20 April 2014

Free Market VS Capitalism

That they are two parts of a single whole comes from a extremely successful deliberate public relations campaign by US government and corporations, going all the way back to inventor of manipulative public relations and advertising, Edward Bernays.
The next year I pointed out parallels between capitalism and anarchy - but I got it wrong.  I should have compared the free market to anarchy.
I was making a similar mistake myself.  American propaganda has basically everyone assuming that the terms "free market" and "capitalism" are interchangeable.  I realized quite some time ago, in arguing with anarchists, libertarians, conservatives, and capitalists that the two meant distinct things.

But what I've realized only recently is that, just like democracy and capitalism, the two are actively opposed to each other.

You can not have a free market under capitalism.  And you can not have our current degree of capitalism without a significant amount of State power actively manipulating the market, which inherently means it is no longer "free".

Of course, even though modern America treats them as interchangeable, this idea is not new.
The person who basically invented the entire discipline of economics, the person who's words capitalists use more often than any other, Adam Smith, recognized that the two were actively opposed, and even that it was the role of the State to intervene to prevent capitalism from corrupting a truly free market.  Unfortunately, few of the people who claim to follow his model actually read his book...
In my next couple posts I'll get into explanations, examples, problems and (hypothetical) solutions.

For now let me just point out that realizing this distinction reconciles a lot of the apparent conflict between the arguments of people with various political/economic outlooks.  One side points out the (legitimate) benefits of the free market, while the other is focused on the (legitimate) problems of capitalism.  Its only because both sides assume (incorrectly) that the two are the same that they are stuck at an impasse.  I propose there is no valid reason we could not set up society in such a way to continue to receive (the majority) of the benefit of a free market economy, while avoiding (the majority) of the problems of capitalism.

[Next up: What is a Free Market?]

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