What makes markets free
There is a reason free markets are called that.
A common critique claiming that free markets aren’t truly free is that such a system beholds individuals to work in exchange for something, with the typical example being basic necessities, most notably food. This argument is flawed both in abstract and practical terms.
The first issue is the application, or perhaps misapplication, of the term “freedom”. In the eyes of a committed capitalist, freedom means one can do whatever one wants so long as one does not infringe on the rights of others to do so.
Indeed, the only thing markets and the legal structure necessary to support them entitle you or I to is protection from being forced to act – violated – by others.
The second issue is practical. Even if one refuses to or is unable to work at all, under any capitalist model country today, they won’t starve. Private charities and welfare provide for such people. Furthermore, a considerable number of capitalists support a universal basic income or negative income tax scheme, which would supplement or replace existing welfare programs.
Capitalism is about the wins, but it’s also about the losses. On a broad scale the wins do exceed the losses, but in any system that is free both will exist.
Consider also that capitalism allows people to work for free, and does nothing in the affirmative to discourage it. Volunteer work, including but not limited to charity, is noble to the highest degree. Oftentimes, volunteers and not-for-profits choose to do work they could reasonably expect to do for a profit or wage. That is permitted, as is digging up rocks in one’s own backyard. In the latter case, just don’t expect to be rewarded for it. As well serving as an explanation of the principle of voluntary arrangements, this metaphor serves to demonstrate how the distribution of capital serves to encourage productivity.
Mutual consent is the principle reason free markets are free. Similar, though not superior to it, is competition. Both values can be neatly summarised under the banner of choice. Choice is essential both as an ethical matter regarding the autonomy of the individual and as it demonstrably induces better outcomes on the whole.
Competition is of such great importance that it can only be secondary to the principle of voluntary exchange. It improves efficiency and, ultimately, quality for consumers. Its practical benefits can be determined by comparing industries where there is more market competition to those with greater government control. Education and healthcare come to mind. This risks missing the point of this article, however, which is about freedom, not quality.
Markets don’t forbid people from working for free, though they do allow them to demand compensation for any good or service they provide, just as they allow for worker co-ops as well as corporations. What they don’t permit is entitlement. That is what makes markets free.
