Wednesday, November 28, 2007
The "Free" Market
The so-called "Free Market" is a theory. Which reminds me of a little joke, which I will now paraphrase and mangle:
Sniffed the economist to the reality-based community: "That explanation may be all well and good in reality, but it will never work in theory."
There is a reason why economics is called the "dismal science".
Econ 101: The most important condition that needs to be present in a free market is free, instantaneous, accurate, universally available information, which, alas, is against all universal laws of physics and human nature. That old reality thing again, it just won't quit, will it?
If, in Bizarro World, all necessary conditions are met, free market theory explains market behavior in the _______ run. If you answered "Short", go sew some burlap bags together and find your scythe, because Serf's Up!
If the free market corrects itself in the long run, what happens in the short run? Besides bargain-hunting and profit taking? How about lead in toys? Or Enron con games? Or exploding gasoline tanks? Or salmonella in spinach?
If enough people get hurt, the word trickles out and eventually the trickle becomes a rivulet and then a puddle and before long a little pond might form and then a crick and an arroyo then a gulley washer, well... you get my drift - it takes time for word to get to the market and force a correction. Harm to humans in short run, before "free market" correction in long run. That's all one really needs to know about the free market theory.
Goddamn, who could be against free markets!!! If you're against free markets, why, you're against FREEDOM, right?
The reality is that government regulations, and the insider elites who actually control the government regulations through the political process, as well as insider elite self-dealing, cancel out the conditions necessary for even a semblance of a free market. Klein's point is these elites use "shocks", both cynically those they manufacture and opportunistically those that just happen, as an excuse for repression by manipulating the so-called free market.
I am open to other explanations, if anyone has any.
Did I say the free market was a theory? Sorry, I was wrong. The Free Market is a big fat LIE.