumers find inferior and organizational forms that are less effective for the productive circumstances at hand—“creative destruction” deaths that are essential parts of improving consumers’ lives.

The calumnies directed against voluntary market arrangements, founded on the protection of ourselves and what we produce from domination by those more powerful, are false.

What economic freedom offers is the opposite of a “dog eat dog,” Darwinian “survival of the fittest” world. It advances our well-being by enabling superior cooperation from vast numbers of others, because it benefits them as well.

On the other hand, government uses its coercive power to commit such abuses every day, and triggers scorched-earth campaigns to control that power at others’ expense.

It is the most powerful and pervasive violator of our rights, not a source of utopian solutions to problems of social cooperation. Indeed, other things aren’t equal when government actions displace voluntary ones—they are far worse.

Gary M. Galles is a Research Fellow at the Independent Institute, Professor of Economics at Pepperdine University, and Adjunct Scholar at the Ludwig von Mises Institute.