[MD] Capitalism and "the free market" was: (redux ad nauseum)

[Platt Holden]

Hi Stella,

> Ok. This field is huge, so I want to start examining the gate. "Free 
> market". Definitions. I think we'll slam dunk into the ditch immediately 
> if we don't start with the definitions. If we can agree on those, there is 
> a chance that this might turn into a fruitful discussion.

I agree absolutely and whole-heartedly. So I offer the following from the
on-line encyclopedia Wikipedia that several of us here have used in the 
past as an "authority."

"A free market is a market where price is determined by unregulated supply 
and demand; the opposite is a controlled market, where supply, demand, and 
price are set by a government.[1] According to a more philosophical 
definition, a "free" market is a market where trades are morally voluntary 
and therefore free from the interference of force and fraud.[2] The notion 
of a free market is closely associated with laissez-faire economic 
philosophy, which advocates approximating this condition in the real world 
by mostly confining government intervention in economic matters to 
regulating against force and fraud among market participants. Hence, with 
government force limited to a defensive role, government itself does not 
initiate force in the marketplace beyond levying taxes in order to fund 
the maintenance of the free marketplace. A few extreme free market 
advocates oppose even taxation.

"In political economics, the opposite extreme to the free market economy 
is the command economy, where decisions regarding production, 
distribution, and pricing are a matter of governmental control. In other 
words, a free market economy is "an economic system in which individuals, 
rather than government, make the majority of decisions regarding economic 
activities and transactions."[3] In social philosophy, a free market 
economy is a system for allocating goods within a society: supply and 
demand within the market determine who gets what and what is produced, 
rather than the state. Early proponents of a free-market economy in 18th 
century Europe contrasted it with the medieval, early-modern and 
mercantilist economies which preceded it."

This Wikipedia entry continues in more detail, but if you agree that the 
above is a reasonably accurate description of a free market in modern 
terms (as contrasted to Adam Smith's time) , then we can proceed from 
here. If not, let us discuss the definition further until agreement is 
attained.  

[snip]

> Definitions. "Free market". I have this idea that I shall go back to all 
> the roots; Smith, Ricardo, Chydenius etc. A few years ago, at a university 
> course in Political science, I had the opportunity to read Adam Smith's 
> Wealth of Nations and write a paper about it. It was... educational. You 
> know, "the invisible hand". That is perceived throughout most of economics 
> litterature as Smith's foremost thesis - "the free market as guided by an 
> invisible hand". It was not his main thesis. At all. It was put in as a 
> kind of a clarification somewhere on page 376. His main thesis was 
> something very different from what he is remembered for. Tantamount to the 
> direct opposite from what he is remembered for...
> 
> So, to start at the beginning; the free market as defined by Adam Smith in 
> 1776, was a place where all individuals had access. All individuals were 
> living in the small town where the market was, or in the close vicinity. 
> The central idea being that everybody had access to information about the 
> retailers, their goods and their moral behaviour. As a buyer, I could make 
> an informed decision. Smith described the over-seas trade as an 
> abomination because the rich people owning the ships to go to China and 
> Indonesia etc, didn't trade on equal terms. Their trading was a kind of 
> raging and roguing, argued Smith, and something that was merely ok because 
> it was so marginal to the trade at home. For Smith, business and trade 
> didn't function well without a palpable degree of Moral. Smith even 
> claims, quite frankly and on several occasions, that it is immoral to make 
> money out of money. His description of a future economic hell looks very 
> much like the situation we have today. Even so, he is used as a kind of a 
> holy saint in the economics sphere today, and I'm sure he's turning at 
> several mph in his grave.

He probably is. I agree that for purposes of our discussion about the free 
market today, Adam Smith may not be relevant except in a general way. 

> The definitions of a free market in many books today (there isn't one 
> Definition, but it differs slightly from author to author) still has the 
> same base as Smith's free market, but when scrutinizing the definition, 
> it's interesting to see on how many points the "market" today veers off  
>  from the definition and how the lack of closeness in business  
> relationships makes it very hard to maintain the "well informed-ness" and 
> "accessibility" to the market. We have 1) definitions of a free market, 
> then we have 2) the live thing we call the free market, and then 3) there 
> are several economic theories and practices, one of which is called 
> Capitalism. That is the picture that has painted itself before mine eyes 
> during the last 15 years. I bet that isn't how any of you perceive it, 
> though.

Maybe not as you perceive it precisely, but I have no problem with your 
three-part perspective.  

> Just a very short digression to Pirsig. (I left his definition of the free 
> market below.) How deep did Pirsig delve in his thought to come to this 
> conclusion? From my perspective the free market is a part of something we 
> call Economics. And Economics is just one way of dealing with values, but 
> far from the only, or the most inclusive way. Values are something that 
> has to do with what we perceive as Quality, so in this respect "the free 
> market" could be explained from all of Pirsigs levels, even though he 
> himself didn't do it, at least not in this excerpt from Lila. As a next 
> thing to examine, it would be interesting to go in the other dirction; 
> what is NOT values and Quality, and why do we use a symbolic (static) 
> pattern (Economics) to value some things, but not others? I will not say 
> anything more of it now, just leave it as some kind of sign of where I 
> would like the discussion to lead, eventually.

For me what you've said above needs further explanation, but let us 
postpone further discussion of economics and the MOQ to a later time.

> I hope for decent and balanced answers, something that Arlo said I could 
> as well forget from the start, so please, help me prove him wrong on this 
> one, heh. I want to further my knowledge, not convince anybody that I 
> happen to be correct, if there is a "correct" answer to be had at all. If 
> this thread turns into yelling and name-calling, I'm out of here because I 
> will not put time and effort into defending myself or what I believe in.
 
Arlo and I have had some very decent and balanced discussions, so not to 
worry about his occasional tantrums. I also doubt if there is a  "correct"
answer to be had. but it would be fun to explore these questions together.

Regards,
Platt
 
> 
> 
> > "A free market is a Dynamic institution. What people buy and what people
> > sell, in other words what people value, can never be contained by any
> > intellectual formula. What makes the marketplace work is Dynamic Quality.
> > The market is always changing and the direction of that change can never
> > be predetermined. The Metaphysics of Quality says the free market makes
> > everybody richer by preventing static economic patterns from setting in
> > and stagnating economic growth. That is the reason the major capitalist
> > economies of the world have done so much better since World War II than
> > the major socialist economies. It is not that Victorian social economic
> > patterns are more moral than socialist intellectual economic patterns.
> > Quite the opposite. They are less moral as static patterns go. What makes
> > the free-enterprise system superior is that the socialists, reasoning
> > intelligently and objectively, have inadvertently closed the door to
> > Dynamic Quality in the buying and selling of things. They closed it
> > because the metaphysical structure of their objectivity never told them
> > Dynamic Quality exists." (Lila, Chap. 17)
> 
> 
> 
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