War is the original sin of markets. Because a political state is necessary for markets, and political states form themselves through war. At least I have great trouble thinking of one that didn’t. Norway may be an exception. It peacefully split off from Sweden at the beginning of the last century.
War, or said more politely Defense, is one of the nine reasons the Free Market is a false concept because it’s hard to buy and sell when the Huns or the Canadians are riding horses or tanks through your living room. More importantly, even if a free market existed, it would do a lousy job providing security. There is a market failure there. We enjoy security collectively. If we decided that everyone would be responsible for their own security, we would have a Hobbesian state of nature, not the ability to walk down the street without worrying about getting whacked.
We continue here, in my ongoing series, Nine Reasons Why The Free Market is a False Concept. I’m adding one reason a day. Here goes Reason Number Five.
In the Middle Ages, it was common when disputes arose or allegations of criminal offenses to do something called “The Ordeal.” Most were variations on this kind of thing: you grasped a red hot stone for a required length of time. Then if you were able to do that, your burned hand was bandaged up. In three days, it was unwrapped. If the wound was infected, you were guilty. If not, you were innocent or telling the truth.
Such was the law. But centuries passed, and the law progressed. Sort of.
In honor of the great story this morning by Shaila Dewan in the New York Times, I’m pushing up in my order of attention an institution that Shaila focuses on and is a another reason the Free Market is a false concept: Cooperatives.
Cooperatives show the free market is a false concept because co-operatives are wonderful ways to organize an economy, or as part of an economy, yet they are nowhere in the standard free-market models of economics. Yet there is nothing fascistic or communistic about co-operatives; they are simply one of the many institutions or market structures an economy can include. Co-ops are an example of successful experimentation with market institutions, one that produces fairer and more stable returns. It’s an example of the type of experimentation we should always be doing with markets and economies. How can we make institutions and markets that produce better, fairer results?
This is such a big topic that I may devote some other space here in the blog – or you can read the book, The Surprising Design of Market Economies! But here goes. And this is the third in the ongoing series, One a Day: Nine Reasons the Free Market is a False Concept.
Question: what does Apple corporation and the City of London have in common? Or Time-Warner and New York City? Answer: they are all corporations, created by government. Among their differences is that the City of London and the City of New York are centuries old, while Apple and Time Warner are of more recent vintage.
Can you imagine a modern, market economy without public education for all? I can’t. We can quibble about whether we should have charters, traditional city-run, federal support or not, or even vouchers or not, but no one I know is arguing to withdraw the right to have an education at public expense, and to withdraw the requirement that children to be educated. As with my reason number one (Roads: i.e. transportation), schooling has become a basic mission of government, as American as apple pie. We argue about how we do it, not whether.
In a blatant attempt to generate buzz for my latest book, The Surprising Design of Market Economies, just out in paperback, I’m going to do a numbered list, the kind that BuzzFeed excels at. I’m going to describe nine reasons why the free market is a false concept. And to further the suspense, I’m going to do one new reason every few days, until I have nine.
Nine is an arbitrary number. Could do 11, or 14 or 27. But nine allows me to hit the high points.
As of a few days ago Russia has effectively seized Crimea and, after a highly criticized referendum that resulted in reportedly 90 percent plus of the population voting to rejoin Russia, it appears that Crimea (The Crimea?) will in short order be a part of Russia again.
I’m no expert on foreign policy – let me metaphorically say that a few dozen times to qualify my remarks — and particularly not on the former Soviet Union. But why is this such a bad thing? There seems to be some subtext that is not being stated that is responsible for sanctions being put into place by both The United States and The European Union. What exactly are we protesting so strenuously against?