April 27, 2014

it’s time to abandon the term “free market”

Filed under: — cwage @ 6:28 pm

Libertarians of all stripes would be well-served to abandon the term "free market". I know it's near and dear to a lot of them, and I get it, I do: the words should hardly be controversial -- who among us can deny the value of "freedom" and "markets"? (well, many can and do, but that's neither nor there). There are a few reasons the phrase has lost all useful communicative value:

1) Many people misunderstand our governmental and economic status quo. They see our system as a fight between "capitalism" and "regulation" -- "capitalism" being a poorly defined/understood bogeyman: a sort of Hobbesian corporate state of nature, in which evil corporations run amok in a battle royale, dragging society and the environment down with them. Therefore, "Free Market" to them does not mean what it does to most libertarians. It means the absence of the regulation keeping this nightmare scenario from unfolding -- a precarious balance only barely kept in check by the unflagging efforts of the modern progressive.

2) The term has been coopted by conservative/right-leaning politicians seeking to "privatize" elements of government function. Though they use the term "free market" to justify and earn the sympathy of their constituents, the ultimate goal is not a free market, but mere profiteering. Any politician seeking or in office who claims to want to limit government and promote freer markets is at best disingenuous, as the advocacy of free markets is unlikely to be accomplished via legislative fiat. As Steven Teles pointed out in last week's Econtalk, most attempts at privatization only further the entrenchment of a social/"public" function of government (with a few more hands in the till, to be sure):

Some of the largest consulting firms, especially around here in the Washington, D.C. area, their primary and in some cases the exclusive purchaser of their services is government. And I think some of that's come from the fact that conservatives thought that if we actually, even if we are going to perform, if some function is going to be considered to be social, if we can push it out into the private sector then that private sector will become a lobby for further privatization. But in many cases those private contractors become a lobby for the continuing socialization of the function, so long as they are the ones who end up getting the benefits.

3) Consequently, the term has also (fairly) been vilified by leftists who look at the consequences of purportedly "free market" policies, and see nothing but exploitation of the system. However, they also, unfortunately, use the term as a pejorative to denote/signal to their constituents that corporate profiteering via privatization is imminent -- to the detriment even of potential governmental policies that could actually help encourage a truly freer market.

If libertarians truly want to change the minds of others, they should abandon this unproductive phrase. For all the reasons above, it does nothing but conjure up an aura of harmful exploitation. Instead, focus on what is (for some) at the heart of libertarian ideals: opposing coercion/aggression. "Anti-aggression" is a phrase likely to get you a lot more traction in any discussion with your average statist, because it focuses the conversation on something which libertarians share quite deeply with most liberal statists: the deeply held belief that aggressive violence is harmful. From here, a genuine conversation about the trade-offs we make with respect to freedom is much easier, or at least it cuts to the heart of fundamental disagreements much more quickly. Waving the flag for "free markets" might score points with people that already agree with you, but it will do nothing but confuse and confound potential allies who grossly misunderstand your goals.

  • Colin McCormack

    Open Source Markets then? Just sayin', you are expressing common cause with no less than Richard Stallman, and over a seemingly similar distinction.

  • http://fancycwabs.com fancycwabs

    I'd be more open to libertarian views if I could see clear, specific examples of where it works. A city, state, or country that's the successful libertarian model for everyone else to emulate. We socialists have plenty to choose from, although we kinda get tired of folks telling us to move to Scandinavian countries if we don't like America.

    • cwage

      This is the germ of a longer post, but a few key things here: the glib answer I could rattle off is that I, too, could ask you to show me a clear, specific example of where socialism works, and I would point out a half-dozen examples of genocidal atrocities committed in the name of the state that strike me as objective failures. You perhaps would point out that those are exceptions/extremes, and that the current status quo is a "healthy compromise" -- socialist democracy. But this is a boring argument to have. Let's take a wider view:

      States, defined broadly as entities/institutions existing and persisting via coercion of individuals, are a relatively recent phenomenon -- on an evolutionary timescale, I mean. Our species, depending on where you pinpoint the divergence, is roughly 5 million years old. Modern nation-states, on the other hand, are the product -- an emergent phenomenon -- of only a couple thousand years.

      So to ask for "clear, specific examples" of alternatives to statism presupposes that statism, this recent emergent phenomenon, is a default or good thing, when in reality it very much remains to be seen what statism evolves into. Anyone that has lived through a state genocide or the nuclear standoffs of the cold war may not have such a rosy view of the potential outcome. (http://c4ss.org/content/26417)

      Instead, the question that has to be answered by statists (by all of us, really): What is the problem that statism solves and by what criteria do we judge the outcome as "good"? Population? Well-being? Is the survival of the human species more important than others? These are not easy questions. Statism presupposes that any one or group of individuals can not only answer them but can effectively direct staggeringly huge numbers of individuals in that direction. What if they are wrong? Mike Huemer, in his "In Praise of Passivity" (http://studiahumana.com/pliki/wydania/In%20Praise%20of%20Passivity.pdf):

      Perhaps, one may hope, human beings will one day attain a scientific understanding of society comparable to the modern scientific understanding of most aspects of the natural world. On that day, we may find ways of restructuring society to the benefit of all. But we cannot now predict what that understanding will look like, nor should we attempt to implement the policies that we guess will one day be proven to be beneficial. In the meantime, we can anticipate many pretenders to scientific accounts of society, after the style of Marxism. These will be theories resting on dubious premises that only certain political ideologues find convincing. These ideologues may, as in the case of the Marxists, adopt the quintessentially unscientific attitude of regarding those who question the ideology as enemies to be suppressed.

      Political leaders, voters, and activists are well-advised to follow the dictum, often applied to medicine, to “first, do no harm.”

      So to get back to your request for examples, I would suggest that we look to the millions of years of evolution prior to the emergence of the modern nation-state for hints. There are tribal societies that have persisted without too much statist interference. The Somali "Xeer" system of law is one in particular that is fascinating. I'd recommend reading this if you have time: http://www.arts.uwaterloo.ca/~jnarveso/TeachingMaterials/LALL%20Political%20Phil/Somali%20law.pdf

      • http://fancycwabs.com fancycwabs

        I always thought Somalia was the joke liberals used to characterize the "ideal libertarian state," but that's actually the example you cite.

        My counterexample of how I want the US to be is Sweden. I would like the US to be more like Sweden. Or Finland. Or the UK. Or Canada. Or France.

        • cwage

          I get that response a lot -- I'd be curious to hear you unpack your opinion of Somalia a little more.

          • http://fancycwabs.com fancycwabs

            Reading through the paper, my first thought was "Well, this makes a certain degree of sense in the 'social justice' idea, and it's true that the prison system in the US has long been in need of reform, especially in terms of 'victimless crime.'" My second thought was "Huh. This system seems ripe for exploitation by organized crime."

            I can't claim to know much about daily life in Somalia, but based on what little I think I know, my second thought seems to have at least some credence--if the man stealing your Rolex in the example provided in the paper is connected to a powerful family with sociopathic tendencies, you have no recourse of justice beyond becoming powerful and sociopathic yourself, or aligning yourself with a powerful sociopath.

            Which makes emergence of factions of "warlords" something that makes sense--powerful individuals enforcing the social compact inside their own organization but making crime against those outside the faction not only legal, but a justifiable way to increase power and influence inside the organization.

            Again, not an expert on Somalia, or libertarianism (hence the question--I certainly do not intend any disrespect). It does seem that by most western metrics (GDP, Life Expectancy) Somalia does far worse than its closest neighbors (10% shorter life expectancy, 1/8 the economy of neighboring Kenya, and faring even worse in comparison to Ethiopia), but I don't know enough about comparative systems of government or time free of (or subject to) colonial influence and exploitation to know if those failures are the result of a misguided system of government or some other contributing factor.

          • TheNuszAbides

            "Huh. This system seems ripe for exploitation by organized crime."

            which distinguishes it from what, exactly? please share with the class any human invention or process that cannot be exploited by bad actors.

        • TheNuszAbides

          more like the UK? just go for the low-hanging fruit, why don't you...

      • TheNuszAbides

        got a 404 for 'in praise of passivity' :(

  • http://theauntiewarhol.wordpress.com/ Auntie Warhol

    See Also:

    http://www.cato-unbound.org/2008/11/10/roderick-t-long/corporations-versus-market-or-whip-conflation-now
    http://mises.org/daily/2099

    [Now I think the word "capitalism," if used with the meaning most people give it, is a package-deal term. By "capitalism" most people mean neither the free market simpliciter nor the prevailing neomercantilist system simpliciter. Rather, what most people mean by "capitalism" is this free-market system that currently prevails in the western world. In short, the term "capitalism" as generally used conceals an assumption that the prevailing system is a free market. And since the prevailing system is in fact one of government favoritism toward business, the ordinary use of the term carries with it the assumption that the free market is government favoritism toward business.

    And similar considerations apply to the term "socialism." Most people don't mean by "socialism" anything so precise as state ownership of the means of production; instead they really mean something more like "the opposite of capitalism." Then if "capitalism" is a package-deal term, so is "socialism" — it conveys opposition to the free market, and opposition to neomercantilism, as though these were one and the same.

    And that, I suggest, is the function of these terms: to blur the distinction between the free market and neomercantilism. Such confusion prevails because it works to the advantage of the statist establishment: those who want to defend the free market can more easily be seduced into defending neomercantilism, and those who want to combat neomercantilism can more easily be seduced into combating the free market. Either way, the state remains secure.]