I'm so tired of people who don't know what "free market" means making up their own definition and then saying it's a bad thing.
A "free market" is an economics term meaning a marketplace free from anti-competitive forces such as government subsidies, government price floors or ceilings, monopolies, cartels, oligopolies, non-compete agreements, etc.
If Google and Apple make an agreement about smartphone pricing, then we might not have a free market for cell phones. The government could then use regulations against such anti-competitive agreements to end the price fixing and restore a free market. In that scenario it was private enterprise causing a non-free market and regulation that made it a free market.
Regulations can help a free market (breaking up monopolies, preventing cartels and anti-competitive practices) or regulations can harm a free market (subsidizing production, preventing new entrants from entering the market). This notion of "free market vs regulations" is completely misunderstanding what a free market is and how the systems involved work.
>I'm so tired of people who don't know what "free market" means making up their own definition and then saying it's a bad thing.
"Free market" has multiple, ill defined and often conflicting meanings, which is partly what makes it so useful for propaganda purposes.
Yours is just one of those meanings, and a particularly pernicious one at that, because a marketplace free from anti-competitive forces has NEVER existed and never will exist.
The neoclassical school economics actually uses the term 'perfect competition' to describe your particular meaning, and while it's a very common assumption, it's one that always breaks their models (making them a poor fit to reality).
I disagree with your defintion in the google-Apple example and so does Wikipedia. It's pretty clear that if the government regulates it it's not a free market anymore.
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A free market is a market system in which the prices for goods and services are set freely by consent between sellers and consumers, in which the laws and forces of supply and demand are free from any intervention by a government, price-setting monopoly, or other authority.
http://en.wikipedia.org/wiki/Free_market
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The wikipedia quote doesn't seem to support your point, though.
It specifically lists "price-setting monopolies" and the like (which would include price-fixing agreements between Google & Apple, right?) as interference in a free market. Prices must be set freely by consent between sellers and consumers, not amongst sellers in backroom deals.
If a government's only "regulation" is to stop monopolies, price-fixing, and other violations of the natural supply/demand pricing, then you have a free market.
If no one stops those things, then you do not have a free market.
Enforcing anti-trust regulation depends on the industry:
If BurgerKing and McDonalds collude to set a hamburger at $10, then Joe's Hamburger will quickly open and win market share with its $4 hamburger.
If the product is an advanced piece of tech with large amounts of IP - there can only be a few firms, thus the need to prevent collusion through regulation.
> If Google and Apple make an agreement about smartphone pricing, then we might not have a free market for cell phones.
If people buy the phones voluntarily, knowing that the prices are set by agreement between Google and Apple, then that's a free market. The fact that you disapprove of sellers colluding to set prices does not mean collusion automatically stops the market from being free.
> The government could then use regulations against such anti-competitive agreements to end the price fixing and restore a free market.
Using regulations to force companies (or anyone) to do things they have not chosen to do voluntarily is not a free market. The fact that regulations might lead to an outcome you approve of does not make regulatory coercion a free market operation. The way a free market would "fix" price collusion between two sellers is by buyers voluntarily choosing not to buy from those sellers, causing those sellers to lose money and either go out of business or change their practices.
Exactly this. I have to explain this to people all the time. A free market is not the same as anarchy. Regulations are involved in making a market free by preventing non-governmental anti-competitive forces from distorting the market.
Right. Most libertarians would agree that courts play a vital role in enforcing rules/laws that govern across specific areas relating to contracts - specifically the areas of duress and coercion.
So in the end, what you're saying is that he's right? I took his comment as a broad generalization, not some flippant slogan via "free market is a fantasy economics concept pretty much exclusive to all who read Ayn Rand and vote Ron Paul". But you already knew that.
They narrowly defined a word that has many definitions while demonstrating outrage at any other meaning.
While they are technically correct in a textbook sense, their idea of a "True" free market has never existed in the context of this conversation, and it can be argued that price collusion between suppliers for a market is the natural result of free markets.
A "free market" is an economics term meaning a marketplace free from anti-competitive forces such as government subsidies, government price floors or ceilings, monopolies, cartels, oligopolies, non-compete agreements, etc.
If Google and Apple make an agreement about smartphone pricing, then we might not have a free market for cell phones. The government could then use regulations against such anti-competitive agreements to end the price fixing and restore a free market. In that scenario it was private enterprise causing a non-free market and regulation that made it a free market.
Regulations can help a free market (breaking up monopolies, preventing cartels and anti-competitive practices) or regulations can harm a free market (subsidizing production, preventing new entrants from entering the market). This notion of "free market vs regulations" is completely misunderstanding what a free market is and how the systems involved work.