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The Mythology of the (Non-Existent) Free Market

The whole of social science and legal research offers vast amounts of evidence to disabuse any notion that free markets exist anywhere in a capitalist society. Everyone from non-economists to the general public cannot escape this reality. We as individuals have no choice but to exist under capitalism because it is the modern and dominant organizing mechanism by which most economies around the world operate. It’s near impossible change this paradigm alone (much of the voting populations do not have the time or resources to mobilize like the wealthy), but it is still important to understand how it works. And this is how it works: the whole of economic activity should be understood not as a naturally determined or inevitable amalgam of statistical realities, but as a far-reaching and complex web of legal arrangements (which are themselves products of political contest, political decisions made and not made, either implicitly or explicitly). This is evidences y hyper commodification and financialization and globalization and in international trade.These legal arrangements guiding economic activity define entire economies and certainly discredit the now-famous fantasy of “the invisible hand” autonomously pushing economic activity towards perfect equilibria and scarce” resources towards their best use (or most efficient).

Legal arraignments do everything from granting legal entities like corporations permission to exist (via the public-private hybrid charter) within markets to creating the corporate entity which outlines the roles of the board. Legal arrangements (or lack thereof) are expressions of the “rules of the game” in every industry with enforcement policies from various regulatory agencies like the SEC and Antitrust Devision at the U.S Department of Justice. We live in a world where material gain is determined by contracts, property, capital, wealth, and tax law, and in no industry, either in any micro- or macroeconomic sense, does a “free” market exist. It is simply a myth. Nor does an industry exists in which the corporations that operate within it are totally independent of certain legal freedoms. Not only does there exist much empirical survey data and a body of legal scholarship that shows this, but I don’t think one industry financial economist or economic historian or corporate law scholars in good academic standing & not funded by Koch money would deny these realities.

Think about it as a matter of logic. If any legitimately recognized, legally operating business is to continue to exist, that means they operate under some industry which complies with legal standards and rules. As of now, this is not to make any one comment about the rules themselves, just that they exist. Not only that, but is existence alone is enough evidence to dispel any notions of total “free,” because the legal right to exist comes from a corporate charter, which comes from the state, which means the state is necessarily involved in some capacity or another. This binary debate of “free vs regulated” is a deficient framing of the issue. By trapping the issue into this corner, we completely ignore the actual problems by continuing to debate within the narrow language of the merits of “free vs regulatory” markets. In every industry there exists elements of certain legally defined liberties as well as regulations the legal entity must abide by. The key is asking not to huff and puff about the supposed virtues of the non-existent “free market” or to complain about how regulation is too tight. The appropriate questions we are to ask ourselves are what kind of regulation and for whom.

It is not as though Republicans care about “government overreach” is a legitimate grievance. If they did, they wouldn’t advocate for the government to step in and punish Amazon’s competition in federal antitrust courts by allowing monopolies to exist, upholding the widely debunked consumer protection standard which justifies unprecedented numbers of per se illegal mergers; nor would they advocate for strict constitutionalism that justifies punitive and unequally violent drug and crime laws.

“Deregulation” itself is a form of political decision-making which demonstrates (either explicitly or implicitly) some legal action that is not to be taken (like robust wealth taxation)–usually against big oil companies and giant tech conglomerates as well as the handful wealthy elite who literally write the tax laws. They are still decisions and necessarily involve the state’s hand. They legally could not exist without it. Libertarians in congress like Rand Paul, Republicans, and other entities like big oil, tobacco, etc. certainly are advocating for aggressive and unrelenting state action in the instances when the type of deregulation or policy involved serves an anti-environment and anti-humanitarian agenda.

The question then becomes, okay, if they really are “free,” then who are the overwhelming beneficiaries of all of this freedom? Do those material gains trickle down? And what kind of liberties do they have that otherwise “regulated” markets don’t? Obviously the gains from “free trade” are not evenly or equitably shared, and that is a legal decision stemming from political contest and and imbalance of political power between all parties involved.

It takes barely 2 minutes of consideration to accept that in working, observable reality all of these supposed “freedoms” come at a cost. Investigating “the cost to who?” is where anyone should start. It’s not like evidence doesn’t exist to offer anyone a healthy scan of the literature. It’s all well-documented.

To claim that there exists free markets is to claim that the earth if flat. It is not a matter of ideologically motivated narratives we have to rely on because there’s substantiated evidence. And if you do not believe the Earth is flat yet believe in truly free markets, our question then becomes how does one decide which science they’re going to believe? People entertain their convictions of a flat Earth because it feels like critical thinking, and just as we do not have to travel far to get a simple picture of Earth by launching a camera into the stratosphere, one does not have to look beyond existence of said market to understand how markets are not “free.”

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