Is the Free Market Hopeless?
By Staff News & Analysis - December 29, 2011

Why free-market economics is a fraud … If there's one thing everyone in America knows, it's that free-market economics is true and free markets are best. After all, we're not communists, are we? They starved and lost the Cold War because they believed otherwise. And their watered-down European cousins the socialists? More of the same, only less so. Even liberals get this nowadays. All hail the free market! Trouble is, things "everyone" knows are often wrong. And this is no exception. It's time to start getting honest about a very simple fact: Nobody, but nobody, really believes in free markets. That's right. Not the Republican Party, not the libertarians, not the "Wall Street Journal," nobody. Here's why: a truly free market is a perfectly competitive market. Which means that whatever you have to sell in that market, so does your competition. Which means price war. Which means your price gets driven down. Which means little or no profit for you. Oops! – World Net Daily

Dominant Social Theme: All this talk about the free-market makes us sick.

Free-Market Analysis: We have been watching what we call the Internet Reformation unfold for about a decade now – and as people begin to understand the Way the World REALLY Works, attacks on the concept of a free market have escalated.

As people in the West used the Internet to discover the one-world goals of the Anglosphere elites, all the regular tricks and tropes of those who seek a New World Order were triggered in the US, where the controversy is especially contentious.

At the beginning of the decade, free-market arguments were routinely ignored and when they could not be ignored they were engaged by Socialist Democrats in the US and plain-old socialists around the world.

Later on, establishment free-market types began to endorse free-market arguments on the Internet. But this ended when conservatives came to power – especially in America. George Bush's militarism was the defining point.

After Bush's serial warfare, the schism between the free-market thinking on the Internet and the free-market orientations of the larger conservative media became clear.

Free-market types wanted to minimize government. Turns out that conservatives only want to minimize CERTAIN PARTS of government – mostly in the area of social services. But when it comes to the military-industrial complex and even the penitentiary-industrial complex, conservatives (pro law-and-order ones) are surprisingly sympathetic.

The latest manifestations of this schism centers around libertarian/Republican presidential candidate Ron Paul. As Ron Paul has widened his political success in America, the schism between the establishment – both Democratic and Republican – has widened as well.

Turns out that American libertarians were right all along, from our point of view. There is only one party in America: the Demo-publicans. In aggregate, this establishment facility believes in big government activism – either in terms of militarism, social activism or both.

In fact, as the freedom dialogue has matured, it has become evident that there is even less difference between the two positions than one might think. Many supposed free-market oriented Republicans turn out to be surprisingly accommodative to big state social programs. Many socialist-oriented Democrats are sympathetic when it comes to the military expansiveness of the American Empire.

The polarization fostered by the Internet continually reveals the falsity of last century's conversation. And it shows more clearly every day the starkness of the divide that separates those who really believe in free markets and free-market thinking from those who don't.

Rush Limbaugh, for instance – supposedly the scourge of the Left – turns out to be a big government person when it comes to numerous parts of the Fedgov's role in civil society and policing in America. Michael Savage, another popular "free-market" radio host, just called for the election of Mitt Romney.

A whole slew of supposedly free-market oriented broadcasters at Fox including popular hosts such as Sean Hannity and Mark Levine turn out to be boosters of aggressive American military adventurism. Ann Coulter is anti-socialist but supportive of what is often referred to as the American Empire.

And then there is the alternative Internet media itself. Alternative media was mostly free-market oriented initially. But as Western Intel and its apologists and associates began to penetrate the Internet, it changed.

Many so-called alternative media sites are openly anti-American Empire (and its domestic oppression) but have radically different viewpoints when it comes to solutions. Many of these positions end up being socialist.

Facilities offered by the Democratic Underground, Lyndon LaRouche and Webster Tarpley are just among a few that offer cogent criticism but then call for MORE government as the solution to what ails America and the West.

Recently, World Net Daily, another putatively free-market oriented website, released a broadside against free markets authored by Ian Fletcher, Senior Economist of the Coalition for a Prosperous America. (See excerpt at the beginning of this article.) He is the author of Free Trade Doesn't Work: What Should Replace It and Why. Here's some more from the article:

Naturally, businesses flee perfectly competitive markets like the plague. In fact, the fine art of doing so is a big part of what they teach in business schools. That's why businesses use strategies like product differentiation, so their competition is no longer selling the exact same product they are. That's why they use strategies like branding, so their buyers don't think the products are the same …

The reality is that the past prosperity of America has never been based on pure free markets – starting with the fact that we had the highest average income in the world in 1776 because the colonies had structurally tight labor markets due to the open frontier. (Europeans and other Old World peoples were trapped by the iron law of wages because they had nowhere to go.)

Free, or nearly free, markets do have their rightful place in many parts of the economy, and it would be foolish to sabotage them. But in other areas – above all, in labor markets – our prosperity was based on pricing power.

A number of areas other than labor also worked better thanks to a healthy dose of pricing power. Try advanced technology, for a start. The patent system, which is not natural, is a fairly recent invention, and does not de facto exist even today in much of the world, is one. Innovation doesn't come cheap, and without pricing power for innovators, few companies could afford it.

Even the existence of scale economies, which are intrinsic to modern, large-scale, capital-intensive industry, implies markets that are less than free. Why? Because scale economies intrinsically imply a small number of large producers and thus give rise to oligopoly, with the consequences mentioned earlier.

This is why most other industrialized nations aren't romantics about free markets, are honest about their frequent nonexistence, and focus their policies on taming the negative effects of oligopoly while capturing the positive ones. They understand, for one thing, that big corporations are necessary but often pirates, and focus on making them share their loot with their crews.

We, on the other hand, live in a state of denial about the piracy. So the next time someone tells you to believe in "free" markets, just tell them you'll believe as soon as they do. When pigs fly.

Fletcher is making an argument for government in a variety of guises. He believes that government can be good to protect people from "piracy" (copyright violations) and can protect people's business ventures. We would argue that the free-market can do a better job than government.

Not only that but, as we have mentioned before, every interference with the marketplace via law or regulation ends up being a price fix (distortive of the market). Price fixes inevitably transfer wealth from one group of people (who are creating the prosperity) to those who have not and are not apt to properly utilize the windfall.

in order to justify government in any guise, one needs to justify price fixing and make an argument that price fixing can be an effective socio-civic methodology of wealth building. Fletcher would no doubt argue that tariffs are a good example of positive price fixing because they transfer wealth from those trying to import to those who are exporting.

But what about those who are neither importing or exporting? is it fair to them to lose out by being saddled with higher prices and less economical and efficients goods and services? There is a price for everything in the marketplace, even if it is an invisible one. Those who advocate that government can provide "solutions" are usually leaving out the problems that the additional solutions generate.

After Thoughts

Government, especially big government, causes problems: endless, ongoing and increasing ones. There are only two solutions to such problems. USE government to make the troubles of government go away. Or SHRINK government so that it causes fewer troubles to begin with. Libertarians come down on the side of the latter argument. The idea of using the locus of the problem to SOLVE the problem seems illogical to us.

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