Free Markets

[Brainonska511]

As I read through the housing bailout thread, I kept seeing terms like "free market" thrown around. One poster mentioned that having a police department was an example that the market is not free, but that is wrong. If you actually read through what Adam Smith wrote, there are there are some tasks that the market cannot handle efficiently, namely defense, justice, and public works (military, police, courts, roads, etc). Since the market cannot efficiently handle these things, he says that those tasks should be left to the government. Additionally, Adam Smith made an argument for government intervention in cases where the market could not properly regulate itself.

So my questions for all of you: Have you actually read any books written by philosophers that wrote about capitalism to get a better understanding of what's going on or do you guys just like to throw catch phrases around without really thinking about what you're saying? Secondly, do you really believe a true laissez-faire system would work and be better than a partially regulated system that we currently have in place?

 

[Throckmorton]

Did Adam Smith invent the free market?

 

[Brainonska511]

Originally posted by: Throckmorton
Did Adam Smith invent the free market?

No, but he did write about capitalism, so I figured it would be a good starting point.

From the Wiki article on the book: It is a clearly written account of political economy at the dawn of the Industrial Revolution, and is widely considered to be the first modern work in the field of economics.

 

[JS80]

That's what I studied in college. Majored in Economics. Most of the leftist jackasses here never even took an economics class.

 

[everman]

Welcome to econ101, have a nice stay.

 

[Special K]

As a non-econ major, I recently read Economics for Dummies. Although some may laugh at the choice, I felt it actually did a pretty good job of introducing macro/microeconomics to someone who had never taken a class on it before.

 

[drinkmorejava]

Originally posted by: Throckmorton
Did Adam Smith invent the free market?

It's my understanding that modern capitalistic thought came out of Calvinism around 1560 (aka the renaissance).

 

[LegendKiller]

There is no such thing as a "free market", nor will there ever be. It exists in a vacuum of utopian ideologies, much like communism and pure socialism. The main thing it excludes in the calculation is the inherent greed and ambition of humans, among other psychological variables.

This is why Smith is correct in stating that regulatory oversight and government intervention is needed.

 

[JS80]

Originally posted by: LegendKiller
There is no such thing as a "free market", nor will there ever be. It exists in a vacuum of utopian ideologies, much like communism and pure socialism. The main thing it excludes in the calculation is the inherent greed and ambition of humans, among other psychological variables.

This is why Smith is correct in stating that regulatory oversight and government intervention is needed.

lol succinct and to the point as usual

/thread

 

[sjwaste]

I majored in economics, but moreso worked on the quantitative side. After I got my first job out of college, I started reading more of the economic theory. I'm not saying I didn't understand the theory, but there's a big difference in having the knowledge to do the math, vs the philosophy behind it.

Anyhow, IMO, a true laissez-faire market system really only works where there are determinable prices (supply- and demand-side) to all of the inputs and outputs of an economy, or sub-economy within. Therefore, things like fisheries, emissions, etc, where the prices of the inputs or the sinks aren't easily determinable, and the costs in their true form don't pass materially to others, that's an instance where some regulation is probably necessary. I don't think Adam Smith would argue against that, either.

Certain other activities that involve a great deal of risk are sometimes better borne by governments as well, such as defense or justice, as great economies of scale (defense) are required or the risks associated with error are too great for a private organization smaller than the government to bear (justice). Large scale infrastructure is sometimes tied into defense (roads, communication) or split out separately, but the analysis is largely the same.

Environmental risks fall into the immeasurable category. I think most economists will agree that pollution sinks, land use/conservation, ocean/waterway use, and biological resources are something that don't have clearly measurable costs in some way that makes regulation necessary, as a free market is not efficient here.

The political problems, to me, start when you get into "scope creep" on the above issue. This is about the line where ideologies start to differ vastly, even when the theory basis is roughly the same. Education is probably the fringe, a good argument can be made on the societal benefit of public or private.

Finally, there are the other social programs. This is where we admit there is going to be economic waste, but decide to do it anyway (treating the government agency as a "firm," we're not at the bottom of the ATC curve anymore), because the perceived (and usually difficult, or immeasurable) benefit is greater than the DWL vs private enterprise. I'm not arguing either side of the political spectrum here, as that's out of scope, but this is the part of economics that tends to become more politicized.

Anyway, now that I've written this, I'm not sure what I was getting at anymore... enjoy?

 

[Deeko]

The people that spout things about the "Free market" and how anything and everything should be regulated by the market generally haven't read anything other than Ron Paul's books, and usually don't have a clue how the world works.

 

[IHateMyJob2004]

Originally posted by: JS80
That's what I studied in college. Majored in Economics. Most of the leftist jackasses here never even took an economics class.

Wow, if leftists are worse than Bush, then we are all Fed