We live in a time of presumed consensus when it comes to economics. In recent decades, the logic of "free market capitalism" has been accepted without much debate. Indeed, the basic laws of supply-and-demand are elegant and true. We ought to allow people to trade freely so that market forces will allocate resources most appropriately. This will theoretically encourage innovation, create prosperity, and minimize waste. Besides, to allow people to trade freely agrees with our natural impulses which favor individual liberty.
Those who argue on behalf of the free market have baited us with pure logic. But there is a gap in their logic when we are told that the market must not be "interfered with" by governments. Governments, we are told, ought not regulate trade, create labor regulations, set minimum wages, and absolutely must not provide nationalized services such as health care. We are also told that labor unions are counter-productive because they "interfere with" the market, which will naturally provide the best deal for employees over the long-run.
What these free market economists fail to recognize is that economics cannot be separated from people. The market works when people trade products and money...not when products and money trade themselves. In fact, a market cannot exist at all without "interference" by people. Every transaction that takes place is a human reaction to the market.
When people organize a company to create a complex product, that product is a reaction to the market. Similarly, when people organize a trade union in order to fight inhumane working conditions, this too is a human reaction to the market. Therefore, the union is a product of the market. It is also true that, when people form a democratic government, then this government is a reaction to, and therefore a product of, the market. In fact, there would be no need for socialist policies if not for the reality of the market. So if people vote for nationalized health care, the establishment of trade policies, a minimum wage, or social security, then all of this is a product of the market itself. There is no conflict or inconsistency between any of this.
How can it be logically argued that people ought to be free to buy and sell, to hire and fire, but ought not be free to unite? We ought not be free to establish a democratic government to represent our collective interests? We ought not be free to decide, out of our own free will, to form a trade union? We ought not be free to create regulations and then abolish them if they prove ineffective? On what basis, and from who's perspective, can such an argument be made? Are those in positions of influence in just a bit of denial when they convince themselves that all things which interfere with what they want are interferences with the market?
The most brilliant economists are baffled when they observe economies which appear to conform more-or-less to their free market ideals, but then fail to deliver the results they logically expect. They are still baffled by all that which has gone wrong with those countless free market experiments launched in Latin America and the former U.S.S.R. over the past decades. They blame any and all problems on "market interference". Yet ironically they, themselves, are the only ones interfering. Only they -- those who stand in the way of personal freedom and authentic democracy -- are to blame for perceived market failures. When they handcuff market participants, unfairly favor the powerful, rig elections, and muzzle free speech, then they make it impossible for the market to function fully.
Countless free market economies have been brutally enforced by dictators who have been faithful to the idea of minimizing perceived interference with the market. When dictators brutally shut down unions, eliminate worker safety standards, remove trade tariffs, abolish minimum wages, and stifle dissent, they do so at least partially under the guise of letting the market function without interference. What they have failed to recognize is that when you eliminate personal freedom, take away free speech, make it impossible for workers to unite, and make it impossible for the collective voice of people to be heard in the form of a democratic government...well, it is only then that you have interfered with the market.
A free market cannot exist without freedom. It cannot exist without democracy. In fact, it is all part of the same thing.
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