The Myth that Capitalism Encourages Free Markets

[Sunstone]

Some people say that capitalism and free markets go hand in hand.

That is, they believe that, under capitalism, free markets are likely to emerge in which the price of goods and services are driven down by competition to nearly the costs of production.

And, so far as I can see, they believe in that notion without much in the way of historical evidence to back up their largely blind faith that capitalism typically promotes free markets.

But, for anyone who believes capitalism leads to free markets, what evidence do you have of that?

By "evidence", I mean, for the most part, empirical observations supported by logical reasoning. Mere logical reasoning alone -- that is, reasoning unconfirmed by observations -- is inadequate because it all too readily leads to wild flights of rationalization masquerading as fact-based theory.

 

[Quintessence]

I would think these things would be very hard to assess, because you can't do a controlled experiment when it comes to such affairs. You'd have to do a large number of correlational studies - assuming you could get good data for them - to the point it builds an overwhelmingly solid case for causation. I'm not sure how one could go about such an endeavor, because I'm skeptical that good data exists. What, for example, would be another "free market" we could compare capitalistic systems to? How would we tease out the confounding factors involved given we'd probably be comparing to completely different countries or historical eras?

 

[Revoltingest]

Complex systems in general don't lead to a singular extreme outcome. Free markets are just one of many traits which arise in combination in a system response under capitalismt. Monopolies are another, for example. Each of these 2 is vulnerable to attack by the other, & a chaotic (short time frame) balance results. Consider the PC. It once looked like Microsoft would dominate the operating system market, but the market became more free as Apple resurged, & other minor competitors arrived. Competition was (& is) healthy. The net effect is that one may thumb one's nose at Bill Gates, & buy a non-Microsoft product. So long as we have government preventing monopolies, & not creating them, free markets will reign.
Economics is never so simple as having a tendency for a certain outcome always have that same effect at all times or to the maximum degree prophecized by zealous adherents. Still, free markets look healthier under capitalism than any alternative system.

 

[Tarheeler]

Some people say that capitalism and free markets go hand in hand.

That is, they believe that, under capitalism, free markets are likely to emerge in which the price of goods and services are driven down by competition to nearly the costs of production.

And, so far as I can see, they believe in that notion without much in the way of historical evidence to back up their largely blind faith that capitalism typically promotes free markets.

But, for anyone who believes capitalism leads to free markets, what evidence do you have of that?

By "evidence", I mean, for the most part, empirical observations supported by logical reasoning. Mere logical reasoning alone -- that is, reasoning unconfirmed by observations -- is inadequate because it all too readily leads to wild flights of rationalization masquerading as fact-based theory.

It can only happen if outside agencies force it to.

Our economy was largely unregulated (and was as free as it could get) until the beginning of the 20th century, and was characterized by monopolies, price fixing, cartels, and other vehicles of unbridled greed. The average American was only slightly better off than the serfs under feudalism, and providing their families with the bare necessities to survive often kept them in abject poverty.

 

[Alceste]

It can only happen if outside agencies force it to.

Our economy was largely unregulated (and was as free as it could get) until the beginning of the 20th century, and was characterized by monopolies, price fixing, cartels, and other vehicles of unbridled greed. The average American was only slightly better off than the serfs under feudalism, and providing their families with the bare necessities to survive often kept them in abject poverty.

Ah, the good old days!

 

[sandandfoam]

I'd rather live in a functioning society than a functioning market. It seems to me that advocates of capitalism tend also to be advocates of free markets. The well-being of others is not often high on their agenda.

 

[Alceste]

Some people say that capitalism and free markets go hand in hand.

That is, they believe that, under capitalism, free markets are likely to emerge in which the price of goods and services are driven down by competition to nearly the costs of production.

And, so far as I can see, they believe in that notion without much in the way of historical evidence to back up their largely blind faith that capitalism typically promotes free markets.

But, for anyone who believes capitalism leads to free markets, what evidence do you have of that?

By "evidence", I mean, for the most part, empirical observations supported by logical reasoning. Mere logical reasoning alone -- that is, reasoning unconfirmed by observations -- is inadequate because it all too readily leads to wild flights of rationalization masquerading as fact-based theory.

Won't happen. Free market capitalism is a religion, not an economic theory. Those who support it are true believers, like the creationists in the evolution forum. For evidence, you'll get nothing that doesn't come from the high brow corporate ad agencies Cato institute or the Heritage foundation, just as the creationists refuse to link to anything other than AiG.

 

[Tarheeler]

Ah, the good old days!

Unfortunately many seem to see them as just that.

 

[Sunstone]

I would think these things would be very hard to assess, because you can't do a controlled experiment when it comes to such affairs. You'd have to do a large number of correlational studies - assuming you could get good data for them - to the point it builds an overwhelmingly solid case for causation. I'm not sure how one could go about such an endeavor, because I'm skeptical that good data exists. What, for example, would be another "free market" we could compare capitalistic systems to? How would we tease out the confounding factors involved given we'd probably be comparing to completely different countries or historical eras?

If you want to study a free market, take a look at the early US railroads in the 1800s -- before their capitalist owners went clamoring for government handouts and protection from free markets.