“Markets Don’t Work the Way They’re Supposed to Work”

by

One of the biggest misconceptions that leftists have of free-market capitalists is that market-based economies have some ultimate purpose or design. It’s almost as if they believe that Adam Smith and other free-market economists had some grand design in mind when they spelled out their ideas.

To understand why this is absurd, and why a real free-market capitalist doesn’t even acknowledge this argument, you have to approach economics the same way a free-market economist does.

Reading Adam Smith’s The Wealth of Nations, you should quickly understand that Adam Smith is, first and foremost, a scientist. He simply did what other scientists in other fields have done: observed, reported, and tried to put the observations together in a cohesive theory.

Adam Smith, and the vast majority of the free-market capitalists out there, never ever talk about intentions, or at least, the grand intention that they have in describing free-market capitalism. The reason why is they really don’t have any.

Ask a free-market capitalist whether markets work, and they will have a puzzled look on their face. If they are actually going to take the time to engage you, they are going to ask, “What do you mean by ‘work’?”

It is up to you, the individual, the nation, the policy-maker, to decide what the parameters of success are.

If you want to distribute wealth as efficiently as possible, and create a boat-load of wealth in the process, then free-market capitalism works all the time.

If you want to equalize distribution of wealth, so that one person doesn’t have much more than someone else, then of course it doesn’t work very well, and it’s easy to understand why. (Adam Smith goes into great detail about specialization is a necessary result of free-market economic policy. This means some people will have a glut of skills, others a glut of resources, and others a glut of capital.)

If you want to fix prices, then free markets won’t work. If you want the optimum price, so that there is neither surplus nor shortage, then free markets work beautifully. If you want to allocate capital to where it is needed most, then free markets are awesome. If you want to empower the poor so that they can lord over the rich, then free markets are not very good.

Free markets are a thing, and idea, and method. It just so happens that free markets explain vast chunks of human behavior as it pertains to money, capital, labor, and allocation of all of the above. In fact, even in dictatorial societies, where prices are fixed and commodities are produced only upon order of the state, free markets exist to combat the ill effects of state-driven economics. (Go visit North Korea, and you’ll quickly find open-air markets where prices are set without government intervention.)

Leftists, unlike free-market capitalists, have ulterior motives as they develop their Utopian economic fairy tales (such as “equality of all” or “no rich people”), and by projection, believe free-market capitalists have ulterior motives as well as they develop their theories. But this simply isn’t true, any more than physicists have ulterior motives as they quantify natural phenomena.

Free markets are simply the way people do things, even in communist and socialist societies. We can either fight the free market way of doing things, and encounter inefficiency after inefficiency and watch as our wealth evaporates before our very eyes in mere moments, or we can acknowledge the universal power of free markets and simply protect them from bad actors (such as the government) who would eliminate them.

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