So I’m discussing economic policies with a socialist friend of mine. I’m advocating for a free market and pointing out that the current economic crisis isn’t the result of a free market gone bad because we haven’t had an economy that really operated by free market principles in a very long time. She asked when the US last operated on the principles of a free market. I don’t know the answer to this question. Its a productive discussion, so I would appreciate some help. Thanks!
Probably in early 1791 before the establishment of the First Bank of the United States (the US’s first central bank). The U.S. never truly had a free market system, though that’s probably the closest we got. Maybe Jackson and Van Buren brought us close when Jackson eliminated the Second Bank of the United States (the First Bank’s successor) and Van Buren brought us out of a severe recession by lowering taxes and reducing government size (though he did delay deflationary correction by suspending specie payments, IIRC).
Thanks kaju. I’ll ask another question because I know she’ll ask. Are there any more modern examples internationally or a free market being used.
Rhetorically I used to slip into “we’ve got to let the free market work.” “More interference in the free market.” etc.
But technically it is wrong and it’s a bad habit a lot of people need to get out of, including myself. I tended to use ‘free market’ and ‘market’ as synonymous and easily interchangeable.
But by using the first, the premise is there was a free market. But then that confuses people when they rile on problems, or ask the question the OP has been asked & you have to later declare, well it wasn’t a “free market” after all. It lessens the persons credibility I think.
Essentially it was a “freer market”, but it’s best to just call it a market to avoid confusion. </random points on the esoteric>
I good way to maybe make your point, would be. For example: NAFTA etc. is not FREE trade, it is MANAGED trade. A “free market” is where there is no government intervention, fiat, inflation, regulation, taxation are interventions. (Still yet to read Rothbard’s MES and Power and Market) The point is the less intervention the better and more ‘free’ the market is.
I find often that these discussions shift back and forth between IS and OUGHT. You’ll argue it ought to be something and the reply will be it is what it is, therefor it’s impossible. Be sure to nail that down. If you wish to talk about what is, then in most cases you can just go look it up, and the discussion isn’t very interesting; it isn’t even a discussion.
Also be sure to nail down what capitalism is. Explain how there are perfectly precise words for corporatism, state-capitalism, mercantilism for the evils she rightly opposes, and that the blanket condemnation of all things capitalist is (don’t say:) intellectually lazy.
Chapter 18 of Volume I of Rothbard’s Conceived in Liberty describes the failure and resulting starvation resulting from the principle of “From each according to his ability, to each according to their needs” and the move to personal responsibility.
Also, I found Chapter 55 about Pennsylvania particularly amazing. Just hope she doesn’t take it as license to advocate banning guns.
One of Jeffrey Tucker’s last daily articles about homesteading, I thought, was a brilliant illustration of private natural property rights arising in “unclaimed” areas and peoples’ natural respect for them.
1791 seems quite extreme to me, but the point about central banking is well taken. Left-wingers like to claim that we’ve been governed by “neoliberals” since the 1980s; you can point out that politicians who claim they are pro-market have rarely acted in a pro-market way (the last three Republican presidents spent like they’d just gotten hold of daddy’s credit card).
There aren’t any examples of true free markets being used in at least the past 100 years that I know of. However, there is a general correlation that the freer a nation the higher the living standards. Singapore and Hong Kong, for example, are the two freest markets in the world and both have very high GDP per capitas. Liechtenstein, another mostly free market economy, has the highest GDP per capita in the world. Luxembourg has one of the highest GDP per capitas in the world along because of its relatively free market as well. Qatar, the country with arguably the second highest GDP per capita in the world and the highest living standards in the Islamic World, has the smallest tax burden in the world, with only foreign corporations being taxed and low tariffs. The overall tax burden is less than 2% of GDP.
Tell your “comrade” that technically, a free-market can only exist in the abscence of The State (this clears up what definition you are using).
Second, point out that even before the establishment of the first central bank, even in the beginning of the United States, we’ve always had a State existing.
Concisely point out that even though the markets were more free compared to what we have today, it is only in a matter of degrees. Even under a minarchist or minimal government (which is what we more or less started as), the free-market never existed.
Thirdly, point out the major error in anti free-market rhetoric, which is that of blaming a minimal amount of interventionism (the minimal state) as the cause of the “problems”, where the solution is “even more interventionism” and/or “regulation”.
Finally, point out that if this all sounds logical (make a few pit-stops to ensure your friend follows, but i hardly see how he could argue that we started out as a minimal government, did not start out with a central bank, etc. when these can be empirically backed up), then the anti free-market rhetoric is really anti-regulation rhetoric.
Advocates of more regulation are simply arguing against less amounts of regulation, whereas you are arguing that regulation as a concept has proven fatal to our economy time & time again.
If you can tie this in with parallels of socialism’s effects in various countries that experimented with it, as well as some countries the went beyond to Fascism, you might have a chance at getting some of your point across.
If you can also somehow sympathize with anti-state socialists (for the purpose of the argument), and strongly point out that under a free-market, voluntary socialist services would most certainly be desired by some individuals, you might be able to convince him that the free-market & socialism (voluntary & stateless) are not necessarily ideological opponents.
Bonus points if you can also mention that capitalism amid voluntary consenting adults & the working class are not the same as corporatism & state-capitalism privatizing the gains & socializing the losses (using the recent economic recession events as a possible example).
Correlate this with socialism amid voluntary & consenting adults would not be antithetical to the free-market, unless one were to force others to follow the same political & economic system. Hopefully by then, you’ve brought up the grand questions of “Why should I be a socialists if I don’t want to?” or “Are you to threaten me with a gun to be a socialist like you?”, and “Is coercion justified, when it is not self-defense?”.
At some point, he will bring in the obligatory “if you don’t like it, then leave”, so throw it back in his face, & question him: “Is you territorial monopoly over the way I run my life legitimate? If i defend myself from your coercive actions, am I instantly a criminal of the state?”
Might be nice to ask him what economics books he has read; interrupt him if he starts prattling off the titles of the latest political books (for brownie points: mention the Oppenheimer quote concerning the difference between political & economic means for better hallway vision, on his part).
Ask if he has read works by legitimate economists (i.e. mention some Austrian ones, but also any non-Austrian you consider worthwhile to read), other than Keynes, Krugman, & sterotypical bashings of Friedman & Hayek in the columns of the latest San Fransisco paper (okay, scratch that last part, but you get what I mean).
Admittedly, a little sloppy, but I tried pacing it in a somewhat point-by-point argumentative way.
- Afterthoughts & Optional:
It might also be nice to address his concerns of egalitarianism not existing because it isn’t forced; if you want to tap into some emotional reasoning ammo, you could suppose that the free-market enables the natural egalitarianism in some to help the most amount of people without barriers.
The State, being an enforced, coerced, involuntary “attempt” at the desired egalitarianism of the usual socialist (or at least their good intentions), forces those who cannot or would not become egalitarian, & possibly motivates more people to exploit each other because in the long run, we’re all getting screwed.
You also might want to address the paradox of egalitarianism and/or socialism, which supposedly advocate some sort of fair society, yet require theft of wealth, cocerion upon those who do not wish to become socialists, etc. that ultimate add-up to a society that is as unfair as the one it adovcates to rwplace (if not more so).
There is no “universal” free market. There are free markets in specific goods. The money market was a free market until the Fed started planning interest rates, for example. The labor market was a free market until union and licensing regulations.