What exactly IS a "Free Market"?

[Crazy Dazz]

Believe it or not, I'm an economic conservative, and believe in the benefits of "Free Market Economics." However people need to understand, that just as Isaac Newton's tale of the Apple falling on his head was meant to illustrate gravity, rather than propose a method for harvesting apples, so it is too with free-market economics.

For starters, the two most basic conditions that MUST exist for a Free-Market are that nobody has "Market Power" (ie you have an infinite number of extremely small buyers & sellers)
And that buyers & sellers can readily enter and leave the markets at no cost.

So as an illustration, as sub-markets, free markets Could exist for particular vegetables: Lets assume for the sake of argument that we neither import nor export vegetables, that we eat a constant demand of vegetables, that our market gardens are exactly large enough to supply our overall demand, and that weather & pestilence play no part.
Each week, every family in Australia goes to the market to buy vegetables, but we can choose what quantities to buy of a huge variety of vegetables. At the markets, you have a huge number of gardeners (each who have a only a very small plot) and they can choose what vegetables to grow, and swap easily between them.
(We also need to assume that all the prices are listed electronically, and that every family can access up to the minute prices.)
So if peas start to become more popular, and carrots less, buys will push up the price of peas, and down the price of carrots. Growers will quickly swap from carrots to peas, meeting the demands of the market, until a new equilibrium is reached.

The problems, even with this simplistic example, should be evident:
Even vegetable crops take months to mature, so you can't swap quickly from one to another. Every so often, we'll get such a glut of a particular vegetable, that some growers will simply plough theirs back in, as its not economical to harvest. (So imagine how that can be for an industrial investment that has a 20 year payback.)
Once you introduce co-ops, or green-grocers, or supermarkets, or canneries, you destroy the free-market.
At the next level up, the market is far from free. For the families, its a choice of buy vegetables or become unhealthy. For the grower, once you have set yourself up (at considerable expense) there's not much else you can do with your land if demand falls (or you face competition from imported products.) To be a free-market, you must be able to simply move your capital from one market to another. Imagine you've invested $1B in a factory, that is nolonger profitable. Nobody is going to buy it off you for $1B, to allow you to invest it elsewhere.

So talking about a "free market for labour" is a nonsense.
Once you have big employers, they have market power. (Which is why you need collective bargaining, but on the other hand too powerful unions can also wield market power."
If your job requires training and experience, then you can't simply move from one career to another.
If the demand for your skills moves to China, you can't practically move your supply of labour to match.
There is a finite level of labour available, whilst on the other hand not working because of insufficient demand is not very pleasant.

Talking about "Free Trade" is so absurd it would be laughable if not so serious.
There's roughly a hundred countries in the world. Even if each economy was the same size, and each government maintained zero interference, you would struggle to maintain a free market with such a small number of players. Proponents would argue that it is individual traders that participate in Free Trade, but that is an absolute nonsense. Governments set major fiscal and economic policies that impact trade, and even in many industries (eg cars) their are limited participants.

If you take many tonnes of steel, properly designed and constructed, you can build a ship, that will float, carry cargo, and even passengers. Taking the same steel, throwing it into the ocean and hoping for the best, simply will not work.

[superyob]

My head hurts reading this Crazy Dazz. However, there is an old window 95 or 8 PC game called Imperialism. Your post just described this game in detail, minus the military muscle...

[Junkyard-Dog]

I read your entire post Dazz and I still can't make heads or tails of it. I don't know where to start.

[Itsme]

I think you have too much idle time, go find a hobby.

[castellan]

Originally Posted by Crazy Dazz

Believe it or not, I'm an economic conservative, and believe in the benefits of "Free Market Economics." However people need to understand, that just as Isaac Newton's tale of the Apple falling on his head was meant to illustrate gravity, rather than propose a method for harvesting apples, so it is too with free-market economics.

For starters, the two most basic conditions that MUST exist for a Free-Market are that nobody has "Market Power" (ie you have an infinite number of extremely small buyers & sellers)
And that buyers & sellers can readily enter and leave the markets at no cost.

So as an illustration, as sub-markets, free markets Could exist for particular vegetables: Lets assume for the sake of argument that we neither import nor export vegetables, that we eat a constant demand of vegetables, that our market gardens are exactly large enough to supply our overall demand, and that weather & pestilence play no part.
Each week, every family in Australia goes to the market to buy vegetables, but we can choose what quantities to buy of a huge variety of vegetables. At the markets, you have a huge number of gardeners (each who have a only a very small plot) and they can choose what vegetables to grow, and swap easily between them.
(We also need to assume that all the prices are listed electronically, and that every family can access up to the minute prices.)
So if peas start to become more popular, and carrots less, buys will push up the price of peas, and down the price of carrots. Growers will quickly swap from carrots to peas, meeting the demands of the market, until a new equilibrium is reached.

The problems, even with this simplistic example, should be evident:
Even vegetable crops take months to mature, so you can't swap quickly from one to another. Every so often, we'll get such a glut of a particular vegetable, that some growers will simply plough theirs back in, as its not economical to harvest. (So imagine how that can be for an industrial investment that has a 20 year payback.)
Once you introduce co-ops, or green-grocers, or supermarkets, or canneries, you destroy the free-market.
At the next level up, the market is far from free. For the families, its a choice of buy vegetables or become unhealthy. For the grower, once you have set yourself up (at considerable expense) there's not much else you can do with your land if demand falls (or you face competition from imported products.) To be a free-market, you must be able to simply move your capital from one market to another. Imagine you've invested $1B in a factory, that is nolonger profitable. Nobody is going to buy it off you for $1B, to allow you to invest it elsewhere.

So talking about a "free market for labour" is a nonsense.
Once you have big employers, they have market power. (Which is why you need collective bargaining, but on the other hand too powerful unions can also wield market power."
If your job requires training and experience, then you can't simply move from one career to another.
If the demand for your skills moves to China, you can't practically move your supply of labour to match.
There is a finite level of labour available, whilst on the other hand not working because of insufficient demand is not very pleasant.

Talking about "Free Trade" is so absurd it would be laughable if not so serious.
There's roughly a hundred countries in the world. Even if each economy was the same size, and each government maintained zero interference, you would struggle to maintain a free market with such a small number of players. Proponents would argue that it is individual traders that participate in Free Trade, but that is an absolute nonsense. Governments set major fiscal and economic policies that impact trade, and even in many industries (eg cars) their are limited participants.

If you take many tonnes of steel, properly designed and constructed, you can build a ship, that will float, carry cargo, and even passengers. Taking the same steel, throwing it into the ocean and hoping for the best, simply will not work.

You are correct, it's all a load of bull and who is it that are pushing this line truly.
Is it some people with big money and the socialist Marxist plan, that they want to walk all over other nations best interest for there agenda.
We are being lead into a position where a states rights and that = the Voters rights are worthless, not to mention the nations rights and borders will be gone = no more democratic Australia rights, so we have only one world order that's run mainly by just one separated identity that controls the whole world.

The plan is coming together but it will not work as you know it can't, but it's a good way of empowering some people that much so that pushing people around will be childes play and killing off most of the population in the world by stealth, most of the media are worthless now and only push a political correct line of spin and bag true freedom of speech, it wont be long and we will see that anyone who does not abide totally with there political correct masters will become an enemy of the State and anyone who understands history should know that Nazi Germany and the Communist used Political Correctness to empower there political party and that pushing Political Correctness was there key tool to brainwash the people.

[Junkyard-Dog]

https://en.wikipedia.org/wiki/Godwin's_law

[Legit290]

Originally Posted by Junkyard-Dog

https://en.wikipedia.org/wiki/Godwin's_law

They lose

[Mowdit]

I admit to "not being all that smart" or educated (at times)

I expect that I fall into the majority of "the masses" !

In saying that, I have always seen "free trade" as trade between countries, where by some rich bugger negotiates an agreement (usually Govco) for "us" to trade with another county, the terms usually involve selling "our" recourses to the other country for sweet FA (to benefit the "rich bugger").
And in turn they trade/import things we don't necessarily need at a premium price

We, the masses, are the sheep..........................
The rich get richer/kick backs...........................