Free Market Mythology

The dominant ideology of the neo-liberal period seems to be that of “free-markets”. Free-markets are an idealized form of market that is only regulated by the internal logic of competition. Many people would suggest that modern capitalist democracies operate on free-markets. Others would say that in countries like the United States massive bureaucratic regulation of the economy makes free markets impossible. Others have even said that free-markets are suppressed by capitalism and the only way to truly have free-markets is to dismantle capitalism. From this it should be obvious that what is meant by the “free-market” is increasingly hard to gauge and the term takes on multiple different meanings at a time. This piece will deal simply with the definition given above, that is a market that is not regulated by the state and is regulated only by the internal logic of competition.

I should probably define what a “market” is before we move forward. A market is when things are produced to be directly exchanged for others rather than produced to be directly consumed. Markets arose in feudal society when peasants had a surplus that was not taken by the lord and was more than they needed for subsistence. They would sell this surplus to each other on markets. For most of human history society produced things to be directly used rather than exchanged. With the advent of capitalism the market has penetrated every sphere of industry and everything is produced to be sold. Most Capitalist ideologues talk about a “free market” not regulated by the state in any fashion. This type of market is largely a myth especially in capitalist society. The capitalist class needs the state to enforce it’s property rights, restructure after crises, and regulate financial markets. Free market capitalism doesn’t and has never existed. As Karl Marx stated “the state is the executive committee of the capitalist class”.

The idea of “free markets” came from economists studying small feudal villages and can’t be applied to a large industrialized society. Markets arose with states, not against them, but in conjunction. States have always been present to regulate markets and there more or less hasn’t been a market without a state. Markets need states to enforce the property relations that they are based on. There is in effect, no such thing as a “free market”.

Free market mythos is largely a way for the capitalist class to propagate the idea that capitalism = freedom of choice. This is not completely wrong. We can choose which soft drink we want, which brand of computer, but the direct producers (workers) can’t choose to own the product of their labor, nor control the tools which they use to make such a product. We can’t choose to not have a ruling class. We can’t choose to live in a society without alienation. We can’t chose weather the ruling classes of our country exploit the resources of the third world or declare war on another country. Capitalism does = choice, but this is not a free choice. It is the choice of work and produce for the capitalist class or fail to gain the means of subsistence, live in poverty, or die.

Much of the free market ideology comes from the libertarian right which was founded by a cartel of large US corporations. Today libertarian “institutions” like CATO are used by front groups (propagandists for companies) to promote an ideology which will serve their interests. These front groups are the same organizations that suppressed the connection between smoking and health issues for Tobacco companies for decades. Right wing libertarianism was constructed to further ideas that endorse the deregulation of large companies. Essentially right libertarianism is neo-pinkertonism that seeks to perpetuate the power of capital over labor.

Markets themselves are coercive institutions that allocate power to those who can effectively participate in exchange. People have to exchange the product of their labor to compete and thus have to adhere to the amount of labor time socially necessary to produce a commodity. Markets as such don’t provide for people’s needs.

If we want a free-society we need to abolish markets in favor of a society with production directed at meeting human needs rather than producing for exchange.