Talk:Free market/Archive 2

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Theory

I see what's going on now. Somebody has confused the concepts of a "free market" with a "perfectly competitive free market," the latter being obviously more of an abstraction than the former. And this is throwing people off as I picked up on from the comment of 172. Those are two dinstinct concepts. So this section definitely needs a rework. In fact, a criticism of free markets is that they're not perfectly competitive --a criticism that is used by some to justify government intervention. They're both real concepts in economics, and I suppose it's fine to talk about the theoretical abstraction called "perfectly competitive free markets" but please don't confuse the two. (RJII) Dec 27

No. We have separate articles on market economy and free market. This is the article on free market abstraction used by economists. 172 16:58, 27 Dec 2004 (UTC)

Economists refers to "perfectly competitive free markets" to distinguish from the simple idea of a "free market." There is nothing about a free market that says it has to have perfect competition. The free in "free market" just refers to freedom, as in the lack of coercion. Take a look at this, for example: [[1]] After talking about pure abstraction of "perfectly competitive free markets" it says below that "free markets are not perfectly competitive." (RJII) Dec 27

Stop conflating this topic with market economy. This is the free market on which the theory of supply and demand is based, which assumes that markets are perfectly competitive, with buyers and sellers unable to influence the price of the good in each market on their own. Perfect competition and perfect information are not "criticisms" of markets; they are assumptions that are central to the elementary forms of supply and demand theory. Hence, market economy (reality) and free market (abstraction) are separate articles. 172 17:37, 27 Dec 2004 (UTC)

The problem is that without actually defining what Perfect Competition is you get the uniformed believing, literally, that it requires perfect competition and complete information which is NOT what Perfect Competition and Complete Information, actually mean. Stiglitz made this sophomoric arguement attempting to build a strawman out of free markets, the abuse of these words result in people automatically assuming that free markets don't work, without actually understanding the meanings. (Gibby 22:25, 25 February 2006 (UTC))

Of course. The Nobel prizewinner and former Chief Economist of the World Bank is "sophomoric", but Gibby will set him straight. -- Jmabel | Talk 06:33, 9 March 2006 (UTC)

I never said that perfect competition was a criticism of free markets. I said that the lack of perfect competition was a criticism. A free market does not assume perfect competition...it just assumes a market devoid of coercion. You have to take it to another level of abstraction for "perfectly competitive free markets." Let's not muddle this up so this article can actually be of value to someone. (RJII) Dec 27

Of value to Randroids? 172 19:48, 27 Dec 2004 (UTC)

I see no reason this article can't discuss both the economists' abstraction and various approximations to it in the real world. It certainly should discuss the economists' abstraction, though: where else would that go? -- Jmabel | Talk 19:53, Dec 27, 2004 (UTC)

The free market is an abstraction. A free market that is also perfectly competitive is a further abstraction. Perfect competition has its own article, so I don't see a necessity to go into it in any detail in this article. I wouldn't oppose it though. (RJII) Dec 27

Jmabel, please take a look at the content deleted by RJII. I can't restore it due to the 3RR. 172 20:11, 27 Dec 2004 (UTC)

Sorry, but I'm staying out of editing this until RJII is finished for a while. I've made it clear that I think he's taking it the wrong direction, that I think his edits are ideological, etc. I'm not interested in continually fighting about it. I'll see where he takes this, and then respond to something like a finished article, instead of arguing one by one about edits I see as bad. -- Jmabel | Talk 20:20, Dec 27, 2004 (UTC)

Ideological in what way? As in being anti or pro free market? I'm making the point that the ideal of a free market isn't perfectly competitive (it's just a market where traders are free). "Asymetrically distributed knowledge," for example, is cited in the article as something that some see as a problem with having a absolutely free market (the idealized abstraction). Therefore, some may advocate intervention to make the market more fair, just, or more perfectly competitive. I don't see any ideology in saying that. I'm not saying an free market is a good or a bad thing. It's just pointing out the truth as far as I can tell. (RJII) Dec 27

Ideological in that you seem to be assuming that taxation is the main way in which markets become unfree, and that any amount of taxation is enough to matter in this respect. By the way, why are you now editing this anonymously? -- Jmabel | Talk 22:59, Dec 27, 2004 (UTC)

I think your mistaken to think that is an assumption of mine. We are talking about an ideal and I'm just trying to be inclusive to all types of intervention into the marketplace. The minute you say a free market can have taxes you're going to have people arguing that it's therefore not a truly free market. And you'd have to admit they're correct. So to be accurate, we'd better stick to the pure idea of a free market as far as definition is concerned, and mention in the article, as I have, that when people say they favor free markets, they are usually speaking in a relative sense rather than the idealized sense, and would therefore settle for taxation to protect as much economic freedom as possible, since it's the view of many that a market without taxation to finance the protection and continuance of it may not be sufficiently free for very long. ...as far as editing anonymously, i just forget to log in every once in awhile. I don't want to store my password since I'm not on my own computer right now. ..there's nothing underhanded going on, ok? (RJII) Dec 27

RJII often ends up implying that a "free market" is something primordial that exists before aliens invade and impose government on the free-market Shangri-La Earth, the bastards. As I've said before - a point RJII appears to miss - a free market is both an absolute ideal (in which case it is identical to perfect competition model) and a relative term ("pretty free, compared to other existing markets/economies"). In the first sense it is redundant and imprecise. In the second, it is often used as propaganda - because implying that ceteris paribus a "freer" economy must be better than one that is less "free", no? Rd232 01:17, 28 Dec 2004 (UTC)

RJII has stated clearly not that the free market is something primordial that exists but rather something primordial that does not exist -- i.e., an abstract idea. The difference is that he uses a different definition of the absolute ideal than you do. In my opinion, he's right, but I have no idea how to amicably settle a dispute that hinges solely on the definition of a word or a phrase. - Nat Krause 03:16, 28 Dec 2004 (UTC)

I made an attempt to de-propagandize the article, but far more work is needed. This article will probably have to be rewritten entirely. 172 02:50, 28 Dec 2004 (UTC)

I generally agree with 172's recent edits, except for the definition he is using of "free market". Not sure about plans for a rewrite, of course. - Nat Krause 03:16, 28 Dec 2004 (UTC)

Agree that 172's edits provide a much clearer description of the range of coersive influences. mydogategodshat 03:35, 28 Dec 2004 (UTC)

What can I say? Perfect competition is not a feature of a free market unless you call the market a "perfectly competitive free market." This article is about the concept of a "free market". A perfectly competitive free market is another concept. That would be a free market with the quality of "perfect competition" attached. It does no good to muddle things together. I'm just hoping it eventually sinks in to the few of you who haven't been able to grasp this. (RJII)

The page has now been protected. RJII will now have to stop edit warring and inserting Randroid POV without dealing with the objections of Rd232, Jmabel, mydogategodshat, me, etc. on the talk page. 172 04:30, 28 Dec 2004 (UTC)

What a cop-out. (RJII)

What an arrogant dick. It's not surprising that RJII was eventually banned from WP. -- Jibal 14:52, 16 March 2007 (UTC)

Now, then, let's everybody keep talking. On the main issue, I agree with RJII. The free market is an ideal form, but the thing that is theoretical about it is perfect freedom, not perfect competition. However, neither my definition, nor RJII's definition, nor 172's definition is by itself authoritative. We should discuss how to arrive at a definition that is authoritative. - Nat Krause 12:25, 28 Dec 2004 (UTC)

"the thing that is theoretical about it is perfect freedom, not perfect competition." strengthens my thought that the problem is that there are two competing conceptions of the term, one of which is fundamentally political (it's all about freedom; it's a system with no government), and one economic (it's all about competition; it's a system without any barriers to competition, including, at the limit, all the perfect competition requirements). The two conceptions get bundled up together, which (plus the bundling of absolute and relative usage) creates much of the confusion. Question: What do we mean by 'market'? - sector/industry or economy? Worse, What do we mean by 'freedom'? Rd232 16:46, 28 Dec 2004 (UTC)

What I understand "freedom" to mean is the act of one doing what he wills with his body, or anything else that is "his," without being prevented by the physical force, threat of force, or deception (fraud) from anyone else. In a word, acting without coercion. I think is the notion of freedom that is behind the concept of "free" the in term "free market." Does "free" in "free market" mean anymore than that? I don't think so. (RJII) Dec 28

That shirt on your back is mine; if you prevent me from removing it, you will be interfering with my freedom. Also, I'd like to point my loaded gun at you while asking you to buy the shirt for $1000; interfering with that would be restricting my freedom. Of course, you are perfectly free to buy the shirt at that price or not. Threat? Well, you are free to see it that way, I suppose, but I'm not threatening anyone, I'm just holding a gun that happens to be loaded and pointed in your direction. BTW, "free market" is a technical term and doesn't have anything to do with these informal political notions of "freedom". -- Jibal 15:04, 16 March 2007 (UTC)

Could somebody also state clearly and unambiguously the coercion-based definition, in particular, what the role for government is and how it is financed. Past attempts have sounded like "government stops 'coercion' but nobody pays for it" - a free lunch. (Which would fit with the Walrasian auctioneer I suppose...) Rd232 16:46, 28 Dec 2004 (UTC)

I don't think practical issues need be or should be in the definition. It's a concept of an ideal. If the real existence of the ideal seems to not be a practical possibility, so what? Figuring out how a free market can be protected without compromising it is a practical problem. Whether or not government can protect the freedom of market participants without compromising perfect freedom is a practical problem so it's not really our obligation to solve it. We're just presenting and labeling the idealized concept. (The same goes for ""prefect competition"...how is that going to be implemented?? Likewise, it doesn't matter.) But yes, your practical concerns are interesting and it would make sense to address them somewhere in the article. It just shouldn't interfere in presenting an understanding of what a free market, theoretically, is.(RJII) Dec 28

It is an integral part of your conception of a free market that the government prevents coercion and deception [I don't think the former includes the latter, though apparently you do], yes? If you define away all possibililty of this being paid for, that is NOT a "practical" problem, it's a theoretical problem! I might as well as say, well, "I have this theory where four plus four equals five; yes, I know there are "practical" problems with that, but it's still a useful theory, honest!" Incidentally, the article says the concept is "useful in understanding real markets". How exactly?? Rd232 18:46, 28 Dec 2004 (UTC)

Look, why don't we just define a free market, then talk about it, then later in the article, if someone wants, they can say something like "Besides the concept of a free market, there is another abstraction which economists employ to understand markets which is known as a "perfectly competitive free market." An idea of a market that is based on simply, "perfect freedom" (the term Nat Krause used above) does have a name. And that name is a "free market." Don't think for a minute that that concept has existed without it ever being named. Perfect competition is another concept. And when the two concepts are merged you have an economists' abstraction called a perfectly competitive free market. (RJII) Dec 28

An incoherent and illogical definition is no use to anyone. And how on earth can you use a term like "perfect freedom" without having philosophical spasms about what the hell that means, and whether it's possible even in theory never mind practice?? There are two definitions of "free market" that make sense to me: perfect competition, and the relative usage equivalent to "fairly free" and basically meaning contemporary capitalism. The RJII definition (Randist AFAIK) is specifically aligned to a particular political POV. If we could develop competing usage of the term instead of an authoritative definition of the concept, we might get somewhere. Rd232 18:46, 28 Dec 2004 (UTC)

The problem with that is we're not talking about a "fairly free" market, but a "free market"...an ideal. A "fairly free market" is not a "free market." When you draw a circle, for example, what you are really drawing is an approximation of a circle, rather than the ideal of a circle. A circle needs to be defined, whether it's possible to draw a perfect one or not. You don't define a circle by telling people that a circle is an approximation of a circle. Because that still leaves the question, "what is a circle?." Likewise, a free market needs to be definined whether or not it's practically possible to reach that ideal. Do you want an article that says a free market is an approximation of a free market? It wouldn't make sense without first defining what a free market is. (RJII) DEC 28

Why should "perfect freedom" allow any room for government, including prevention of coercion/deception? The only straightforward reason draws us in the direction of perfect competition. An alternative justification might be more philosophical, and if explicitly stated that would help. Rd232 18:46, 28 Dec 2004 (UTC)

You seem to want to make the concept of a free market have something explicitly to do with governments. But it doesn't. Government is what some people wish to use to put into practice the approximation of a free market. Still others wish to use government to put into pracice the approximation of a perfectly competitive market. But the idea of government really has nothing to do, per se, with the concept of a free market. As I said earlier, a discussion that has to do with governments and practice is fine for the article, but it's a separate problem than just defining a free market. As I said above, you can't understand what a "relatively" free market is, without understanding the what a truly, or "absolutely" free one is. (RJII) Dec 28

It is actually easier to define a relatively free market, because you avoid the contradictions involved in the asbolutisms proposed so far. You define a free market using the concept of coercion being prevented by government. A relatively free market is where the government does little else besides this. Rd232 15:53, 29 Dec 2004 (UTC)

As I said, you can't know what "relatively free" means without first knowing what "free" means. Economist abstractions are just that ..abstractions to an ideal. After you know what an absolutely free market is, then you can say that the colloquial use of the term "free market" just refers to relative economic freedom, rather than the concept of the absolute. That's how its been for awhile already with little problem ..i think it's fine in that regard. The reason it's locked is because of user 172 wants to say that a free market requires perfectly information, etc, (perfect competition), and I disagree. ..which is kind of strange because he hasn't been engaging in the dialogue. (RJII) DEC 29

So when is the article going to be unlocked so we can start "warring" again? (RJII) DEC 29

When we agree on a definition here. Rd232 15:53, 29 Dec 2004 (UTC)

Usage:

• absolute (i): Perfectly competitive market: perfect competition
• absolute (ii):Free market: absence of coercive influence over individual economic decisions.
• relative: eg "a free market economy" - a term frequently used in a loose sense to refer to an economy where the market is relatively free, as would be the case when an economy is overseen by a government that practices a laissez faire economic policy; contrast with command economy, where relatively unfree.

Free market and Fraud

A fraud is not consistent with a free market. In a free market you voluntarily pay for goods that you want, free of coercive influence. Consider this real-world example that actually happened to a friend of mine. A guy on the street in Manhattan was selling what he termed "VCR's." They were in sealed boxed labed as "VCR's." She made a purchase. She then returned home, opened the box, and alas, there was nothing but a brick inside. So, it was not a voluntary purchase. She did not volunteer to buy a brick; she volunteered to buy a VCR. Essential to a free market is that people make trades that they volunteer to make. The guy took her money in a way that was not consensual. If you want to use some ultra-strict definition of "coercion" to only include physical force fine, but that's not all that a free market is about. It's about people interacting and trading on a voluntary basis. And, to act on a voluntary basis naturally means that coercion and fraud are not involved. RJII 18:13, 3 Jan 2005 (UTC)

BS. Unless the guy puts a gun to her head and says "You're going to buy this box, which I claim contains a VCR but I won't let you check", it's a voluntary transaction. It's entirely your friend's choice to buy a pig in a poke from a vendor of questionable trustworthiness. Caveat emptor, end of story. Rd232 19:20, 3 Jan 2005 (UTC)

No, it's not a voluntary transaction, but a coercion-free transaction according to your definition of coercion. Coercion, using your preferred definition, is only one way to thwart voluntary trade. RJII 19:36, 3 Jan 2005 (UTC)

And how is it involuntary? By your definition, anytime you don't get exactly what you want in a transaction, it's involuntary, because if you'd known, you wouldn't have made the transaction! Rd232 20:07, 3 Jan 2005 (UTC)

You're influenced by your old (and wrong) conception of coercion excluding fraud; and free markets being free of coercion. As we clarified on coercion, coercion is about threats, and does not cover deception or exploitation. A free market is about exchanges entered into freely; this perfectly well permits mistakes voluntarily made by the buyer, such as choosing to trust a fraudster. Rd232 19:20, 3 Jan 2005 (UTC)

By the by, there's a basic logical fallacy here, isn't there? If we find some way to prevent fraud in a free market (and we must, because otherwise it will exist and it won't be a free market anymore by this definition), we can only do this by preventing people from freely defrauding others. Which is itself an infringement of the "freely transacting" core idea. Rd232 19:47, 3 Jan 2005 (UTC)

Nonsense, free trade must be voluntary trade. I made the point above and you were not able to counter it. "Fraud" is going back in. RJII 19:30, 3 Jan 2005 (UTC)

Your simply saying so does not make it so. Please explain precisely how your friend's transaction is involuntary. Exactly when did the fraudster take away her ability to voluntarily walk away from making the purchase? What stopped her demanding to see the box opened? Or the VCR demonstrated? Or rejecting the man as dodgy and going to a shop with a well-known brand that many people trust; or her next-door neighbour down the road she's known for years who's getting rid of his old VCR; etc. Your example demonstrates the importance of trust to an economy. The transaction was entirely voluntary. The fact that it was based on a false premise doesn't invalidate that. It's her responsibility to check her premise, not the free market's. I'm sorry if that conflicts with your conception of the free market as the embodiment of perfection, but that's not my problem. Rd232 19:47, 3 Jan 2005 (UTC)

Already explained. She didn't volunteer to receive a brick. RJII 20:04, 3 Jan 2005 (UTC)

In a sense she did. Unless you restrict free markets to a world of perfect information, we have risk and uncertainty. Every voluntary transaction includes the risk of not getting what you wanted. You nonetheless make transactions because the risk is worth taking. Sometimes you underestimate the risk; life goes on. In a risky world, she transacted for a risky transaction - for the possibility that the VCR would have a slight scratch; or not be the latest model; or not be compatible with her TV; or made of solid gold; or not be a VCR at all. In a risky world, she transacted for a measure of risk. The fact that she apparently didn't estimate or value that risk appropriately does not make it an involuntary transaction. Rd232 20:14, 3 Jan 2005 (UTC)

More formally, every transaction includes an appropriate discount for the risk of non-fulfilment. For a big financially-stable company that offers a money-back guarantee, the discount is low, so I pay close to the absolute value I place on the good. For a street vendor, the discount is much higher. If I over-pay (eg at auction because of infectious enthusiasm from other bidders) and don't apply the discount I should given the risk I estimate (or if I underestimate the risk), that doesn't make the transaction in the slightest bit involuntary. Rd232 20:31, 3 Jan 2005 (UTC)

Also, your ridiculously restrictive definition of coercion in the coercion article doesn't even account for theft, so we need to include "theft," without fraud, in the free market article as well. RJII 20:21, 3 Jan 2005 (UTC)

It's not "my" definition, it's the correct/standard definition. And theft is covered in the free market idea of freely transacting, because if someone nicks my car, by definition he hasn't got my permission and it's not a voluntary transaction. Rd232 20:31, 3 Jan 2005 (UTC)

What we have in this example is not coercion in the sense of violent force. It is, rather, a breach of a promise; a violation of contract. John promises to deliver a VCR, not a brick, in exchange for Mary's money. Mary, in exchange for the promised VCR, turns over the money to John. John fails to deliver. John has, here, stolen from Mary -- he has stolen the fulfillment of the contract, which is Mary's property by dint of her having purchased it from John. As I understand it, in a Nozickian free-market anarchy, Mary would here be justified in using or threatening force to get her money back.

The act is theft because it is an intentional deprivation of something that Mary negotiated for and purchased. Caveat emptor is a pragmatic rule, not an ethical one. It is a rule of thumb for avoiding the unpleasantness of having one's rights violated -- it is not a justification for others to violate rights. (Consider: It is worthwhile for people to be suspicious of ticking, smelly packages because they might be bombs. A person who fails to do so is a fool. However, it is just as wrong to blow up fools as it is to blow up wise people. Likewise, a wise person avoids being defrauded; but defrauding a fool is still wrong.)

If the claim "This box contains a VCR" were not connected with John's selling of the box, then John would not have stolen from Mary. For instance, suppose John and Mary together discover an abandoned box labeled as containing a VCR. John does not want a VCR, and so sells his share of the discovery -- sight unseen by both! -- to Mary. It turns out to be a brick. Too bad! John has not stolen from Mary in this case. --FOo 19:43, 3 Jan 2005 (UTC)

I just changed the term "fraud" to "theft." Most everyone agrees that fraud is stealing so it's inclusive of "fraud." But if anyone wants to get into a ridiculous debate whether fraud is theft, feel free. RJII 20:45, 3 Jan 2005 (UTC)

Yeah, those wacky ol' lawyers, having different criminal offences for "theft" and "fraud". Whatever. Rd232 22:28, 3 Jan 2005 (UTC)

If you want to talk legal terms then it's called "theft by deception." RJII 23:33, 3 Jan 2005 (UTC)

Wow. I'm amazed. I look at the above debate and have to say RJII is being the voice of reason! I can't believe that people are arguing that a market with massive fraud can still be a "free market" in a meaningful sense. And putting it in the article! Oh, well, I've already got a "disputed" tag on this article, so I can't add another one... -- Jmabel | Talk 06:29, Jan 4, 2005 (UTC)

Hey, that's pulling a fast one. I said the absolute definition of a free market allows for the possibility of fraud; indeed, doesn't allow for any mechanism to eliminate it. If the resulting idealised model isn't a "meaningful" free market, that's an inherent contradiction in the concept of an "absolute" free market. As RJII has repeatedly pointed out, "free market" is different from "perfect competition"; in the latter we make declarations about optimality on the basis of clear assumptions; the absolute free market in the sense of RJII is just self-contradictory hogwash. Clearly there is room for, say, a "minimal government" definition of free market, including the prevention of fraud and coercion, but that's not palatable because it admits the need for a government. Or is there some other magical way to prevent fraud? Rd232 09:43, 4 Jan 2005 (UTC)

Eventually you'll get a grasp on what voluntary trade means. There is a difference between a guy on the street selling you a box that contains a brick when you agreed to buy a VCR and a guy that actually sells you a VCR but doesn't mention that it's of shoddy workmanship and will probably malfunction in a few months. The former is clearly a form of theft. The latter is more typical of an example that would apply to "Caveat emptor" where people don't have perfect information. Theft is not consistent with a free market, but imperfect information is. There's a difference between imperfect information (not going into exhaustive and absolutely complete detail about a product) and misinformation (lying) to take someone's money. One is stealing and the other isn't..you guess which is which. RJII 16:26, 4 Jan 2005 (UTC)

Supra-economics?

Can someone explain the term "supra-economics" recently introduced into the article? If this is meaningful, I imagine it deserves an article. If not, it should be gone. -- Jmabel | Talk 19:14, Feb 2, 2005 (UTC)

"Supra-economics" and "supraeconomics" seem to fail the Google test. -- FirstPrinciples 08:29, Feb 3, 2005 (UTC)

I am deleting this, since no one has defended it. -- Jmabel | Talk 05:12, Feb 5, 2005 (UTC)

Democracy?

"The free market can be seen as a form of democracy because buying a product is an incentive for the producer to continue producing that product and thus a vote for continuation. This is also know as dollar voting." This seems to me to be a trivialization of "democracy". For one thing, it is only even vaguely democratic in a society where wealth is relatively evenly distributed; otherwise, it is a form of plutocracy. For another, it is a "democracy" that involves only voting and no collective deliberative processes: indeed, it may be subversive of deliberative processes. I would like to see this sentence struck, but brought it here first for, well, a deliberative process. -- Jmabel | Talk 19:44, May 8, 2005 (UTC)

Thanks for the deliberation. You're right, it is a form of plutocracy. I also pointed that out in the theory-proposal I put on the talk page (I just forgot to name it properly - corrected that now). But the term exists (just Google it), so there should be an article on it.

And if an article exists it should be linked to from somewhere. Until yesterday that was only from talk pages and such, not from articles. I edited in an unacceptable way a few weeks ago (I put an attempt at a theory on the article page) and nobody noticed for weeks (I've moved it to the talk page now). Now that I've put up some links I instantly got a reaction. Now there's only one place where I was quite happy to put the link, namely here. But just one link seemed a bit weak, so I also put it in vote, money and democracy. In neither of these it really fits in, so removing these would sooner be an option. But removing it there and here would again isolate the article.

I wonder now how I originally got to the page (I didn't start it). Maybe through a portal? Aren't those shown when you look at 'what links here'?

DirkvdM 06:58, 2005 May 9 (UTC)

It probably should be linked from plutocracy. And it should be mentioned and linked here, just not with an implication that it is inherently democratic. -- Jmabel | Talk 03:28, May 10, 2005 (UTC)

Hmmm, well, if so, then that should also be changed in the dollar voting article. However, the plutocracy article says that it means either an oligarchy, related to aristocracy, or political influence of the wealthy (companies) by financing political parties or threatening to move business elsewhere. In both cases it's about political influence by the happy few. One point that should indeed be made is that dollar voting may be akin to democracy but differs from it in that it applies to production rather than politics. But it is not restricted to the happy few. This applies only in so far as there are differences in wealth. We may be used to that, but one cannot assume it. You're basically attacking capitalism because it makes dollar voting less democratic (which leaves the question if the free market necessarily leads to capitalism).

One may conclude from the above that dollar voting is more like a meritocracy. But a strange one, because the merits gained in one field (production - earning money) gives more votes in another field (consumption - spending money). And that assumed that the money is earned, not inherited or stolen. And should doing dirty business (one way to get rich quick) give one more right to determine what should be produced? This is beginning to sound like a (leftwing) political pamflet....

In a way dollar voting is a stronger democracy than the one we're used to because anyone can vote (it's just that the weight of the votes may differ). The Greeks are said to have invented democracy, even though women, children and slaves were not allowed to vote.

So I now propose the following: The free market system functions in a way akin to democracy, but applied to production rather than politics. This is known as dollar voting. Buying a product is like casting a vote for the producer to continue its production. However, one may argue that this leans more towards plutocracy in so far as wealth is spread unevenly, giving the rich more votes. Notice that my first proposal put the free market in a positive light whilst this sounds more like an attack at capitalism (which the free market will usually lead to).

I see you've already changed 'democracy' to 'decision-making'. You might have waited for this discussion to come to a conclusion.

DirkvdM 08:49, 2005 May 10 (UTC)

If all we are talking about is what brand of soda gets a big share of the market, sure, that is relatively democratic, but if we are talking about the way that money, channelled through markets, leads to major, impactful decisions about the world, I am quite comfortable in saying that the effect is generally one of plutocracy, or at least skews that way.

Pretty much everywhere in the world where it is allowed to function, the free market does an excellent job of producing goods for the wealthy, a slightly less effective, but decent, job of producing goods for the middle classes, and it it is just about random whether it benefits the poor. Not having any significant amount of money with which to "vote", they become an externality: the market does not "care" about its effect on them. This does not mean that the effect on them will necessarily be bad, just that the market won't take it into account.

I thought about that too, but one should also take into account the various price-levels. Bread, for example, is something that one does not buy more because one is rich (unless a large part of the poor are so poor that they can't even afford bread). The rich may, however, buy different kinds of bread, at a different price-level. So, really, you get different types of products. The market for cheaper bread is played by the poor and the market for special bread by the rich (this is of course over-simplified). And you get something similar with more expensive products, to the point that votes for some products (eg yachts) come entirely from the rich. But that's no problem because they are the ones who use such products. So in this sense it's more specifically democratic than a political democracy. People vote just for the things that concern them. It might be better to say that the richer you are the more often you get to vote but a large part of those extra votes are used up for stuff that's out of reach for the poor (not just yachts but also the more expensive versions of products (tv's, chairs, hats, whatever)) and it doesn't apply as much to elementary stuff like bread. DirkvdM 11:52, 2005 May 11 (UTC)

Democracy is not simply about voting. It is, as its etymology suggests, about rule by the people. It implies equal voice in that rule. Certainly, the more evenly money is distributed, the more "dollar voting" has a democratic effect (in a still-stunted sense of democracy, lacking, as I remarked above, any deliberative processes), but that doesn't mean there is any inherently democratic aspect to dollar voting. One could with at least as much justice say that aristocracy comes to resemble democracy as the peerage becomes larger.

Once again, plutocracy is about keeping a part of the population out of government. If the peerage grows that group may decrease in size (from the vast majority to what? Half?) but the principle still holds (unless everyone is of nobility, in which case it would be nonsense to speak of an aristocracy). In dollar voting no-one is excluded in principle, the weight of the vote just differs (or rather the amount of voting).

By the way, a first past the post system is a bit like this too. How much your vote counts depends on the district you happen to live in. Is this then not democratic? I admit it's less democratic, but it's still a form of democracy. Like I suggested before, no existing democracy is fully democratic (everyone having a say in everything just wouldn't work in too big a society), they're all approximations, adaptions to make them more practical. But they're still democracies.

What do you mean by a lack of deliberative processes? I suppose you mean discussions about politics and products. Well, on the one hand there is way too little deliberation about politics for a democracy to perform at it's theoretical best - a intrinsic problem (people can't know about everything) that is, however, outweighed by the disadvantages of other forms of government. On the other hand, in 'dollar voting' there is deliberation through consumers talking about the pros and cons of products, especially now with the rise of the Internet (potentially a real saviour for the free market if you ask me). Or do you mean something different? DirkvdM 11:52, 2005 May 11 (UTC)

The plutocratic rather than democratic effects of democracy can be seen in any number of places. For example, democratic choice would certainly channel far more medical research into solving AIDS, malaria, dengue, etc. Indeed, the degree to which research goes into those areas is almost entirely the degree to which that research is protected from market forces.

Ah, you're talking about the whole world. In that case the differences in income are so humungous that there's little democracy left. But there's still a democratic aspect. If the money were more evenly spread that would certainly help for these problems. Same if there were a worldwide democracy. Which there isn't (the United Nations is the closest thing, but that's hardly a world government at the moment). So there's neither a political nor a financial democracy. Either of these would help. If money were more evenly spread that would certainly help where there's no political democracy. Which helps to prove my point, thank you very much :-). DirkvdM 11:52, 2005 May 11 (UTC)

For perhaps an even more intriguing example, where a relatively free market is almost certainly actively subversive of broad democracy, consider political campaign finance in the United States. The "wealth primary" (raising the money in order to campaign) is a near-perfect instance of how a relatively free market can have a plutocratic effect: the system works reasonably democratically within that class of people who finance campaigns, but relative to society as a whole the effect is clearly plutocratic. This seems to me an almost perfect illustration of substitution of a market in place of more traditionally democratic processes, and I think the only question is the degree to which the effect is plutocratic, not whether it is or not. -- Jmabel | Talk 05:56, May 11, 2005 (UTC)

You're right that it's a very bad thing that money talks in politics in this way. This is the second form of plutocracy that I mentioned above. Only a limited group of people have enough money to influence politics this way, meaning that a (large) group of people get totally excluded from that influence. But I'll again state the point that in the free market everyone with money has some influence. So here, there is a degree in which people have power. In a plutocracy there is no degree. Some have all the power and others have none. So plutocracy is not in any way democratic. The free market however gives some level of democracy. Only when some (many) have no money at all can you speak of a plutocracy. And at a global level the differences in wealth are indeed such that a plutocracy is approximated. But that doesn't disprove the democratic aspect of the free market. It's just a (major) flaw of capitalism. And thus a potential pitfall for the free market.

Let me try a different angle. I'm overall fairly left wing and certainly not a supporter of an unchecked free market. But we live in a free market society (even Cubans and Chinese do, despite the heavy socialism in those countries). That's unavoidable. The free market is not an ideology, it's a description of how society works. So we have to understand how this works. And if there is a democratic aspect to the free market then that may be exploited and we may change our policies to make the world (well, starting with one's own country) more democratic through a redistribution of money. And then let the free market operate within that framework. That's a bit left wing and a bit right wing. Just like me.... DirkvdM 11:52, 2005 May 11 (UTC)

"In a plutocracy there is no degree." Why on earth not? No system is ever pure, as instantiated in the world. If one demands equal purity to qualify as democracy, then clearly no democracies exist, let alone "dollar voting" constituting one. -- Jmabel | Talk 05:33, May 12, 2005 (UTC)

Actually, the few overt plutocracies I can think of all had degree: different levels of wealth for a voting franchise, for serving in each of several different political offices, etc. -- Jmabel | Talk 05:36, May 12, 2005 (UTC)

I based this on the Wikipedia articles. In the plutocracy article the first definition calls it an oligarchy, where "political power effectively rests with a small segment of society". So no degree there. The second definition is about the influence of the wealthy on politics. In principle that could be anyone with some money, but in practise at least 90% of the people will not have enough money to even start to make a difference. I assume. Maybe you're reasoning from a US perspective (assuming that we don't have that much plutocracy in Europe). I don't get that second bit. I suppose that by 'voting franchise' you mean the 'right to vote'. Are you saying there were (are?) occasions where the right to vote was distributed in various quantities to all people depending on how much money they had? (Which would be the equivalent of dollar voting.) DirkvdM 07:33, 2005 May 12 (UTC)

Absolutely. Property requirements for voting or holding office were quite common until rather recently. For example, Ancient Rome drew its Senators and Magistrates exclusively from the property-owning classes, with quite specific property requirements for various offices. Property requirements in order to vote were the rule rather than the exception in the U.S. until the mid-19th century, and in the UK a bit longer; I imagine the picture was similar elsewhere, but I don't know details offhand. I wish I had time right now to research this; I don't, though, and it's pretty far afield from the topic of this article. My central point is that "dollar voting" can only accidentally produce a democratic effect — precisely insofar as money is evenly distributed — but inherently produces the effect of turning money into decision-making power. And, yes, I would argue that the fact that the U.S. has more of a free market in financing political campaigns compared to the average European democracy is a very major component of why money has more power in American politics than in contemporary EU politics. -- Jmabel | Talk 16:36, May 12, 2005 (UTC)

Indeed this discussion is getting rather long and it's in the wrong place - it should really be moved to the dollar voting talk page. But back to the issue. Again you give examples of a select group of people holding all the power with the rest holding none at all. And that's plutocracy. But I was talking of 'occasions where the right to vote was distributed in various quantities to all people depending on how much money they had'. And that's an aspect of dollar voting; everyone gets a number of votes, but there is a gradual scale, not a clear cut between two groups of people, which is plutocracy. So dollar voting may not be purely democratic but it isn't purely plutocratic either. But a society can in practise be purely plutocratic but not (well, hardly) purely democratic. So since there are many variations of democracy it is easier to call this another variation. That's a bit weak, I admit. But it certainly isn't plutocratic. Then again, if I have to weaken the comparison to dollar voting having a democratic aspect, then I might as well admit that there is also a plutocratic aspect to it (or rather it leans towards plutocracy). Can we settle on that? Please? (This is starting to take up too much of my time too.) By the way, I don't contest that dollar voting inherently produces the effect of turning money into decision-making power. That's actually a good description of dollar voting. But my central point is that dollar voting produces a democratic effect insofar as money is evenly distributed. There, almost exactly the same thing you said.

To deviate a bit more, a pure democracy is actually possible. I've seen it at work at a rainbow gathering (a bunch of hippies). Someone would come up with a proposal and then anyone who wanted to participate in the discussion could. Including kids. But because a consensus has to be reached there, the discussions went on for ages (just like this one :-) ) and only those who were really interrested managed to sit through the entire discussion. Which never included kids. But that was just a few thousand people. I wonder what the upper limit of the number of people for this is. DirkvdM 19:44, 2005 May 12 (UTC)

Missing Criticism?

There doesn't seem to be any real response to the merits of a free market economy, only links to the articles of some alternatives. Where is the "criticism" section seen on the communism,socialism, etc. articles? Is there another article that deals with this, or should I add it in? --Brendanfox 11:18, 23 August 2005 (UTC)

There's some criticism in the "Practice" section. RJII 16:36, 23 August 2005 (UTC)

If you have well-cited material (e.g. Michael Albert's work, or a good discussion of externalities), I think that would be great. -- Jmabel | Talk 03:44, August 24, 2005 (UTC)

This is from the capitalism article if anybody wants to incorporate some of this in:

However, not everyone believes that a free or even a relatively-free market is a good thing. One reason proffered by many to justify economic intervention by government into what would otherwise be a free market is market failure. A market failure is a case in which a market fails to efficiently provide or allocate goods and services (for example, a failure to allocate goods in ways some see as socially or morally preferable). Some believe that the lack of "perfect information" or "perfect competition" in a free market is grounds for government intervention (see perfect competition). Other situations or activities often perceived as problems with a free market may appear, such monopolies, monopsonies, information inequalities (e.g. insider trading), or price gouging. Wages determined by a free market mechanism are also commonly seen as a problem by those who would claim that some wages are unjustifiably low or unjustifiably high. Another critique is that free markets usually fail to deal with the problem of externalities, where an action by an agent positively or negatively affects another agent without any compensation taking place. The most widely known externality is pollution. More generally, the free market allocation of resources in areas such as health care, unemployment, wealth inequality, and education are considered market failures by some. Also, governments overseeing economies typically labeled as capitalist have been known to set mandatory price floors or price ceilings at times, thereby interfering with the free market mechanism. This usually occurred either in times of crises, or was related to goods and services which were viewed as strategically important. Electricity, for example, is a good that was or is subject to price ceilings in many countries. Many eminent economists have analysed market failures, and see governments as having a legitimate role as mitigators of these failures, for examples through regulation and compensation schemes.

However, some economists, such as Nobel prize-winning economist Milton Friedman as well as those of the Austrian School, oppose intervention into free markets. They argue that government should limit its involvement in economies to protecting freedom rather than diminishing it for the sake of remedying "market failure." They tend to regard the notion of market failure as a misguided contrivance wrongly used to justify coercive government action to further various political agendas, such as egalitarian goals. These economists believe that government intervention creates more problems than it is supposed to solve --as well-meaning as some of these interventions may be. Laissez-faire advocates do not oppose monopolies unless they maintain their existence through coercion to prevent competition (see coercive monopoly), and often assert that monopolies have historically only developed because of government intervention rather than due to a lack of intervention. They may argue that minimum wage laws cause unnecessary unemployment, that laws against insider trading reduce market efficiency and transparency, or that government-enforced price-ceilings cause shortages. While economists tend to offer pragmatic arguments, some individuals put forth moral justifications for opposing coercion in favor of free markets.

Some dismiss the whole idea of "free markets", claiming that they are exploitative or coercive in essence. For example, some say that wages set by a free market rather than by government decree is exploitative since capitalists have appropriated private ownership of resources, thereby putting individuals in a position to accept low wages in order to survive. However, many believe that decreases in wage rates are the result of the same thing as deflation in any other market: the price of labor falls due to either a lower demand for labor or a larger supply thereof.

Financial markets, though some of these markets are far from being free due to heavy regulation, allow the large scale, standardized, and easy trading of debt, foreign exchange, and ownership of companies. Similar changes have taken place for products from agriculture, mining, and energy production. Standardized markets have even appeared for pollution rights and for the prediction of future events like future weather and political elections.

—The preceding unsigned comment was added by RJII (talk • contribs) 24 Aug 2005.

• Looks like there is some good material there for someone to incorporate, although I notice that the criticisms are uncited (all that is cited is the Friedman rebuttal). -- Jmabel | Talk 23:50, August 24, 2005 (UTC)

Weasel alert

"Others argue that the only fair market is a free market, since there is no coercion and one is free to decide what to buy and sell in the market, at a price determined by the market." "Others" is not a citation. -- Jmabel | Talk 01:49, September 7, 2005 (UTC)

"Voluntary" transactions

My corrections were unceremoniously deleted as "too weird". That included the use of the word 'contract' for transactions in the free market. That usage is not weird, it is standard. The deletion seems to be provoked by clarification of the word 'voluntary'. In the free market context voluntary means 'uncoerced'. It does not mean that people want to enter into a transaction, or that they are satisfied with its terms, or indeed with the existence of a free market. It simply means that for a given transaction, say a buyer-seller exchange, no third party told the others what to do. That should be explained. Asd it stood, the text carried the implication of political consent to the market and its outcomes. Obviously, 8-year olds who carry hot bricks in Indian brick factories are not there 'voluntarily'. Possibly they approached the employer asking for work, due to acute hunger, and the employer stated the hours and pay, and the child said 'yes'. No external coercion, true, but 'voluntary' in the usual sense it is not.

I restored the word 'contract' which is uncontroversial standard usage, and the clarification.Ruzmanci 17:45, 28 September 2005 (UTC)

I think I see what you're getting at now, but I don't think it makes much sense. If one voluntarily gives money to someone, what else could it indicate other than he did it because he wanted to? If you're hungry, you eat because you want to. If someone has food and won't give you any unless you pay him, he's not forcing you to pay him. You don't have to pay him. You just won't eat. You pay him because you want to, because you want to eat. RJII 18:48, 28 September 2005 (UTC)

So if I stick a gun in your mouth and ask you to hand me your wallet, you have handed it to me voluntarily? -- Jmabel | Talk 23:31, 29 September 2005 (UTC)

No, you would be coercing me. What makes something voluntary is that it's not coerced. RJII 23:48, 29 September 2005 (UTC)

And that differs how from the situation where you are starving and I say "I'll feed you, but only if you sign over your property?" -- Jmabel | Talk 07:15, 30 September 2005 (UTC)

In that situation you're not being coerced. You'll certainly stay hungry if you don't purchase the pizza, but the seller is not coercing you to purchase it. You're free to go to bed hungry, or you may go next door and purchase a taco from a vendor who isn't coercing you to purchase his food either. RJII 12:27, 30 September 2005 (UTC)

No RJ that IS coercian! If there is a threat of starvation.. Think of the Irish Potato Famine - by your logic the disperate, displaced Irish folk had the choice to starve, build an armada and sail to America.

Consider: Traditional methods of supplementing the diet, such as game hunting and fishing often resulted in imprisonment and deportation ("transportation") to other parts of the British colonies...because the land and the wildlife thereon belonged to the landlords....it is an inarguable fact that right through the Famine England imported tons of Irish grain and livestock - more than enough to feed every starving person in Ireland. Food depots at ports were guarded by British Army regiments and local militias.

What were their alternatives? I suppose you would say that was all fair?? However both sides of the argument can and should be presented in this article . But if there is a representation of both views already.. you can't state it is a voluntary/non coercian as fact, elsewhere in article. -max rspct 12:55, 30 September 2005 (UTC)

It looks like you're conflating coercion with exploitation. In the case that someone needed food to such a degree that he was going to die if he did not get it, and you asked that he sell you everything he owns in order for you to give it to him and there was no other food to be found, you haven't coerced him but exploited him. The hungry individual is free to starve and die --you're not forcing him to purchase your food --you aren't going to shoot him if he doesn't purchase. But, most would say, you are taking undue advantage of his desperation. There is a difference between coercion and exploitation. RJII 13:11, 30 September 2005 (UTC)

Coercion can an operational part of exploitation (it can reinforce the desired result of exploitation). tHE iRISH WERE FORCED OFF THEIR LAND.. pAY UP OR DIE BASICALLY .. tHATS NOT coercion? max rspct 13:25, 30 September 2005 (UTC)

I'm not familiar with that particular situation so I can't comment on it. But, if it had to do with government claiming the private property of people and taxing them, then of course it's coercion. RJII 15:08, 30 September 2005 (UTC)

Don't swerve it RJ, the example is one of tenant-landlord relationship/free market (it could be employee/employer or buyer/seller... the amount or apparent intensity of coercion would be dependent on the standard of living)- -max rspct 16:28, 30 September 2005 (UTC)

Again, I'm not familiar with it. And, I don't know what you're talking about. It would be better to stick with a hypothetical example. RJII 16:38, 30 September 2005 (UTC)

I would say that anyone who is unfamiliar with the Irish potato famine is pretty unqualified to edit an article on free markets. -- Jmabel | Talk 19:26, 30 September 2005 (UTC)

I'd say anyone who expects others to be knowledgeable about the details of everything that has ever happened in history is out of his mind. A free market is an abstract philosophical concept. I'm well qualified in that area. Obviously, you're not. Hence, your ridiculous question posed to me above. I didn't put you down for it --I just thought you were "slow." But, now that you've started the attack, I'll tell you the truth. I think it a moronic question. From the looks of things, I don't think you're qualified to do much of anything that requires thought. RJII 19:36, 30 September 2005 (UTC)

My question was by no means ridiculous. I was pointing out that the line between coercion and non-coercion is not so clearly drawn. You appear to consider it a "free market transaction" to use threats of death, as long as one didn't deliberately introduce the means of death. I find that absurd. And I stand by my statement about the Irish potato famine: it is probably the single most dramatic example in history of failure of free market economics. To write about free markets without knowing about that is like writing about communism without knowing about Stalin.

Let me attempt to put my hypothetical argument about the death threat slightly differently. We are in New Orleans a few weeks ago, at the height of the flood. You are on the roof of your house as the tide is rising. I have a boat. I offer to rescue you, but only if you will sign over the deed to your house. Do I correctly understand that you would consider that a free-market transaction? -- Jmabel | Talk 20:17, 30 September 2005 (UTC)

Absolutely, that's a free-market transaction. You would not be coercing me to sign over the deed. However, you would be exploiting me --taking advantage of my desperation. You're not threatening to kill me if I don't sign over the deed. Rather, you are threatening to let the floodwaters kill me (which you are not controlling). There difference is between killing and letting die. If you simply let someone die, you're not coercing them. Whoever sent the flood in would be engaging in the coercion. I suppose that would be God. Though it would be a free-market transaction, I doubt a third party (government) would enforce the agreement after you were rescued --not because it was not a free-market transaction, but because it was exploitative. You could call it "market failure." RJII 20:32, 30 September 2005 (UTC)