Critique of Free Markets: Beyond Economists as the Priests of Liberty

June 30, 2015

It is a common refrain today among some that governments should not overregulate economies or markets, just as they should not overregulate people’s lives. Both forms of intervention infringe on liberty, and both undermine the economic well-being of the world. This argument is often presented as an argument for protecting individual liberty and has two different flavors or variations, which are interrelated in various ways and are often used to justify each other. One argument says that free markets are a right like other rights of life, liberty, and property. We have a right to sell to whom we want and at what price we want, just as we have a right to our lives, liberty, and properties. Regulation of markets interferes with one of our key liberties, related to our liberty to do what we want with our property and to our liberty in general.1

The other argument holds that free markets create economic prosperity and are right and good for a liberal society because they help create and perpetuate liberty and justice. In this version of the argument, the consequence of free markets and an absence of regulation has consequences that are critical to the flourishing of liberty. Economic prosperity is an end in itself, and it also supports a life that embraces liberty. Sometimes both of these positions are used together, sometimes one or the other. Both use the language of liberty but come at liberty from different perspectives. As we shall now see, however, both have misleading ideas of liberty and distort the liberty tradition in critical ways. Let us dive into these positions in more detail…

Rethinking Liberty and Free Markets

In what follows, we see that both of these arguments about market freedom are confused and confl ate the question of liberty inappropriately with the question of markets. To begin with, liberty and markets intersect and touch each other but are not the same matter. One can fiercely defend the concept of liberty but still advocate for various kinds of interventions in markets. This is not a contradiction in terms. Indeed, various kinds of interventions in the market are necessary for liberty, and the decision of whether and in what ways to regulate markets is itself part of what it means to live in a liberal society. This is not a position that free market proponents recognize, for they tend to see any intervention in the market as incompatible with liberty. In framing the relationship of liberty and markets in this alternative way, we have turned the free market story on its head. We believe liberty itself includes the right to decide how much latitude or freedom to allow the market. Indeed, to take away that freedom by trying to mandate and prescribe a set relationship between government and markets is to deny liberty itself. In other words, to impose free markets and to insist they are not a choice, but a mandate of liberty, is as much an imposition as the imposition of socialism would be. Insisting that governments cannot intervene in markets is tantamount to saying that we cannot try to live our lives by deeply held values and morals. There are three different pillars on which this alternative understanding of markets and liberty rests.

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