Free Markets

Opponents of free market capitalism ritually object to its alleged unfairness. This is not a deficiency in economic literacy, it is a deficiency in vocabulary – "free" and "fair" are two different concepts.

In economic exchange, "fair" is a subjective term; what is fair to one is seen as unfair to another. It is an emotional response made after the fact. "Free" is an objective term; it is an observable attribute of the process of exchange.

Freedom in economic exchange is the absence of 3rd party interference with the will of the principals. Any voluntary exchange is inherently fair, as neither party would complete a transaction against his/her own self-interest.

Our country was founded upon the principle of self-sovereignty; we are a nation of 300 million Kings and Queens. Kings and Queens do not accept boundaries placed upon them by the minions they appoint to administer governmental affairs.

Libertarians believe in free markets, and free market capitalism in its purest forms. It is our point of departure from many Republicans and most Democrats on matters of economic philosophy.

We reject all forms of coercion on principle, and we recognize that economic liberty and personal liberty are inseparable. The regulated economy only serves the interest of the regulators. Putting a different color jersey on the regulators each election cycle does not liberate human action in economic exchange.

Anti-capitalists point to labor abuses of the 19th century industrial revolution as proof of the essential immorality of capitalism. They celebrate the creation of the Department of Labor in 1913 as the beginning of the enlightenment, the dawn of the age of regulated state capitalism, where public interest trumps self-interest in matters of economics and commerce.

They have it wrong. Self-interest is the public interest. Consider this list of goods invented during the century preceding the establishment of the regulatory state:

Automobile, telephone, elevator, escalator, refrigeration, anesthesia, airplane, camera, motion picture, air conditioning, fiber optics, dishwasher, sewing machine, fax machine, gasoline, hydrogen fuel cell, light bulb, electric motor, railway, steamships, bicycle, radio, plastic.

Would the critics of capitalism prefer to live without the products it has given us? I think not. Organized societies of humans had existed for thousands of years before 1800, so why do you think that this explosion of invention occurred in this place and in that time? What happened to unleash a century of unparalleled prosperity, charity, and improvement in living standards?

America happened, that’s what.

For the first time in history, government was limited by liberty instead of the other way around. For the first time in history, individuals truly owned the fruits of their own labors. Innovation, ingenuity, and industry were liberated in the human spirit and the result was prosperity beyond imagination. It was no accident; we were not just lucky, our prosperity was the deliberate consequence of our liberty.

Along the way, we abolished slavery, institutionalized charity, extended life expectancy, established a middle class, and introduced the dynamic of economic upward mobility. Yes, there were abuses, as there are in any human endeavor.

That was then. Now we live in a different age – the age of regulated state capitalism. What will our 21st century statists list as their greatest inventions – Credit Default Swaps? Sub-prime mortgages? The Internet kill switch?

Free markets select winners and losers on merit alone. The order goes to the best supplier, however the customer defines best. The employee joins up with the best place to work, however he/she defines best. It is the consumer who wields absolute power in the free market, not the producer. Each dollar has the same market power, regardless of what color hand is holding it – or gender, age, sexual preference, or physical state.

The consumer decides what products will be sold and at what price. The consumer rewards success and punishes failure. Producers only survive and thrive when they give consumers what they want. This is the only reliable expression of "the public good". Those who can’t or won’t fail; failure is essential to the capitalist system, as it redistributes productive assets to those better able to meet the needs of consumers. Markets redistribute wealth more efficiently than any government could.

The state-regulated market transfers power to the producers and their regulators. Consumers are deprived of choice and their power to choose. The State places its self-interest above the individual consumer’s self-interest, and the State defines "the public good" in collusion with large and powerful producers seeking to insulate themselves from open competition in the market. Regulation, by its nature, stifles innovation, protects the bad operator, and constrains the good.

It is delusional to imagine that the state regulators are superior to unregulated producers and consumers, that their motivations are nobler. Statists and socialists who rail against individual self-interest are the most self-interested of all, demanding that millions of us comply with their own preferences, whims, and fancies against our wishes. They will not tolerate choices that deviate from their own; their idea of diversity is for us to act on their beliefs. When they can’t convince, they coerce.

They produce nothing, and yet they dictate what is to be produced and what is to be consumed. They substitute their rigid ideologies for the rightful self-interest of the producer and consumer in voluntary exchange. They suppress innovation, ingenuity, and industry, and then curse the very free enterprise system they have just disarmed.

The statists are not a necessary annoyance, they are an affront to the dignity of every free man and woman and everyone who aspires to be free.

In the economic history of the world, progress has been achieved by the disruptors, not by the states regulators. We will not unleash another era of unimaginable prosperity until we liberate our markets, and we will not liberate our markets until we dismantle our regulatory bureaucracy. We can begin this November, and we must.

"Moment Of Clarity" is a weekly commentary by Libertarian writer and speaker Tim Nerenz, Ph.D. Visit Tim’s website www.timnerenz.com to find your moment