The Free Market

[Jdanz]

is a tool of people, rather then a value of people.

Discuss

[lehighguy]

How about, what does that sentence mean?

[tylerdurden]

[ QUOTE ]
is a tool of people, rather then a value of people.

[/ QUOTE ]

It's neither. It's just the totality of voluntary, mutually beneficial transactions. That's all. It's just easier to say "free market" than "a bunch of independent transactions voluntarily agreed to by all affected parties, without any outside interference."

[Jdanz]

it's a economic system that does something.

It is commonly believedto be the system that provides for the greatest generation of wealth, and i tend to believe that.

However in determining whether we want to use the price setting mechanism that is the free market, we have to determine if that's the goal we have in mind.

Especially because it doesn't account for some non-monetary valuables and it doesn't really deal with distributional issues.

[lehighguy]

The best way to allocate resources is through accurate pricing.

Accurate pricing is based on the value of the thing to be exchanged as seen by the parties involved in the exchange.

[tylerdurden]

[ QUOTE ]
However in determining whether we want to use the price setting mechanism that is the free market, we have to determine if that's the goal we have in mind.

[/ QUOTE ]

This mindset assumes that someone must make a decision and impose a mechanism. The free market is the result of nobody imposing anything.

[ QUOTE ]
it doesn't really deal with distributional issues.

[/ QUOTE ]

It doesn't deal with anything BUT distributional issues. Two parties engaging in a simple trade are doing nothing more than voluntarily redistributing assets.

[QuadsOverQuads]

[ QUOTE ]
The best way to allocate resources is through accurate pricing.

[/ QUOTE ]

The "free market" does not achieve this.

[ QUOTE ]
Accurate pricing is based on the value of the thing to be exchanged as seen by the parties involved in the exchange.

[/ QUOTE ]

$1 in the hands of Bill Gates does not represent the same level of "demand" as does $1 in the hands of a minimum wage employee. An economic theory that ignores this is standing on a false foundation. I'm not saying I have a solution to this, but the problem should at least be acknowledged.


q/q

[SheetWise]

[ QUOTE ]
$1 in the hands of Bill Gates does not represent the same level of "demand" as does $1 in the hands of a minimum wage employee. An economic theory that ignores this is standing on a false foundation. I'm not saying I have a solution to this, but the problem should at least be acknowledged.

[/ QUOTE ]
Just because two people value a unit of money differently doesn't change their demand, or the value of what they purchase. A bottle of Coke cost $1. Is it worth more to Bill Gates?

[QuadsOverQuads]

[ QUOTE ]
Just because two people value a unit of money differently doesn't change their demand, or the value of what they purchase. A bottle of Coke cost $1. Is it worth more to Bill Gates?

[/ QUOTE ]

Re-read what you just wrote:

$1 = $1
1 unit of value = 1 unit of value
1 unit of demand = 1 unit of demand

Therefore: equal dollars represent equal units of demand which represent equal value


Do you see the flaw in your reasoning yet?


q/q

[ACPlayer]

[ QUOTE ]
Accurate pricing is based on the value of the thing to be exchanged as seen by the parties involved in the exchange

[/ QUOTE ]

Hard to see how you can believe this and support school vouchers.

You misunderstand the meaning of "free market."

[tylerdurden]

[ QUOTE ]
You misunderstand the meaning of "free market."

[/ QUOTE ]

Enlighten us, please.

[sammysusar]

yeah well communism accomplished this alot better.

the free market system is flawed but it is still the best system. nothing in life is perfect. governemnt could do a few things such as taxing gasoline and other pollutants to more to compensate for stuff like this. other than that people our better off without any governemnt involvement.

[Il_Mostro]

pvn has a somewhat unorthodox view of the free market. Such as beliving that it was the free market that got us fire and the wheel.

[tylerdurden]

[ QUOTE ]
pvn has a somewhat unorthodox view of the free market. Such as beliving that it was the free market that got us fire and the wheel.

[/ QUOTE ]

I'm still waiting for someone to disprove this assertion. It shouldn't be hard, just tell me which government market intervention led to their creation.

[Il_Mostro]

There was no government involved, ovbiously. But I don't think your underlying premise that the only two possible systems are "govenment market intervention" and the free market is correct. In what way do you mean the free market was responsible for inventing fire?

[tylerdurden]

[ QUOTE ]
There was no government involved, ovbiously. But I don't think your underlying premise that the only two possible systems are "govenment market intervention" and the free market is correct. In what way do you mean the free market was responsible for inventing fire?

[/ QUOTE ]

How is the premise incorrect? There's a third option other than "government intervention" and "the lack of government intervention"? What is it?

The free market is not a force that induces things. It's the absence of intervention, intervention which prevents things.

[Il_Mostro]

And my original point stands. This is an unorthodox view of what the free market is. The idea of a free market among cave men a few 10s of thousands of years ago is not the usual meaning of the word.

[tylerdurden]

[ QUOTE ]
And my original point stands. This is an unorthodox view of what the free market is. The idea of a free market among cave men a few 10s of thousands of years ago is not the usual meaning of the word.

[/ QUOTE ]

What is the free market, then? You seem to imply that there has to be something imposed in order to create a free market. I simply state that "the market" exists whenever there are people that wish to interact - whether those interactions are coercively interfered with or not determines if the market is free or not.

[ QUOTE ]
pvn has a somewhat unorthodox view of the free market.

[/ QUOTE ]

It's sad (and frightening, frankly) that viewing a free market as the voluntary exchange between individuals without outside interference has become so unorthodox.

[sam h]

is a fictitious concept that has never been realized. But it is a powerful idea, and that idea has been used as tool by many people, some for good and some for bad.

[SheetWise]

[ QUOTE ]
Hard to see how you can believe this and support school vouchers.

[/ QUOTE ]
The government can't participate in a free market transaction.

[sam h]

[ QUOTE ]
The government can't participate in a free market transaction.

[/ QUOTE ]

Good point. And this is why the free market has never existed!

[tylerdurden]

[ QUOTE ]
[ QUOTE ]
The government can't participate in a free market transaction.

[/ QUOTE ]

Good point. And this is why the free market has never existed!

[/ QUOTE ]

Government has not always existed.

[sam h]

[ QUOTE ]
Government has not always existed.

[/ QUOTE ]

Social organization in primitive societies emerged historically in response to scarcity, among other needs. They weren't like the governments we have today, but they weren't presiding over markets in the modern sense of the word either.

[tylerdurden]

[ QUOTE ]
[ QUOTE ]
Government has not always existed.

[/ QUOTE ]

Social organization in primitive societies emerged historically in response to scarcity, among other needs. They weren't like the governments we have today, but they weren't presiding over markets in the modern sense of the word either.

[/ QUOTE ]

Circular argument. Markets "in the modern sense of the word" are precisely distortions of free markets caused by government intervention. Of course "modern" markets didn't exist before governments!

[sam h]

[ QUOTE ]
Markets "in the modern sense of the word" are precisely distortions of free markets caused by government intervention.

[/ QUOTE ]

Ok, then name me a historical example of the free market as you define it. Let me know your definition too.

[lehighguy]

"The "free market" does not achieve this."

Explain.

"$1 in the hands of Bill Gates does not represent the same level of "demand" as does $1 in the hands of a minimum wage employee. An economic theory that ignores this is standing on a false foundation. I'm not saying I have a solution to this, but the problem should at least be acknowledged."

What does this have to do with pricing?

[lehighguy]

The parties involved are the parents and the school.

[MMMMMM]

[ QUOTE ]
Ok, then name me a historical example of the free market as you define it. Let me know your definition too.

[/ QUOTE ]

Sorry for butting in, but I'd just like to say that a good example of the free market would be the garage sale down the street. My definition of a free market would be about the same: people buying and selling at prices mutually agreed upon by both buyer and seller.

[sam h]

[ QUOTE ]
Sorry for butting in,

[/ QUOTE ]

Not at all!

[ QUOTE ]
but I'd just like to say that a good example of the free market would be the garage sale down the street. My definition of a free market would be about the same: people buying and selling at prices mutually agreed upon by both buyer and seller.

[/ QUOTE ]

I see where you are coming from M, but don't really understand how that definition differs from the definition of an economic transaction. Even if one narrows the definition to situations in which the initial price is not fixed, this would encompass a great many transactions, including things like buying a car or Dell haggling with Intel over the price of chips.

I think to be a useful concept the free market must operate at the level of the society, rather than the individual transaction.

[Triumph36]

So, if government is solely a coercive force, and the free market existed before government, why did government come about, since clearly the free market was taking care of things before government?

[tylerdurden]

[ QUOTE ]
So, if government is solely a coercive force, and the free market existed before government, why did government come about, since clearly the free market was taking care of things before government?

[/ QUOTE ]

Because coercive people used force to take power. The market isn't a magical force field.

[MMMMMM]

[ QUOTE ]
I think to be a useful concept the free market must operate at the level of the society, rather than the individual transaction.

[/ QUOTE ]

I'm unclear on what the difference would be.

Also, my general perspective is that "society" is essentially a set of many individuals.

[lehighguy]

This may be out of context because I'm jumping in.

Brittian 1500s-1800s (maybe start earlier)
America 1700s - FDR

Are some of the most widely used examples of a free market.

[sam h]

[ QUOTE ]
I'm unclear on what the difference would be.

Also, my general perspective is that "society" is essentially a set of many individuals.

[/ QUOTE ]

The difference is that under your definition there were free markets operating all over the Soviet Union. There is voluntary exchange in every society and under every economic model.

[sam h]

[ QUOTE ]
This may be out of context because I'm jumping in.

Brittian 1500s-1800s (maybe start earlier)
America 1700s - FDR

Are some of the most widely used examples of a free market.

[/ QUOTE ]

I would say they are widely used examples of the closest approximations to a free market that we have seen in modern societies. But these were still societies in which there was a lot of coercive regulation of economic transactions by the state (just not a lot by today's standards) or by local power brokers (like in the earlier part of the English period). They were also historical examples of the proximity of the economic system to a free market eventually leading to enormous societal backlashes which led to much more regulated economies. So while they indicate that a certain level of approximation to the free market has been historically viable at certain periods in the development of capitalism, they are also evidence for the position that such a close approximation to the free market is inherently unstable.

[SheetWise]

[ QUOTE ]
The difference is that under your definition there were free markets operating all over the Soviet Union. There is voluntary exchange in every society and under every economic model.

[/ QUOTE ]
There were free markets operating all over the Soviet Union. At first, the state did everything possible to close them. When they realized the populace would starve if dependent on the state system -- they tolerated them. They simply never recognized them.

[sam h]

[ QUOTE ]
There were free markets operating all over the Soviet Union. At first, the state did everything possible to close them. When they realized the populace would starve if dependent on the state system -- they tolerated them. They simply never recognized them.

[/ QUOTE ]

Thinking about it, I am partly in error. What I am really talking about is a free market economy, which has never existed. This is often referred to in shorthand as a "free market," a useful application of the concept at the level of the society. Free markets as you guys define them certainly do exist all over the place, but I don't often come across this use of the term as it is essentially synonymous with voluntary exchange.

[SheetWise]

[ QUOTE ]
... under your definition there were free markets operating all over the Soviet Union.

[/ QUOTE ]
[ QUOTE ]
What I am really talking about is a free market economy, which has never existed. This is often referred to in shorthand as a "free market," a useful application of the concept at the level of the society. Free markets as you guys define them certainly do exist all over the place, but I don't often come across this use of the term as it is essentially synonymous with voluntary exchange.

[/ QUOTE ]
I usually equate the plural "free markets" to "voluntary exchange".

In any case, the Soviets were a great example. The na levo economy was unregulated, untaxed, and unmonitored. It was the citizens first choice for consumer goods.

It reminds me of a friend I had in Reno in the early 80's -- he had "owned" a casino in Poland, and finally made it to the US. He spent a lot of time complaining about all the "red tape" involved in opening a casino in the US. /images/graemlins/wink.gif

[Cyrus]

[ QUOTE ]
$1 in the hands of Bill Gates does not represent the same level of "demand" as does $1 in the hands of a minimum wage employee.

[/ QUOTE ]

In the free market, this is an elementary concept, though much ignored. The subject is actually covered, quite conclusively, by David Sklansky in a nifty li'l tome (http://twoplustwo.com/books.html#Tournament Poker for Advanced Players), where it is shown how chips change value in accordance to size of stack.

[ QUOTE ]
I'm not saying I have a solution to this, but the problem should at least be acknowledged.

[/ QUOTE ]
Play to win - until the rules change. That's the interim solution.

Or you change 'em.

[Cyrus]

[ QUOTE ]
[ QUOTE ]
So, if government is solely a coercive force, and the free market existed before government, why did government come about, since clearly the free market was taking care of things before government?

[/ QUOTE ]

Because coercive people used force to take power.

[/ QUOTE ]

Besides a couple of obscure historical examples provided by Rothbard, where else can we see this "free market" established in human societies before the middle class moved center stage in western Europe some five hundred years or so ago? How far back you wanna go?

In primitive societies, the notion of capitalism is virtually non-existent, when not "legislated" against.

[Cyrus]

[ QUOTE ]
Government has not always existed.

[/ QUOTE ]

If you were to study History, you would see that whenever Central Government was abolished (and various forms of autonomous governance established), the first thing that was done was mandatory and equal distribution of all wealth.

In the eyes of those anarchists, inequality of wealth meant clearly inequality in freedom.

[tylerdurden]

[ QUOTE ]
If you were to study History, you would see that whenever Central Government was abolished (and various forms of autonomous governance established), the first thing that was done was mandatory and equal distribution of all wealth.

In the eyes of those anarchists, inequality of wealth meant clearly inequality in freedom.

[/ QUOTE ]

So you found some people that replaced one set of oppressors with another set. Big deal.

[tylerdurden]

[ QUOTE ]
Free markets as you guys define them certainly do exist all over the place, but I don't often come across this use of the term as it is essentially synonymous with voluntary exchange.

[/ QUOTE ]

If this isn't what you think of as a free market, what DO you think of? Several people have said "that's not what *we* mean" or "you have a distorted view of free markets" but nobody that's said that has offered their definition. Knowing this would probably help the debate, since we could actually discuss what each other is talking about rather than discussing some vague term that each person has a secret meaning for.

[sam h]

[ QUOTE ]

If this isn't what you think of as a free market, what DO you think of? Several people have said "that's not what *we* mean" or "you have a distorted view of free markets" but nobody that's said that has offered their definition. Knowing this would probably help the debate, since we could actually discuss what each other is talking about rather than discussing some vague term that each person has a secret meaning for.

[/ QUOTE ]

Free market = Free market economy = A societal economic system in which all transactions are free from coercion.

[tylerdurden]

[ QUOTE ]
Free market = Free market economy = A societal economic system in which all transactions are free from coercion.

[/ QUOTE ]

And how is that different from what I've been saying?

[ptmusic]

[ QUOTE ]
[ QUOTE ]
So, if government is solely a coercive force, and the free market existed before government, why did government come about, since clearly the free market was taking care of things before government?

[/ QUOTE ]

Because coercive people used force to take power. The market isn't a magical force field.

[/ QUOTE ]

And if you somehow achieved your anarcho-capitalist state-free existence, what would be your plan to prevent coercive people from using force to take power again?

-ptmusic

[SheetWise]

[ QUOTE ]
Amendment II - Right to bear arms. Ratified 12/15/1791.
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

[/ QUOTE ]

[ptmusic]

[ QUOTE ]
[ QUOTE ]
Amendment II - Right to bear arms. Ratified 12/15/1791.
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

[/ QUOTE ]

[/ QUOTE ]

1. That's a government/state rule - we're talking about a no-gov/stateless existence.
2. Are you suggesting that the existence of guns changes everything to the point that nobody will ever again use force to gain power?

-ptmusic

[JPinAZ]

[ QUOTE ]
[ QUOTE ]
Amendment II - Right to bear arms. Ratified 12/15/1791.
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

[/ QUOTE ]

[/ QUOTE ]

NH

[SheetWise]

[ QUOTE ]
1. That's a government/state rule - we're talking about a no-gov/stateless existence.

2. Are you suggesting that the existence of guns changes everything to the point that nobody will ever again use force to gain power?

[/ QUOTE ]
I take the right to bear arms and defend yourself as a natural right. Am I suggesting it changes everything? No. But, personally, I always feel safest when I'm around people known to be armed.

[tylerdurden]

[ QUOTE ]
And if you somehow achieved your anarcho-capitalist state-free existence, what would be your plan to prevent coercive people from using force to take power again?

[/ QUOTE ]

Is this a "might makes right" argument? We should just give up because some mean people might try to fight us?

What prevents it when there *is* a state already existing? Last time I checked, the existence of a state doesn't prevent either invasion or internal coup.

In fact, the existence of a state makes BOTH of those types of violent power-seizing EASIER, not harder. Without an established government infrastructure, it's much, much harder to exert power over the conquered area.

[ptmusic]

[ QUOTE ]
[ QUOTE ]
And if you somehow achieved your anarcho-capitalist state-free existence, what would be your plan to prevent coercive people from using force to take power again?

[/ QUOTE ]

Is this a "might makes right" argument? We should just give up because some mean people might try to fight us?

What prevents it when there *is* a state already existing? Last time I checked, the existence of a state doesn't prevent either invasion or internal coup.

In fact, the existence of a state makes BOTH of those types of violent power-seizing EASIER, not harder. Without an established government infrastructure, it's much, much harder to exert power over the conquered area.

[/ QUOTE ]

That was a great use of communicative "bridging": you didn't answer the question.

-ptmusic

[ptmusic]

[ QUOTE ]
[ QUOTE ]
1. That's a government/state rule - we're talking about a no-gov/stateless existence.

2. Are you suggesting that the existence of guns changes everything to the point that nobody will ever again use force to gain power?

[/ QUOTE ]
I take the right to bear arms and defend yourself as a natural right. Am I suggesting it changes everything? No. But, personally, I always feel safest when I'm around people known to be armed.

[/ QUOTE ]

I hate to make a personal attack, but, you're weird.

-ptmusic

[SheetWise]

[ QUOTE ]
I hate to make a personal attack, but, you're weird.


[/ QUOTE ]
No offense taken.
We probably run in different circles.

[ptmusic]

[ QUOTE ]
[ QUOTE ]
I hate to make a personal attack, but, you're weird.


[/ QUOTE ]
No offense taken.
We probably run in different circles.

[/ QUOTE ]

Probably right - that's cool.

-ptmusic

[sam h]

[ QUOTE ]
And how is that different from what I've been saying?

[/ QUOTE ]

I'm not sure what your definition is. But if we agree on the definition, then the point of disagreement is empirical. I am saying this phenomenon has never existed historically, you are saying that it has, and I asked you above to give me some examples.

[Il_Mostro]

In my mind a "free market" exists when two, or more, parts exchange goods or services with each other without any interfering entity (you could probably poke holes into this, but see it as a holistic denfition).

So, in what sense was there an exchange of goods or services when some caveman discovered fire? It wasn't like two competing enterprices both offered a solution to have grilled meat instead of raw, and the free market, ie. all other cavemen, decided which of the two they would chose. No, it was some dude discovering that when you bang two rocks together you get sparks.

[tylerdurden]

[ QUOTE ]
No, it was some dude discovering that when you bang two rocks together you get sparks.

[/ QUOTE ]

Right. No coercive "apollo program" was needed to develop fire. The greatest invention ever, an man achieved it without the magical powder that only government can sprinkle on things.

[Il_Mostro]

And how was the free market involved?

[tylerdurden]

[ QUOTE ]
And how was the free market involved?

[/ QUOTE ]

The free market isn't a force that induces things. It is the absense of force that prevents things.

Things don't happen because of the free market, they happen in spite of the fact that government didn't declare that they should happen.

When I say "the free market gave us XYZ" all that means is that the creation of XYZ was not dependent on some overlord.

[Il_Mostro]

Which brings us back to my original point, then. Pvn has a rather unorthodox view of what the free market is.

[tylerdurden]

[ QUOTE ]
Which brings us back to my original point, then. Pvn has a rather unorthodox view of what the free market is.

[/ QUOTE ]

Really? I have the same view you just expressed:

[ QUOTE ]
In my mind a "free market" exists when two, or more, parts exchange goods or services with each other without any interfering entity

[/ QUOTE ]

In other words, lack of coercion. What's unorthodox about this? The "problem" is that you want to think of it as an "institution" of some sort, whereas in reality it is precisely the LACK of any such institution.

[Il_Mostro]

No, I don't think of an institution. I think the market requires exactly what I wrote, people exchanging goods and services, not someone banging rocks together.

But whatever.

[tylerdurden]

[ QUOTE ]
No, I don't think of an institution. I think the market requires exactly what I wrote, people exchanging goods and services, not someone banging rocks together.

But whatever.

[/ QUOTE ]

The *conditions* that exist in a free market allowed man to pursue his own interests. Fire was created in a permissive environment, not a centrally-planned one.

IIRC, this originally came up when you asserted that no great inventions had ever been developed in the absence of government interference. I countered with fire and the wheel. Do you really want to continue this?

[Il_Mostro]

[ QUOTE ]

IIRC, this originally came up when you asserted that no great inventions had ever been developed in the absence of government interference. I countered with fire and the wheel. Do you really want to continue this?

[/ QUOTE ]
If I remember correctly that was not my wording.

But no, there is no need to continue this. I find your views strange and impossible to use as anything but a thought experiment. And I am glad I will never have to live in an anarcho-captialist world.