As the financial world has collapsed all around us we are faced with astounding evidence that not only is free market capitalism a failure, it can bring a country to the brink of destruction. Despite all this there are many people who continue to heartily support free market capitalism complaining that the market was never truly free and the reason for the failure was government intervention. The purpose of this article is to discuss the numerous fallacies within the free market ideology.
A core belief of the free market ideology is that the market is completely separate from government. However this couldn’t be further from the truth. At the very minimum a government will provide the currency for the market forever interlinking them. Markets such as our current system include national defense to ensure the stability of the currency. Infrastructure such as roads and rail which is used to transport labor and goods is also created by the government. Also included in our system is public education which helps the market by providing it with an educated workforce. Thus the argument for government provided higher education would only help the market. Same with single-payer healthcare, a healthier workforce is a more stable workforce. Ultimately, there is no way to separate the government from the market.
Some will continue to argue that we must completely remove government from the market, even if it means allowing banks to issue currency. By doing so they argue, the market will truly be free. But what will this lead to? Likely a successful corporation will increase in size till there are no more competitors left. With this accomplished it can keep its stranglehold on the market by utilizing its enormous wealth to squash any competition. It will result in a market where all the power is held in a few hands and little economic activity will be able to take place without their approval. Since capital is required to launch any new idea, exactly what will keep monopolies from forming in this “free market”?
But what really is the difference between the government and corporations providing services? According to free market theory the consumer wants something. A corporation will then supply the product to meet that demand to earn a profit. However if a different company provides a better (whether it be in quality, price, or whatever) the consumer will buy said product. What will entice corporations to develop these better products is profit. So development is tied to profit and the ability for someone to decide the best option is tied to their wealth or buying power. In government the people will also want something. A politician will then come along and promise to provide the people with what they demand. What will entice the politicians to continue to develop better products is re-election. However if the politician does not provide what the people want they will be replaced in the coming election. In this case development is tied to the job of the politician the ability for someone to decide the best option is tied to having a majority of people support it. Which system is preferable? In the free market those who have the most wealth make the decisions while in government the majority of people decide. People in the free market will only do something if there is profit to be made off of it while in the government things will be done to keep their job. While both have their problems I feel the government is superior as a majority of the people will feel the consequences of their decision, while in the free market what affects everyone will be decided by the minority.
Along with the idea that the market is the answer to everyone’s problems is the belief that the government is completely incapable of providing anything. But why do they believe this? Aren’t corporations staffed by people just like government? What precisely is the difference between those employed in government and business? The success of both relies on employing the proper people. If anything, the problem with government is that they don’t do enough to draw the right people to work for them.
In many ways however the government is actually superior to the market in providing services to its citizens. First and foremost government can operate with lower overhead than a business. This is because the government has no requirement to produce a profit like a business. Secondly it is easier for the average person to replace a politician than to hope a corporation makes available what they demand. Lastly the biggest stumbling block to developing something in the free market is the lack of capital. However government overcomes this by providing the necessary capital to those whom the people elect into office to carry out these ideas.
The most important question to ask of the free market is have there been any successful examples of it being implemented? No such example exists and numerous countries have tried to implement it (see South America). Europe is the best example of successful mixed economies where the government provides some services and the market others. The response to this usually is “I wouldn’t want to live in Europe because I’d have to wait 6 months for a mammogram” or “taxes will be so high I’d live in poverty.” Clearly the obvious is overlooked. Not only are we trailing model mixed economy countries in healthiness but also in standard of living. By going towards a more free market we are moving in the wrong direction. Evidence supports the belief that more government intervention will result in a better life for everyone.
The “free market” has failed on all fronts. The belief that government and the market can be separate is not feasible. Even if it could be separate it truly wouldn’t be free as nothing will stop monopolies from forming. The whole basis of the theory is unjust as those who hold the wealth hold the power. A reasonable argument cannot be made as to why the government is incapable of doing the same things as corporations. In fact, the government can be seen as a superior to corporations for providing certain services. Lastly and most importantly this failed ideology has yet to produce one real world example of how the system could be implemented to the benefit of the many rather than the few. The free market has collapsed on itself like a house of cards and is destroying the lives of millions of people. Its time we let this theory ride off into the sunset as we did with communism in 1990.