Why “free market” is better than “free”
We all love “free”. Free choice. Free time. Free beer. Free love. What’s not to like?
So, how could anything be better than free?
In economics, there is more to “free” than first meets the eye.
There is an old saying about free stuff:
“When someone gets something for nothing, someone else gets nothing for something.”
— Anonymous
Some people might point to charity or open source software as exceptions to this rule. But, in these cases, the giver is either “getting” some personal satisfaction from the gift or is expecting nothing for their gift because they believe in the principal of giving. In these cases, giving is a voluntary rather than enforced.
There is a corollary of the above quote that can be expressed like this:
“When everyone gets something for nothing, everyone ends up with nothing for something.”
The scientific name for this second expression is “tragedy of the commons”.
The principle, in a nut-shell, is that people will tend to over-use a shared common resource until there is nothing left to share.
So, there are some practical drawbacks to free both in the case of individuals and in groups.
Application in the Real World
Let’s say you wanted to develop a “free” online shopping marketplace. In theory, this could be accomplished by using a peer-to-peer technology. Each user would be required to bring their own Internet bandwidth, their own storage, and their own promotional skills. Peer-to-peer payments could be accomplished using Bitcoin. But, like most cryptocurrencies, Bitcoin requires payment of processing fees to “miners”. So, the “free” model is threatened almost immediately.
But, let’s say that you succeed in arranging for payments using one of the new breed of cryptocurrencies that don’t have any transaction fees. There still remain some other important functions that a successful marketplace will need to provide for its users.
For example, some users may not want to keep their computer running and connected in order to keep their listings visible in the marketplace. So, there is a need for a class of “listing publishers” who can keep the listings of others visible on the network. Similarly, users need some form of escrow to protect users when they do business remotely with someone they don’t know well. Similarly, some users might want to have a way to promote their listings so that they are more visible in the marketplace.
It may be possible that some or all of these services could be provided in a way that is “free” to the user. The problem is that, while these services may be “free” for the user, they are not free for the providers. Human and computing resources are required to provide those services.
The principles quoted above tell us that a system that provides “free” services will always either be exploitative of someone, or will end up with nothing to share due to the “tragedy of the commons”.
A System That is Better Than Free
A “free market” economy solves these issues easily.
As long as the providers of services are allowed to set and collect some fees for the services they provide, no one gets taken advantage of and resources don’t get over-consumed. Supply and demand eventually discovers the “right” prices that balance the providers’ cost of providing the service with the consumers’ desire to pay as little as possible.
This “price discovery” mechanism has been working for as long as Man has been trading and bartering.
History has shown that governments and groups fail when they try to preempt or disrupt this free-market price discovery with “planned economies”, price subsidies and giveaways that benefit some people at the expense of others.
Our Solution
OmniBazaar is a “free-market” place, not a “free” marketplace.
OmniBazaar Publishers and Escrow Agents are able to choose the amount of the fees they wish to charge, and these amounts are displayed to users. Users can then “shop” for these services by balancing the price against reputation, reliability and other factors.
Sellers who want higher visibility for their listings can choose to pay for higher “listing priority”. This creates a competitive environment that is based on choice rather than an enforced fee amount.
You can buy and sell in the OmniBazaar marketplace completely free of charge, as long as you don’t need or want any help from anyone else. But, if you want someone else to publish your listings, provide escrow services, or help get your listings in front of more people in the marketplace, you should expect to pay the “market” rate for those services.
The other side of this coin is that you can choose to be a service provider and earn fees instead of paying them.
We believe that “free market” is morally sound and economically sustainable, whereas “free” is not. And, we have hundreds of thousands of years of trade and barter history on our side.
About OmniBazaar:
OmniBazaar is a community-owned, peer-to-peer, e-commerce marketplace. The OmniBazaar ecosystem includes its own built-in cryptocurrency (“OmniCoin”), an influencer marketing system, social messaging, reputation tracking, escrow agents, and bonuses to provide user incentives for participation and growth. Social influencers enjoy a simple referral system that allows them to monetize their social networks. Marketplace buyers and sellers can generate additional income by publishing listings for other user or providing escrow services in the marketplace. OmniBazaar provides a simple “gateway” to cryptocurrency by allowing users to barter for bitcoin℠.
Unlike eBay, Amazon, Upwork and others, OmniBazaar removes the middlemen and bankers from transactions. Users deal directly with each other, using our free software application on their computer, and pay dramatically lower fees as a result. With OmniBazaar, online sellers save 90–100% of the fees they would pay Amazon or eBay. Online buyers benefit from lower prices, and escape from “big data” tracking and “push” marketing.
The OmniBazaar/OmniCoin white paper is available here in 12 languages.
Beta testers and early adopters receive free OmniCoins to use in the marketplace. Users may download the free OmniBazaar software here. The OmniBazaar marketplace is open and “live” during the beta test, and the public is encouraged to participate.
Try out the OmniBazaar marketplace and let us know your thoughts.