Towards a True Free Market

The current economy is rigged and should be re-examined from the ground up.

The only certain things in life are death and taxes. So goes the old saying. Since the advent of civilisation we have taken it for granted that taxation is necessary. It is so ingrained in us that no one has really bothered to consider whether there might be an alternative to taxation. Our view of taxation is a microcosm of our view of the entire economy. We take for granted the way various elements in the economy operate, forgetting that our economy evolved over time from basic barter between individuals to the large scale economy we have today. The truth is that as the economy has evolved, the fundamental principles which made the market free and fair for everyone have been lost, and the modern economy is heavily rigged in favour of certain groups, especially the banking and financial sector.

One of the defining characteristics of a civilisation is the existence of a market economy. While most people assume that the modern economy is representative of the free market, I think that the world has never seen a true free market in action. Pre-civilisation, we simply did not have the tools to execute a true free market, and with the advent of civilisation we have always had a managed system. From the perspective of a true free market economy, all participants at all levels are equal. Whether the participant is you the reader, your neighbour, a private company, or the government, all are equal in the market. The government for instance should not be viewed as an overseer or manager of the economy, but as a participant in the market, providing regulatory services, and also public goods and services. The government should not have special powers that other market participants do not have. Neither should banks and financial institutions.

Thinking about what kind of market we really need led me to explore what the free market is all about. I thought about two people in a primitive market, exchanging goods and services voluntarily by bartering. There is no interference from a government. No need to pay taxes. No need to borrow currency from a bank in order to complete the transaction. That is what the free market is all about. The big question was how do you take this, make it more efficient, and scale it up to a nation and even the whole world. Efficiency and scaling come from having a good currency system. I will show in a future article that in a true free market, the currency system is unlike any we have seen before. One of the things it achieves is that it eliminates the need for taxation.

With the modern economic system, we face numerous problems such as the increasing gap in wealth between the rich and the poor, boom and bust cycles, and the destruction of the environment as we over-consume the resources on the earth. These problems are not a failure of the free market. In fact it is very much the opposite. We face these economic problems because we do not have a true free market. The powers that be are not to blame for continuing with this broken system. They do not know better, and are only implementing ideas which have been handed down to them. The truth is, a true free market was not possible in the ancient times, because they simply did not have the knowledge or the technology to implement it. Thus they resorted to solutions such as using gold for currency and taxing the population. The use of gold, unsurprisingly, has degenerated into the unbacked fiat currency system that we have now; a system that is responsible for an unprecedented transfer of wealth to the banking and financial sector from the remainder of the economy. Taxation poses its own problems, with no clear solution on how to fairly tax the population. Many countries have resorted to so called progressive taxation, but what they fail to understand is that the only reason they need a progressive tax is because the monetary system is regressive.

We usually think of economic interactions as generally being the exchange of goods and services for money. The truth though is that the fundamental interaction is barter, and we need to view the economy in a way that preserves the principle of barter. Whether it is two people involved in a barter exchange, a person buying an item from a shop, the government providing public goods and services to the people, or two countries involved in import and export of goods, the underlying interaction is always the exchange of goods and services for other goods and services. With this change in viewpoint, we can discover the true role of money in the economy. Then we can develop a true free market currency system, and we will see that this currency system eliminates the need for taxation. This does not mean that people do not contribute towards paying for public services. Rather it means that we correct the upside down approach of taxation. In this new system, taxation will be replaced by the exchange of goods and services between government and the people. Instead of the public paying taxes to the government, they will provide goods and services to the government, in return for the public goods and services provided by the government. This is a scaled up version of barter, but made efficient using currency. Everything is done through the interactions that are already happening in the economy, so there is no overhead. Everyone contributes their fair share, but their fair share is not in money, but rather in goods and services. I will discuss this in detail in a future article.

The way money naturally evolved caused the shift in perspective in how we view the economy. We went from what I call the bartering paradigm, which is a perspective of exchanging goods and services for other goods and services, to what I call the purchasing paradigm, which is a perspective of exchanging goods and services for money. We have built our economic system and developed our policies based on the latter paradigm, but this is not ideal since it does not represent the reality of what is going on in the economy. A policy such as taxation seems obvious under the purchasing paradigm, but from the perspective of the bartering paradigm we see that it is unnecessary, and just a waste of resources. We need to make the shift back to the perspective of the bartering paradigm. All economies begin with barter, and we need to preserve that principle even as the economy grows. Even when money is involved, the foundation of the economy is still that basic barter interaction. We just need to see how that is scaled up and made more efficient. The way we are currently creating and injecting money into the economy does not conform to free market principles. Free market principles can show us how to create and inject money in a way that will preserve the bartering paradigm, while scaling up the economy and making it more efficient.

This “new” view leads to new solutions which level the playing field for every participant in the economy. Everyone can have the same opportunities in a true free market. Imagine an economy where the wealth gap isn’t growing, where people have real power over their government, where there is no taxation, and where the banking and financial institutions do not have a stranglehold on the economy. It is time for a change. We need a revolution in our thinking and understanding of the economy, and to transition to a true free market. We are taking too many things for granted in the economy. For example, for centuries, we have been made to believe that it is okay for government to tax the population even though the population generally does not give their consent. It is not okay for your neighbour to confiscate a portion of your earnings, and it is not okay if the government does it either. There is a better way.

To move to a true free market we need to make a number of changes. Amongst them are the following:

• No more legal tender laws. Legal tender laws force people to use currency created by a select few and results in wealth transfer to the currency creating monopoly.
• No more taxation. Taxation is theft and is completely unnecessary in a true free market.
• No more favours to particular sectors of the economy. No economic sector is more important than others. There is no such thing as “Too big to fail”.

As I said before, we do not have a true free market. In fact we have never had one. My aim is to show the world what a free market really looks like, and why it is exactly what we need to give everyone equal opportunity to succeed. After all, when you think about it, a free market is really just a special case of a free society. And that is something worthy of striving for.