Free market

A free market is an idealised market where all transfers of money, goods, and services are devoid of coercion and theft (some definitions of "coercion" are inclusive of "theft").

Ideology and ethics

Support for the free market as an ordering principle of society is above all associated with liberalism, especially during the 19th century. In Europe, the term 'liberalism' retains its connotation as the ideology of the free market, but in American usage it came to be associated with government intervention, and acquired a pejorative meaning for supporters of the free market. Later ideological developments, such as minarchism and libertarianism also support the free market, and insist on its pure form. Although the Western world shares a generally similar form of economy, usage in the United States is to refer to this as capitalism, while in Europe 'free market' is the preferred neutral term. Use of the term ?capitalism? in Europe usually implies a Marxist, or at least critical, approach, unless it is being used to describe the 19th century.

Related Topics:
Liberalism - 19th century - Connotation - Pejorative - Minarchism - Libertarianism - Western world - Capitalism

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Marxism, communism, and socialism are usually seen as the main ideological opponents of the free market. Modern liberalism (American usage), and in Europe social democracy, seek only to mitigate what they see as the problems of an unrestrained free market, and accept its existence as such. To most libertarians, there is simply no free market yet, given the degree of state intervention in even the most 'capitalist' of countries. From their perspective, those who say they favor a "free market" are speaking in a relative, rather than an absolute, sense -- meaning (in libertarian terms) they wish that coercion be kept to the minimum that is necessary to maximize economic freedom (such necessary coercion would be taxation, for example) and to maximize market efficiency by lowering trade barriers, making the tax system neutral in its influence on important decisions such as how to raise capital, e.g., eliminating the double tax on dividends so that equity financing is not at a disadvantage vis'a'vis debt financing. However, there are some such as anarcho-capitalists who would not even allow for taxation and governments, instead preferring protectors of economic freedom in the form of private contractors.

Related Topics:
Marxism - Communism - Socialism - Modern liberalism - Social democracy - Libertarian - Coercion - Double tax - Anarcho-capitalists

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The ethical justification of free markets takes two forms. One appeals to the intrinsic moral superiority of autonomy and freedom (in the market), see deontology. The other is a form of consequentialism - a belief that decentralised planning by a multitude of individuals making free economic decisions produces better results in regard to a more organized, efficient, and productive economy, than does a centrally-planned economy where a central agency decides what is produced, and allocates goods by non-price mechanisms. An older version of this argument is the metaphor of the Invisible Hand, familiar from the work of Adam Smith, although it is older. In Smith's time there were no centrally planned economies to serve as a comparison, he was simply arguing that the market benefits the common good. Modern theories of self-organization say the internal organization of a system can increase automatically without being guided or managed by an outside source. When applied to the market, as an ethical justification, they are appealing primarily to its intrinsic value as a self-organising entity. Intense admiration for these abilities of the market became a characteristic of some pro-market argument in the 1990's, especially among those who saw the internet as a form of perfect market.

Related Topics:
Justification - Autonomy - Deontology - Consequentialism - Metaphor - Invisible Hand - Adam Smith - Common good - Self-organization - Intrinsic value - Internet

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