The Myth of the Free Market

Ok, I’ll admit up front that this blog entry is going to seriously undermine my small L libertarian cred because libertarianism’s very foundation is built around Adam Smith’s treatise on classic liberalism economic theory The Wealth of Nations. The “invisible hand” of the free market is, at best, infallible and at the least, far better than any government-controlled, centrally-planned economic system.

While I agree with the premise of free market economics from a normative point of view, from a descriptive/realistic perspective, I think the concept of Laissez-faire economics is not exactly grounded in realism.

In order for a (totally) free market economy to function, both consumers and producers (the demand-side and supply-side, respectively) would have to act rationally, even if it requires sublimating self-interest, which ironically is not rational.

Again, I feel compelled to state that I’m not a socialist, social democrat, or communist. I’m very much a capitalist. However, to quote an article I read some time ago from Mr. Conor Bond with the same title as this blog post…

I think capitalism is the way to go, provided that it is partnered with a degree of state ownership, strict corporate regulations, and a strong welfare state. Two, the invisible hand applies only to perfect markets in which perfectly informed consumers demand goods from perfectly competitive firms. These markets do not exist. Three, Adam Smith was, above all else, a moral philosopher. Were he around bear witness to the burgeoning inequality of the modern United States, he would be horrified. Stop planting your conservative flag in Adam Smith.

Feel free to read Bond’s article in its entirety as he goes on to provide historical context as to why the free market is and always has been a myth. However, the point of my post is that this salient point is seldom brought up in our political discourse and it absolutely should be.

Arguing theories devoid of facts always propagates ignorance.

-The Rational Ram

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