I contend that liberals, progressives, and many other people don’t understand “The Market.” I have often thought that the reason might be hatred of “Wall Street” and its “Stock Market”. But one could hate the New York Stock Exchange all day and still honor the “Market”.
So what is this “market”? I will start with what is a “free market” since that is easier to comprehend in a way. The “free market” is simply people trading goods and services for other goods and services. A trade might involve direct trade as in “barter” but in our modern society a trade usually involves money. I recently had a company look at my van to see why the indicator was saying my tires were low on air. While I was there they did a complete check under the van for me. All is well, and I paid a reasonable fee that I knew in advance. I got the money to give them by giving my employer my services that so far, thank the gods, he thinks is worth more than what he gives me.
The amazing thing about the trade with the auto shop is that we both think we came out ahead in the trade. I have to travel to another city each week and I would hate to have tire trouble or any other kind of trouble on my aging vehicle so the small amount of money I gave them really was a “win” in my book. They think that they used a small amount of time to help me out and that the money they charged me made them come out ahead. You see, in a free market, both sides of any trade think that they are better off after the trade or else they would not trade. Remember, I am taking a free market without any force, intimidation, or fraud. No government intervention in other words.
Murray Rothbard once described the free market thusly:
The Free market is a summary term for an array of exchanges that take place in society. Each exchange is undertaken as a voluntary agreement between two people or between groups of people represented by agents. These two individuals (or agents) exchange two economic goods, either tangible commodities or nontangible services. Thus, when I buy a newspaper from a news dealer for fifty cents, the news dealer and I exchange two commodities: I give up fifty cents, and the news dealer gives up the newspaper. Or if I work for a corporation, I exchange my labor services, in a mutually agreed way, for a monetary salary; here the corporation is represented by a manager (an agent) with the authority to hire.
Both parties undertake the exchange because each expects to gain from it. Also, each will repeat the exchange next time (or refuse to) because his expectation has proved correct (or incorrect) in the recent past. Trade, or exchange, is engaged in precisely because both parties benefit; if they did not expect to gain, they would not agree to the exchange.
Now liberals or progressives hate the idea of free exchange as they believe that you and I need the protection of government intervention to avoid being taken advantage of. In other words, a progressive wants to treat you as a child and refuses to grant you the freedom and liberty to learn from your own life experiences. They call this “fairness”. Since the late 1800s and the “progressive age”, Americans have seen more and more intervention by the criminal class called government into our attempts to practice free market trades. The Austrian School of Economics has repeatedly demonstrated that any intervention into the market by government will reduce the overall wealth and, more importantly, the elites will profit from the interventions as we mundanes lose. Some call this American system we have now “Crony-Capitalism”.
But exchanges are not necessarily free. Many are coerced. If a robber threatens you with “Your money or your life,” your payment to him is coerced and not voluntary, and he benefits at your expense. It is robbery, not free markets, that actually follows the mercantilist model: the robber benefits at the expense of the coerced. Exploitation occurs not in the free market, but where the coercer exploits his victim. In the long run, coercion is a negative-sum game that leads to reduced production, saving, and investment, a depleted stock of capital, and reduced productivity and living standards for all, perhaps even for the coercers themselves.
Government, in every society, is the only lawful system of coercion. Taxation is a coerced exchange, and the heavier the burden of taxation on production, the more likely it is that economic growth will falter and decline. Other forms of government coercion (e.g., price controls or restrictions that prevent new competitors from entering a market) hamper and cripple market exchanges, while others (prohibitions on deceptive practices, enforcement of contracts) can facilitate voluntary exchanges.
From around 1800 to 1900, the US practiced laissez-faire free markets to a large degree (never perfectly) and the USA experienced an explosion in wealth from the top of society unto the very bottom of society. Since 1900 the US has increasingly practiced governmental intervention via a maze of laws, codes, taxes, and other coercions that defy listing in a small post like this and increasingly the US has become a debtor nation and the people have experienced ever increasing economic problems induced by governmental interventions.
When talking to a liberal (good luck with that!) don’t let them get away with claiming that the market is managed by “us” through the force and coercion of government planners. The only “democracy” in the market comes when each human may trade freely without any intervention by the armed thugs called government. The only “democracy” is the democracy of the sovereign individual making her/his own decisions free from coercion by the armed goons of government.