Reason Number Six The Free Market is a False Concept: War

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.

War and defense are obviously huge subjects. I did not spend much time on them in The Surprising Design of Market Economies because the subjects are so huge. Suffice to say that commerce cannot be separated from war. We need security in order to trade things simply. More morally troublesome, we war in order to seize markets or establish them. Mafia gangs fighting over turf to sell heroin or olive oil is comparable to nations warring over territories. What’s happening in the Ukraine right now, with Russia and the European Union pulling at this land mass and people, with a gas line going through it, is an example of this.