On “Free” Markets

by James Hanley
Part II: Dedicated to all the quiet folks who read part I. I’m still astounded that despite my repeated disavowals some folks were certain that I was arguing that that modern markets can exist without third-party regulation. But that insistence alone makes this post worthwhile, because–here’s the fun part–this post is predicated on the opposite claim; that modern markets do require that kind of regulation. How about that? Let he who has ears to hear, hear.

In that post I explicitly did not want to delve into the issue of “free” markets. I just wanted to focus on whether it was possible for a market to exist without third-party regulation, without getting hung up on that troublesome concept “free.” I think I demonstrated my point. Some think I didn’t, but I found them unpersuasive. Oh, I was persuaded to tuck in the corners here and there, and move an example or two outside the bounds of what constituted a market, and that was all fair and good. But to my mind nobody successfully rebutted the claim that at least some of those examples were both markets and unregulated by third parties.

In fact several people agreed that they were both markets and unregulated by third parties, and found that fact entirely banal, and the examples trivial. Exactly–that was my very point. In fact I openly stated that it was my point. And still people couldn’t grasp it (I’m sure there’s a lesson about communication in there, but that’s not my field, so I’ll leave the ruminating upon that to others).

So here’s my opening position, from par I: There are in fact such things as unregulated markets, but the examples of such are trivial, and without much, if any, relevance to the modern type of markets in which we engage.

And here’s why that triviality matters. If any market can be indisputably be called a free market, it is a market that is not regulated. And those markets are trivial. Let that sink in. Hanley, that fishing libertarian, is saying that the only markets that can indisputably be called free markets are the most trivial markets.

Pause. Re-read. Understand what I am saying. Allow me that position. I don’t mean agree with me. I mean allow me to hold that position, and before we move on, resolve that you will not claim I am holding some different position.

Moving on.

Every important, non-trivial, market has some degree of third-party regulation. But does that make them un-free? That has not been demonstrated. That we can call an unregulated market a free market does not logically entail that a regulated market is in fact un-free. Freedom may depend on something other than just the presence or absence of regulation. So what would that something other be? Presumably the degree of regulation, or the type of regulation. And suddenly we’re in thick mud, prospects for agreement nil. I could point out that free/unfree is a clunky binary variable, surely a false dichotomy, and that we ought to be looking at it as a continuous variable ranging from various degrees of “less free” to various degrees of “more free.” Logically, that’s the more defensible way to go, but what would it really accomplish? We’d never come to agreement on how to operationalize and measure the variable. Never. Prospects for agreement nil.

Let’s face it, the moment we attach the word “free” to the word “market” the shouting begins. Even when I detached the word people shouted about it. The absolute best we can hope for is agreement on a set of very trivial cases (and even there, it seems, we can’t get unanimity on whether those are actually free markets).

So can we just agree that the term “free market” is a useless shibboleth? It’s imbued with particular meanings by both its adherents and its critics. Yes, I’m criticizing libertarians, too (and god bless my critic who was so quick to notice how I mocked liberals in the opening of that first post, and utterly failed to notice how I mocked libertarians–in such ways do people reveal themselves). I have no patience with the impassioned cry of “free markets!” in response to every regulation. S0₂ and mercury emissions from coal-fired power plants aren’t part of a free market–they’re an externality imposed on folks downwind. Regulating them may not be a “free” market, either, but getting rid of the regulation doesn’t make the market “free,” it leaves it as a market with a failure, an externality, a cost imposed on others without any compensating benefit. You might as well club someone in the head for their money and call it a free market (which, ironically, one commenter circuitously did).

So libertarians, kindly STFU about the phrase, please. You’re doing more harm than good to our cause with it. And you liberals, chill out. 90% of the time the word isn’t actually meant the way you think it is–almost never does a libertarian mean we should have no regulation at all. It just means, well, probably some lesser amount of regulation than you want, which might mean very little regulation, but given how much regulation you all sometimes ask for could leave “less” still meaning a substantial amount. But when you do the call-and-response with libertarians (“Free markets!” “There’s no such thing!” “Free Markets!” “There’s no such thing!”) you really do come off sounding just as unthinking as those wild-eyed gun-toting, Rand-lovin’ would-be-Galtian libertarians you hate so much. Absolutism is just so yesterday–we don’t need any more unyielding ideologies leading us to try to exterminate each other.

My argument is simply that “free markets” is too contested to be a meaningful concept, except in that mostly meaningless realm of trivial cases. So we shouldn’t use the words. Not libertarians. Not liberals. Because it’s not a trump card for either side. Libertarians should realize that liberals are going to interpret it as meaning that we ought to allow the Chinese to sell our children toothpaste with arsenic. Liberals should realize that what they’re rejecting when they dismiss it is not what libertarians are actually asking for.

So what are libertarians really asking for, and what phrase should we all be talking about, instead of that useless and substantively empty term “free market?” Well, this post is already too long, and as much as I was disinclined to continue at all, I’m just going to have to leave that one for another day and write a third damned post on the topic. But hey, that one will be the “what do women libertarians want post that’s never been written. So there’s your cliffhanger.