Defending free market policies today is a little daft. It is quite clear that leaving equality or mutual interest to the free market doesnt work in the majority of cases. To put it simply, in theory it all sounds great, but in reality most systems are not true free markets. For instance, there usually is little to no competition keeping the wages at "almost the same level as the value of the production". This is due to sluggishness of workplace mobility. People dont want to change jobs and do so rarely. There are plenty of reasons for that such as economic downturn (less jobs), lack of knowledge or courage to change, geographical limitations and in general the hassle of finding a new job which in all cases is a major hurdle. Also, companies set wages at similar levels as other companies, preferably below them, not above. They can do this exactly due to the sluggishness of mobility. This means that wage increases grow much slower than production value, and will over time stay more and more behind.

Last but not least, wages and worker rights are usually fought over not by government but by unions, which are specifically not government-based. Naming the weakness of politics doesnt change that having no protection is also not good.

As always it is best to walk the middle road here. Free market economics has its moments to be sure but it needs to be tempered by intelligent social rules. If you take a look at the "best" countries in the world to live in, various studies show that for instance the Nordics are extremely loved, and they all have free market economies tempered by social policies.

PS The economics theory of Karl Marx is about the only theory of macro-economics still standing. We may all not like the communist ideas that came from it, but his thoughts on capitalism so far have turned out to be spot on.

this is so hyper-simplistic that it's not worth responding to.

Capitalism For Dummies.

I couldn't watch this shit beyond 1:30.

"Companies HAVE to pay more because of competition from other companies."

This is absolutely true! True right up to the point the company moves it's production line to a third-world, human-rights-starved country for the equivalent of $.25 per hour. THEN the competition is to see how little each company can spend on labour.

@rbar First you state that free markets don't work, then you say most systems are not true free markets. So, how did you realize they don't work if apparently we don't have them anywhere?

My guess is that you rushed to conclude they don't work when, usually, more prosperity is experienced where there is most economic freedom?

Assuming workplace mobility is sluggish as you claim, ever considered that maybe it's not something inherent? Maybe it's policy that makes it sluggish. Worker's rights are designed to help the employed, but what most don't see is that they do so at the unseen expense of the unemployed, those looking for jobs, and the employers. Ever considered that maybe that's what's getting in the way of hiring and firing people more easily (i.e., more mobility)?

A free market wouldn't have worker rights guaranteed by government. The terms of job contracts would be freely negotiated between employers and employees/unions.

Unions are, more often than not, involved with government, how do you think worker's rights came to be? That's the threat they represent to economic freedom, the same way a cartel would be a threat if it corrupted authorities to obtain undeserved privileges at the unseen expense of competing businesses and consumers.

There is nothing daft about defending economic freedom, just as there was nothing daft about defending freedom of expression back when no country in the world would allow it. Today we all know and enjoy freedom of expression thanks to our open-minded ancestors who cared enough to fight for it.

@renatojj I argue that most markets do not have the right environment to allow free market policies. I do not argue that free markets policies do not work as I believe in some cases they can work. If you allow free market policies in a market that doesnt have the right basis, you will get exploitation.

Yes, I did consider if workplace mobility is inherently sluggish. And it is. There are numerous reasons. Consider that finding a new job is always more effort then staying where you are. There is always a threshold to changing jobs. Regulations can make that threshold higher (bureaucracy), just as deregulation can make that threshold higher. You see, if there are clear rules about minimum wages, pensions, health insurance etc, you dont need to negotiate those, which saves time and effort and lowers the threshold to change jobs, ie makes mobility higher. In any case there is never no threshold which means that you always need at least some basic rules.

Unions are not involved with government any more than businesses are. They are a party representing a group of people on the negotiation table just like businesses. And just like businesses it is government who has setup the basic legal rules they have to play in. If you look at history you will see that both corporations and unions started without any government involvement. They are both groups of workers cooperating, be it for different reasons. Later government regulated both.

Free markets are about one option on how to manage markets. Free markets are not about economic freedom and certainly not about freedom of expression. You can have free markets that oppress in the economic sense and fully regulated markets that give economic freedom. Consider that the free market concept is also not devoid of all rules. It just cherry picks the rules it likes and calls other rules "anti-freedom".

@rbar the only definition of exploitation that really matters is when people are coerced into transactions they don't want to participate. Whenever you adopt any broader definition to fight against, you end up with more of that first kind of exploitation.

In a free market, the policy is to make transactions as voluntary as possible, maximizing options, which makes exploitation less likely.

When you argue that an environment is not right for a free market, what do you mean by "right"? Isn't that just passing judgement, just you implying force should be used to achieve whatever it is you consider to be "right" for a bunch of people, instead of letting them work it out without force? Wouldn't imposing by force your definition of "right" be likely more unfair?

What you said about unions not being involved with government any more than businesses are, I completely agree, because they both are very much involved, they both use force, laws, and taxpayer money to gain an unfair advantage. That would be unacceptable in a free market.

There is nothing arbitrary about the rules of a free market, they're defined on principle to maximize economic freedom for the individual. The only analogy I make with freedom of expression is that they're both freedoms, they have the same dynamic.

Moving this video to bobknight33's personal queue. It failed to receive enough votes to get sifted up to the front page within 2 days.

@renatojj I agree with you! Coerced into transactions they dont want is indeed the only definition important. I just dont agree free market policies are about making transactions as voluntary as possible. Free market policies only do that in some cases, namely where you have optimal competition. In most markets that is not the case. That is what I mean with right.

I live in Europe. Spain currently has an official unemployment of 25%, 50% for those under 25. Do you think in that situation the unemployed have a choice? You will and do get coercion. People dont want to work for wages that are so low they cannot afford their homes and barely have enough to eat. But the other option is starvation, so they have to. I know the free market people argue that that is still a choice. It is not. If it where up to companies, they would pay even less. Thats why you need for instance minimum wages. If companies would be allowed to go below that minimum all kinds of nastyness would happen. Not for the companies, but for the country, which is bad also for the companies in the end.

Free markets rules are set to minimize government intervention. In some cases that also leads to maximum choices, which you call economic freedom. The issue here is that if all the choices are bad, you are still better off with more rules as lots of bad choices is another form of coercion. The entire idea is to maximize economic freedom while making sure there are good choices. I am not advocating government take full control, which would be the other side of the spectrum. I am advocating a middle road. Use free markets when you can, regulate when you need to.

@rbar when people have only bad choices available to them, what we truly resent is the economic problem that puts them in that awful predicament. In principle, there is no exploitation taking place.

Economic problems exist no matter what policies you adopt. The only thing a policy maker can do is transfer (to someone else) or dilute (to everybody) the costs of the problem, but rarely without increasing them in the process.

So when you say free markets are only about minimizing government intervention, but NOT about maximizing choices, what you're implying is that government can increase one's choices through force... and, you're right, that's true ... but for whom, and at what cost?

Government can improve the choices of a group of people only in detriment of others, and not without reducing the amount of choices overall.

The tool of government is force, and that's what force is all about: reducing choices. Less force => more choices => more ways to solve economic problems.

@renatojj I think we are getting to the bottom of this. You and I have a vastly different idea of what a choice is. Let me ask you, how many choices does the person in the next example have? (Apologies for the graphical nature, its is not meant personal just a vivid example)

If I were to ask a person to shoot themselves or jump of a building because if they dont I will kill their family, how many choices does this person have? I am betting you will say at least 2. Maybe in a creative moment even more (escape, fight back etc) In reality this person his no choice. In all options either he or his family dies, ie he loses. He cant win. The end result is always the same. Hence, there is no choice he can take that has a different effect, hence there is no choice.

So trying to maximize the amount of choices, good and bad, is counting false positives. The bad choices are no choices. They are just another form of coercion by whomever has power.

So whether the bad choices come from economic problems, or from any of the other reasons (monopolies, geographical limitations, mobility sluggishness etc) it doesnt matter. Bad choices are always a form of coercion. Free markets only work in situations where you have none of the above problems and as such have a natural amount of good choices, which is rare. This is exactly why you need policy makers to create and protect good options. Maybe that decreases the total amount of choices, good and bad. But it increases the amount of good choices, which are the only ones that matter.

@rbar in your examples, force is used to remove a person's choices, but then you equate that with bad choices. Bad choices which, in a free market, would not involve the use of force. So, are bad choices just the same as no choice or do we need to make a more refined distinction?

- No choice => Coercion, someone is denying you something you have a right to (like your life).

- Bad choice => No coercion, the choice is just shitty.

The classic example of "exploitation" is a terribly low paying job, is there any coercion going on? We can always concoct a moral dilemma where a man must feed his malnourished family, thus the employer ends up with the terrifying power of life and death over the poor worker and his family. Holy Coercion, Batman!

Would it make sense if I accused an American citizen of coercing children in Uganda for not donating to a charity that saves lives over there? Blame a homeless man's hunger on someone denying him a handout? Accuse an employer of stealing money from a worker if they paid exactly what was agreed upon beforehand, but paid less than what we think the worker "deserved"?

In a free market, you want to reduce the "choice remover" that is coercion. Whatever's left, nobody is being denied what is theirs by right, so they're all choices. It's up to the person doing the choosing to label them good or bad.

@renatojj making a distinction between bad and no choice is a very fine line to walk on. It will always be arbitrary, as what for one is only bad, for another is no choice. An example: our Spanish friends have the option to work for a shitty fee (the bad choice) or not work at all (and possibly starve, arguably no choice). As there is only 1 choice (work for a shitty fee) is that a choice? Even if that choice was good, 1 choice means there is no choice. And in most cases, due to the same principles as apply to free markets, if there is only 1 choice (or less) that choice will be bad. Is this a case of free markets or should we have done something about the lack of choice? You can argue that policy makers did not do anything in Spain, and you are right. But again, they had their chance (and have a chance every day) to do the right thing. Having an opportunity to make things better is better than knowing 100% that things will go wrong in the end (total free market) even if in some cases human stupidity still F$^&& up the chances.

BTW, in your examples on Uganda and the homeless man, both are not situations of power. As in the giver has no power (or relation) over the receiver or vice versa. It is charity. There is no real economic reason to do it. An employer however does have power over a worker in various ways. You cant compare those examples. Coercion only happens in cases where there is an imbalance of power. Student to teacher, employee to employer, citizen to police. Those are exactly the moments when you need to make sure the ones with more power are scrutinized and can be stopped.

I agree that a free market wants to reduce "the choice remover" aka rules. The rules are however making sure there is balance and that the ones in power cannot remove all the choice from the ones without power. Creating good options for one side in free markets, can lead to bad options in the other, again, no choice. Rules can do the same, however the entire idea of the rules is to balance it and make sure the amount of good options for everyone is maximized.

I just read a great parable. Ill copy it in the next post as it says a lot about free market policies.

Below is the parable of the ox: (http://www.johnkay.com/2012/07/25/the-parable-of-the-ox)

Though it is about our economies in general, it also says something between the lines about markets without guidance. Namely that in ANY market, given enough time, you will get people who "abuse" the lack of rules and change the game in their favor. (Libor, credit default swaps, monopolies, etc etc) As free market policies work only when there is plenty of competition, as soon as some one cheats or in another form effectively removes competition the entire thing will collapse. Free market policies can be optimal during a time, however, that time is limited as before (just started market, monopoly or wild west) and after (mature market, few or 1 large competitors ruling the market, monopoly) you need guidance to make sure all the stakeholders are protected, not just those with power.

(BTW though there are rules setup to make sure the system works, you can see those are reactionary because otherwise the system doesnt work at all. They make sure there are good options for everyone, not just maximum options for those with power, aka in this case the cheaters)

25 July 2012, Financial Times

In 1906, the great statistician Francis Galton observed a competition to guess the weight of an ox at a country fair. Eight hundred people entered. Galton, being the kind of man he was, ran statistical tests on the numbers. He discovered that the average guess (1,197lb) was extremely close to the actual weight (1,198lb) of the ox. This story was told by James Surowiecki, in his entertaining book The Wisdom of Crowds.

Not many people know the events that followed. A few years later, the scales seemed to become less and less reliable. Repairs were expensive; but the fair organiser had a brilliant idea. Since attendees were so good at guessing the weight of an ox, it was unnecessary to repair the scales. The organiser would simply ask everyone to guess the weight, and take the average of their estimates.

A new problem emerged, however. Once weight-guessing competitions became the rage, some participants tried to cheat. They even sought privileged information from the farmer who had bred the ox. It was feared that if some people had an edge, others would be reluctant to enter the weight-guessing competition. With only a few entrants, you could not rely on the wisdom of the crowd. The process of weight discovery would be damaged.

Strict regulatory rules were introduced. The farmer was asked to prepare three monthly bulletins on the development of his ox. These bulletins were posted on the door of the market for everyone to read. If the farmer gave his friends any other information about the beast, that was also to be posted on the market door. Anyone who entered the competition with knowledge concerning the ox that was not available to the world at large would be expelled from the market. In this way, the integrity of the weight-guessing process would be maintained.

Professional analysts scrutinised the contents of these regulatory announcements and advised their clients on their implications. They wined and dined farmers; once the farmers were required to be careful about the information they disclosed, however, these lunches became less fruitful.

Some brighter analysts realised that understanding the nutrition and health of the ox was not that useful anyway. What mattered were the guesses of the bystanders. Since the beast was no longer being weighed, the key to success lay not in correctly assessing its weight, but rather in correctly assessing what other people would guess. Or what others would guess others would guess. And so on.

Some, such as old Farmer Buffett, claimed that the results of this process were more and more divorced from the realities of ox-rearing. He was ignored, however. True, Farmer Buffett’s beasts did appear healthy and well fed, and his finances were ever more prosperous: but, it was agreed, he was a simple countryman who did not really understand how markets work.

International bodies were established to define the rules for assessing the weight of the ox. There were two competing standards – generally accepted ox-weighing principles and international ox-weighing standards. However, both agreed on one fundamental principle, which followed from the need to eliminate the role of subjective assessment by any individual. The weight of the ox was officially defined as the average of everyone’s guesses.

One difficulty was that sometimes there were few, or even no, guesses of the oxen’s weight. But that problem was soon overcome. Mathematicians from the University of Chicago developed models from which it was possible to estimate what, if there had actually been many guesses as to the weight of the animal, the average of these guesses would have been. No knowledge of animal husbandry was required, only a powerful computer.

By this time, there was a large industry of professional weight guessers, organisers of weight- guessing competitions and advisers helping people to refine their guesses. Some people suggested that it might be cheaper to repair the scales, but they were derided: why go back to relying on the judgment of a single auctioneer when you could benefit from the aggregated wisdom of so many clever people?

And then the ox died. Among all this activity, no one had remembered to feed it.

@rbar I think I made a fair distinction between no choice and a bad choice. Yet, you argue that the line is arbitrary. So, when we say someone has no choices, aren't we being arbitrary as well?

When will that someone or a group ever be satisfied with their choices if we give them the choice of removing the choices of others forcefully? More importantly, What will be their incentive to increase their own choices through other means if they can just rely on increasing them through force?

If you mess with the incentives for people to get out of their own undesirable situations, people end up imposing their costs on those who instead made an effort of having more choices, thus establishing a moral hazard (good being punished, evil being rewarded).

It's easy to see any economic problem being directly solved with laws, but not so easy to see the consequences. Even worse, the moral hazard leads to people misbehaving, and that ends up being invariably blamed on the concept of a free market, specially where there is no actual free market to speak of, like when you talk about Spain.

One other thing, if I can't compare charity to employment because you say there is no economic reason to do charity, I can't tell whether you're saying that a charity is pointless or if people who receive charity don't need it. Probably neither, but I wanted to understand your statement. Can't a person in an unfortunate situation have her life depend on charity just as much as a desperate man who needs a certain job to survive?

@renatojj The distinction between no and bad choice or even good choice depends on the point of view and in that regard I agree with you, it is arbitrary in both directions. I argue that 0 or 1 choice (good or bad) = no choice. I argue that sometimes even more choices are no choice. Would the ability to vote for 3 presidential candidates be no choice, a choice or multiple choices if all 3 are extreme right and there is no other option? I argue that 3 x extreme right = same choice = 1 choice = no choice. Without any good choices, if all options are bad, there really isnt any choice, even if there are many bad choices. If employers were to offer 1 euro per hour in Spain to those unemployed, that is below the minimum required to live. You can say that is a good choice in economical terms as it is more than 0, but I doubt the employees would agree. It is the same as not offering salary so again not an option. Now the question is which viewpoint should you take? I would say the idea is to protect the less powerful against the more powerful and maximize the total amount of choices for the total group.

There is something interesting to note here: Where government makes laws protecting employees from certain hardships (against unfair dismissal, discrimination, too low pay etc) arguable limiting the choices of employers, it also makes laws that limit the employees (for instance setting higher pension ages.)

"When will that someone or a group ever be satisfied with their choices if we give them the choice of removing the choices of others forcefully? "
Exactly! In a world where the powerful can set their own rules with no one there to stop them, what incentive have they to do the right thing? That is exactly what we have seen go wrong time and again in fully free markets. There are so many examples of this. You believe government is the one removing choice? Look at monopoly markets and see what happens to prices there.
You believe government only sets rules one way, always against a group. That is not the case. The idea is that policy makers try to find a middle ground between the freedom of one group vs the freedom of another group. That is a fine line to walk and continually needs to be adjusted but it is a much more ethical line than simply giving a group with power full control in the hope that they will do well because of "the market".

"If you mess with the incentives for people to get out of their own undesirable situations, people end up imposing their costs on those who instead made an effort of having more choices, thus establishing a moral hazard (good being punished, evil being rewarded)."

Do you have an example? Maybe I am missing your point. In my mind, its not about the incentives as all people always want to improve themselves. Its about the amount of choices they can have. If you leave it to a part of the people who have reason to take control and coerce another group, they will.

"It's easy to see any economic problem being directly solved with laws, but not so easy to see the consequences. Even worse, the moral hazard leads to people misbehaving, and that ends up being invariably blamed on the concept of a free market, specially where there is no actual free market to speak of, like when you talk about Spain."

Spain is not a free market? In what way?

About the charity: No I dont think charity is pointless You cant compare charity to employment because in employment there is an exchange, hours work for pay, which creates mutual dependence and a relationship. In the case of charity there is none. Though the person in the unfortunate situation may depend on charity, he or she is not giving anything in return. Without this exchange, there is no relationship between giver and taker, which means no power over anything as there is no economic reason to give. If the giver demanded something for it, it is pay and not charity and a true mutual dependence with possible coercion would appear.

@renatojj I am curious to see how your ideal world would look like. Say we have 4 products and 10 companies. How would you see the prices in those markets evolve and how would you implement free market in them?

@rbar Spain is at most a mixed economy, with a monetary system controlled by the European Central Bank, that is very far from what a free market ought to be. It's another galaxy.

To me, coercion is the difference between bad and no choice. I never said it was arbitrary, so stop agreeing with what I didn't say, please? I have a feeling you are silently ignoring or reading something entirely different whenever I say the word "coercion". I won't dispute for now your impossible standards of what a choice is supposed to be, I think we have more pressing issues.

If by "powerful" you mean the rich, they can only set rules as much as government lets them, because unless they're criminals, they have no power to coerce in any way. Again, that goes back to the definition of coercion.

"all people always want to improve themselves"... have you ever heard of laziness?

Whether a person doing charity is asking for anything in return is irrelevant to the fact that the receiver of charity can be as dependent on the charity as an employee is to his wage. You are pointing out differences that are inconsequential to the analogy I made between charity and employment.

It's as absurd to accuse an employer of "coercing" an employee based on the fact that he needs the money to survive as much as it is to make you responsible for someone dependent on charity to survive.

In both cases, they are not being denied anything that they are entitled to, so there is no coercion.

No one is entitled to a job, or to charity, or even money to survive. Your right to your life doesn't impose any requirements on others around you to provide for your survival. Maybe if it's an emergency.

I don't understand your question about how to implement the free market on 4 products and 10 companies. A free market is not supposed to be tailored to a certain market, just as free speech is not meant to adjust itself based on how many broadcasting companies and TV shows we currently have.

@rbar It's been a while since you last posted, maybe you're busy or lost interest, which is totally fine. I hope I didn't offend or discourage you with such different opinions. I just wanted you to know that I was really enjoying our conversation, it's always refreshing talking to someone with some intellectual honesty and curiosity.

@renatojj dont worry, I too am enjoying our conversation. Back to the topic at hand

My definition of coercion: http://oxforddictionaries.com/definition/english/coerce
"persuade (an unwilling person) to do something by using force or threats"

That means in any situation where one has a higher degree of power then the other person, there is risk of coercion. Especially in cases of employment there is a large discrepancy between the power of the employee vs the power of the employer. Employers can coerce in numerous ways, by saying you will get fired if you dont, you will not get a raise, you will not be promoted, you will be demoted, and so on.

What can the employee do? He or she can stop working there. Unless there is a shortage of workers (which country in the last 50 years has had that?) that will not overly upset the employer, so the employees negotiation power is limited.

So what is coercion in practical sense? Working 14 hours for 8 hours of pay or get fired? Working 14 hours for 8 hours of pay to get a promotion? If you look at the definition both are coercion as the employee does something he would otherwise be unwilling to do (work unpaid hours) because of (the unspoken) threats. Threat to lose the job or threat to not get the promotion.

So what do I mean with powerful? Exactly that, the ones with more power in any situation. They can be rich, but they dont have to be. Off course, where power reside, usually riches follow or vice versa.

Laziness is part of the human condition. Everyone is lazy, and everyone is not. I have seen toilet ladies work 14 hours shift 6 days a week and I have seen CEOs spend most of their time on golf courses and vice versa. Laziness is dependent on your motivation and on what you can get away with. Nobody will do work they dont have to if they dont like it. And everyone will work their butt of if they really like and want to do it. If the other option is starvation, trust me, no one is lazy.

Employees actually are entitled to something. Employment is a contract between one giving his free hours and the other giving goods (or money) in return. Charity is not. Coercion can follow as many things are not clarified in the contract, or are clarified but later are demanded or not given anyway. In charity there is no contract, hence no agreement on what should be given or received hence no coercion as there is no base of power. You can argue that as the receiver needs the money, it is possible to coerce him or her by offering and asking something he doesnt want to give in return, ie persuading him to do something he would otherwise not have done. That is not charity, that is employment ;-)

@renatojj

Whether or not everyone is entitled to a job or money is a question I never thought about. The universal declaration for human rights (UDHR) states it as follows:
"The UDHR included both economic, social and cultural rights and civil and political rights because it was based on the principle that the different rights could only successfully exist in combination" -- http://en.wikipedia.org/wiki/Human_rights (parts classification and indivisibility)

Its really interesting to read the declarations 22 to 28 of the UDHR. (http://en.wikipedia.org/wiki/Universal_Declaration_of_Human_Rights#Article_22)

For instance:
Article 23
(1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment. (2) Everyone, without any discrimination, has the right to equal pay for equal work. (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection. (4) Everyone has the right to form and to join trade unions for the protection of his interests.

I havent thought this through, but all of the above seem to me to not be inline with free market policies as free market policies dictate against the above rules favoring the natural motion of the market to guide the market along. Natural motion meaning that if there are moments of superfluous workers (large unemployment like today), they dont have a job and dont get paid, which forces them to either start working for themselves or die out which in both cases balance the market again.

A question inline with this: I just dont understand what your ideal is. Is there some country that comes close to your ideal or can you describe what you want to achieve?

Just having less government IMHO isnt a goal, its a means. Is your goal to maximize individual freedom (Ayn Rand style)? Though she has some ideas I fully agree to (rationalism as the only mean to knowledge vs faith for instance) her objectivism has never had much success with academia and for good reason.

Someone much more eloquent then me explained it this way (though he was talking about libertarian-ism, a close relative):
http://videosift.com/video/Noam-Chomsky-on-Ron-Paul-Hes-a-nice-guy-but

One reason democracy and capitalism have done so well for so long is because they keep each other in balance. Democracy is the rights of the majority over the minority. Capitalism (of which free market policy is a part) is the right of the individual, ie the minority over the majority. Both in and off themselves are disastrous. The balance is just where its at. Free market policies push in the direction of capitalism and away from balance. IMHO not what we want.

@rbar Welcome back. You present a good definition of coercion, but how did you deduce that it applies to any situation where one has a "higher degree of power"? Did you miss the word "force" in there? Also, "threats" usually refer to "threats of force", the Oxford dictionary defines threat as a "a statement of an intention to inflict pain, injury, damage...", which sounds pretty violent to me. I don't think it was referring to threats like, "I'm not talking to you anymore!" or even, "I will fire you!". However harsh it may be to get fired, it doesn't involve violence.

Even if your idea of coercion has nothing to do with violence, I'm sure if you look hard enough though, you will find broader and more convenient definitions, but they won't escape the notion of denying rights.

Now, apparently you think an employee has a right to a job or is "entitled to something". What if no one needs what an employee has to offer, what then? Are the unskilled, the incompetent, and the dispensable, therefore, automatic victims of coercion?

If anyone with "power" can coerce, can you be coerced by a child's psychological manipulation? What about a person you're in love with, can they *coerce* you by leveraging your feelings towards them? What about a guy who is more qualified for a job than you are, is he coercing you out of that position?

If we just throw the word "coercion" around willy-nilly, we can pretty much justify anything a government can do to punish those perceived as coercive, and this punishment usually involves the use of force. So, instead of correcting social injustice, we'll likely end up causing more of it if more force is being used.

I need to refresh your memory on this talk of laziness, it was in objection to your statement that "all people always want to improve themselves", which you used to dismiss my concern about incentives and moral hazards in society.

I'm sure people give up laziness when their survival is threatened, but that's not the point of laziness. Rising above the petty needs of survival doesn't compel one to reach for the utmost excellence, that's where laziness comes in, people don't "always want to improve themselves", specially if they can live on a comfortable level by using force to solve their problems, imposing their costs on others. It's the lazy way out, get it?

Instead of increasing their power by becoming more competent, more useful, more productive, employees could argue that they are being coerced and use laws to forcefully remove the choices of employers as a way of giving them, the employees, more power. Having the choice of using force to solve their problems, would harm the incentive to improve themselves and that would establish a moral hazard: trying to do the hard thing, like becoming more productive (it's not easy!) would be punished by its very cost, while doing the easy thing, which is to rely on force to solve your problems, would be rewarded.

@rbar sorry I didn't see your last post. I think this UDHR is pretty noble but unknowingly evil, because it states that people have all sorts of rights, but what happens to the costs and demands those rights impose? To enforce them would imply a huge amount of force that would deny people of even more basic rights the declaration supposedly claims to protect. Take for example, "Everyone, without any discrimination, has the right to equal pay for equal work". Does that mean the price of labor should be controlled?? By whom? To see that policy enforced, would be an egregious assault on economic freedom.

My ideal is a society where most if not all of these problems that socialists and liberals are also concerned about, like people's material needs being met, living happy productive lives, etc. are handled in an environment where the right incentives and freedoms allows creative solutions and resources to be best allocated voluntarily, rather than by mandates that are noble and well intended, and seem to handle the problem in the short run, but cause a lot more trouble than they are worth because they destroy this very environment in which society thrives.

Your video of Noam Chomsky commenting on Ron Paul's answer in a republican debate, "what if some guy is on a coma and he's going to die" to which he supposedly replied, "it's a tribute to our liberty", is a gross misrepresentation, that was never the answer Ron Paul gave. I'll bet Noam Chomsky wouldn't like to be paraphrased into saying the opposite of what he meant, he just understood what he wanted based on his own preconceptions.

Watch the actual footage here: http://www.youtube.com/watch?v=gMHY21VA8WE
(And please don't confuse a few members of the audience yelling "Yes!" with the position of the Tea Party (not that I care what they think) or Ron Paul's)

Before you talk about capitalism and democracy balancing each other out, you must first question what really happens when people are given economic freedom. A contrived scenario is playing out in your mind.

It's like if someone told you that if people had freedom of expression, people would just start spewing lies on top of lies and society would bury every shred of truth and dignity until it became unrecognizable. All I'm saying is that freedom of expression is beautiful, it's far from perfect, a lot of people will say terrible things, but it's a much better environment than censorship, and that it's not naive to expect freedom of expression to improve society with time, making truth more and more available and affordable to everyone, not only making our society more civilized but effectively raising our standards of living.

Only I'm not arguing about freedom of expression, but economic freedom.

@renatojj So you are saying you cant be threatened economically? Off course you can be. Damage can be economical or mental too. There is no reason to exclude those. Far from it, you can argue these are in the end physical too.
Force is not required to be physical in this process.
What you need is leverage, ie something that the other needs. If you are the giver of a job that that other person needs and it is difficult for him to find it elsewhere, you are in a position of power without any other need of force. If you own a well in a desert you are the most powerful man without any force. And you can coerce people to do your bidding for them to receive water. No force required, just threat.

On right to have a job. The thousands of philosophers, lawyers, human rights activists, politicians, etc that worked on the UDHR just believe that without the job, people will starve, ie will die, ie will get a right offended. Hence, they need a job. And thats is were coercion comes in. The NEED (not the right) to have a job to survive (or at least live on a "decent" level in your society) Coercion isnt about having or not having a job. Its about the threat of not getting it / losing it and accepting things you would otherwise not. Discussing whether or not someone is suitable for a job is besides the point, as we are all unsuitable for the job we have in some form or other. So unskilled, incompetent, dispensable, these are all point of view based. In a world of geniuses you and me would be unsuitable for anything. But are we really? Off course not, just like every tree, flower, bacteria and animal has a role, so does every person.

On coercion: by a child's psychological manipulation? For sure. (Check with any parent and they will readily agree ) What about a person you're in love with? Yes off course. What about a guy who is more qualified for a job than you are, is he coercing you out of that position? No. He nor you has the job to give. The coercion comes when your boss says to work 12 hours a day and get paid for 8 because someone else might be better and he might give that person the job.

On justifying anything government does: you make assumptions I dont follow. Punish coercion -> using force -> more social injustice.
If it is coercion and we define coercion is something bad, isnt it justified to do something against it? You can do something against it with or without force, but even if it is done with force (meaning someone somewhere gets his freedoms lessened) again, isnt that justified to stop him or her being able to coerce someone as that is bad? Its like saying government cant stop someone from shooting someone because that would lessen the freedom of the shooter. I would define social injustice not as the max rights of that individual but of the max rights of the whole population. So not "using force" would lead to social injustice.

On laziness: You are right. If you are not careful, setting up rules that protect the weak can make them complacent. Its a balancing act. If you set no rules, ie free market, you open them up to abuse. If you set too many rules, they can become less eager to be the best they can be. BTW I dont call that lazy. There is a larger argument to make here, about the goals of capitalism (More and more efficiency, ever growing and ever improving) or about more soft lifestyles that would not be as efficient but might in the end bring more happiness. A topic for another time.

On the UDHR: I guess we want to achieve the same, we just disagree on the way to get there. I structurally dont believe free markets will get us there, as in every real case free markets have proven to be unreliable because people will abuse their powers and create too much inequality. There are so many examples (LIBOR, the entire financial derivatives markets, basically all unregulated markets) that I can ask this:
can you give me 1 example of a market that is run truly free that worked for a longer period of time?

@rbar have these thousands of philosophers, lawyers and activists ever considered that, if people have material needs, they may or may not be satisfied in exchange for money, money that may or may not be provided through a job? What about other ways of making money, like being self-employed, a businessman, an investor, or a beggar? What if I can satisfy those needs without money, as a farmer?

Should the self-employed have a right to customers? Should a businessman or an investor have a right to profits, or a beggar to handouts? Should farmers also be entitled to good crops? If there's no direct and necessary link between job->survival, what, then, would justify it being declared an unalienable human right?

Your objection about government causing social injustice, sounds to me like asking, "if government outlaws drinking, how is it wrong to stop people from drinking if it's against the law?". If government outlaws something that doesn't use force, it inevitably uses force to outlaw it, thus increasing the overall use of force in society and diminishing our condition as a civilization. On the other hand, any force used to repress wanton shooters is a good deterrent to their use of force, no?

About laziness, your characterization of capitalism as "more and more efficiency", with no regard to human hapiness is very typical of a socialist's portrayal of capitalism as a social order of relentless profit-seeking and competition. When in fact, capitalism is the most cooperative of any social system ever devised. Markets thrive in capitalism, and markets are a bunch of people trading and making agreements with each another. There's nothing more cooperative than trades and handshakes. You get more cooperation in capitalism than in feudalism, mercantilism, corporatism, socialism or any other "ism". In the end, you're allowed more choices, including that of softer lifestyles in capitalism, than anywhere else.

The Libor and derivatives markets scandals, are not examples of free markets at all, they're abuses where the bad behavior was encouraged by policy. What you and I argued about making the weak complacent, also applies to bad rules encouraging excessive greediness and risk-taking that went unpunished, bad behavior that would, otherwise, be "regulated" in a free market by the very real prospect of bankruptcy, and being sued for fraud instead of a get-out-of-jail-free card and juicy bailouts granted by a secretive central bank (which wouldn't exist in a free market!).

Things are not necessarily less regulated when you have economic freedom, and anything resulting from deregulation is not an automatic example of free markets at work. Regulation just happens to come from the bottom-up, from forces in the market itself, instead of by force from the top-down, by well-intentioned bureaucrats who fancy writing human rights declarations in their spare time.

@renatojj Ah, its nice to be called a socialist for once. Where I come from, they call me a right wing capitalist
Any economic system is as cooperative as the next. That is the definition of an economic system, a system where economic transactions take place, ie cooperation. So capitalism is NOT more (or less) cooperative than other isms. (And mercantilism and corporate capitalism (corporatism right?) are forms of capitalism ;-) http://en.wikipedia.org/wiki/Capitalism)

Definition of capitalism:
"an economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state" - oxford dictionary
Emphasis is on "for profit". So yes, all capitalist are per definition profit seeking. Relentless is something that follows Darwin. Those who are more relentless get higher profits and have more money to grow, invest, invent, etc. They eventually push out less relentless profit seekers so the relentless ones are the only ones left.
And remember you said them first, not me. I just said that capitalism tries to achieve profit and as competition drives prices down one way to do so is to minimize cost, ie become more efficient. So there is always a drive for efficiency in capitalism.
I am not against profit seeking, I believe that capitalism is the system that pushes the most growth in most regions, be it economic growth, technological progress, etc. That also makes it a rat race, where you continually need to go faster to keep up. As I am getting older I see that running is not the only game in town. And in most cases it detracts from happiness more then other methods in the long run (though it brings more wealth). Given also the finite resource problem and it is a good discussion to have if capitalism is the best and only economic system we should have on this planet. Like I said, for another time.

"The Libor and derivatives markets scandals, are not examples of free markets at all, they're abuses where the bad behavior was encouraged by policy"

What? What policy? The entire idea of over-the-counter (OTT, the largest amount by far) derivatives was that they are traded without any supervision or visibility. Complete free market! That and the inability to value and understand the risk per unit made for instance the Credit Default Swaps so dangerous. These were perfectly legal, and are still in most cases. The market is still unregulated today. You can argue that in the end it wasnt a free market because they got bailed out. Bullshit. They got bailed out because the other option was to let the entire economic system collapse. Letting the system collapse is not free markets, its stupid. The damage would have been catastrophic. The markets wouldnt repair that, they wouldnt exist anymore. That is why people call the derivatives market an example of a free market that should have been more regulated, because they had the power to destroy everything and the incentive to take the risk (for profit).
The way the bailout happened (and is still happening) is total and utter crap, but that is a different story all together.

Which leads again to the same question: if not the (IMHO obvious) derivatives market, name me an example of a free market?

@rbar I didn't call you a socialist, I don't know you that well! It was about your portrayal of capitalism. Also, I apologize for referring to free market capitalism, subject of this topic, as just "capitalism", that caused understandable confusion. I completely agree with you that some of those "isms" fall under a broader definition of capitalism, as they're social orders dependent on private property rights. Those who advocate free markets like me, however, really tend to consider free market capitalism as the only real one, while variations are just "less capitalistic" or not capitalism at all.

Any economic system is as cooperative as the next? Hmm... I don't know, rbar. Would you say there's as much cooperation inside North Korea as there is in South Korea? The old East and West Germanies? Surely any country with a lesser economy enjoys much less cooperation of their citizens among themselves (or with other countries) than a country where policy favors economic growth, no? Very common in North Korea, the "do what I tell or you'll starve in a concentration camp" approach, just isn't my favorite definition of cooperation. Coincidence or not, their economy is shit.

You raise a very important issue of limited resources, that wikipedia article on Capitalism explains better than I ever could, that counter-arguments to "those criticisms of the depletion of finite natural resources consists of the economic Law of Diminishing Returns, opportunity cost, and scarcity in economics". Interesting stuff.

My issue is with you portrayal of capitalism as ever-increasing competitiveness, because it's kind of biased and overlooks the abundance of cooperation. Imagine looking at a crowded night club and describing it simplistically as "a bunch of people struggling for the attention of the opposite sex". Seems pretty accurate if one hates night clubs. There is competition going on, specially for the most popular people, but what about all the other people enjoying each other's company over drinks, talking, flirting, and laughing, couples making out and enjoying the music on the dance floor? Who would describe those activities as purely competitive?

There is a lot of supply and demand in a capitalistic economy, not trying to sound like an economist, but competition is proportional to the difference between supply and demand. So what about where supply is meeting demand, should we just overlook the huge amount of cooperation happening there?

I find it amusing that you ask "What? What policy?", then, at the end of the same paragraph, write "The way the bailout happened is ... utter crap, but that is a different story all together." No, it's not a different story, the bailouts are government/central bank policy, partly the answer to your important question. Stepping in and handing out money to bankers who should have been punished by their excessive risk-taking with bankruptcy, is the exact opposite of letting free markets work.

To try to answer your persistent request for examples of free markets, if you didn't realize it yet, free markets are not very compatible with central banks, institutions that have a legal monopoly over what happens to half of a country's economy (usually half of all economic transactions involve money). Now, do you know how many countries have central banks today? Except for Monaco and Andorra, all of them.

Centuries ago, there wasn't a single country in the world where people enjoyed freedom of expression. That fact could be considered an obstacle to its adoption, but never a testament to its impracticality.

@renatojj Apologies for the late reply, have been running for work and it doesnt look like that will stop

True that some countries may have less cooperation, though is that dependent on the economic system used or something else? For instance, East Germany had 100% employment and a very active economy, more so then west Germany in some regards. It was ofc run top down with little choice and politically biased, but I am not sure if that lessons the amount of economic transactions, ie cooperation. I guess it comes down to what you define as cooperation.

BTW "those criticisms of the depletion of finite natural resources consists of the economic Law of Diminishing Returns, opportunity cost, and scarcity in economics" -- I never understood what they mean with that. Even if the resource cost goes up strongly due to scarcity it doesnt mean that that resource can be replaced by something else, or that the higher cost (than the original cost of the scarce resource) of the replacement can be born by its consumers.

Now you say something very interesting: I agree with you that capitalism isnt always about ever-increasing competitiveness, in practice. In cases where you have competition, you get ever-increasing competitiveness. (This is in theory what all capitalism strives for) In cases where you do not have competition you dont. That is exactly what we are talking about. Free market philosophy assumes there is always near perfect competition right? How else would the market balance itself if there is no competition? Would you agree that free markets only work where there is competition?

Lets see when we have competition:

"competition is proportional to the difference between supply and demand" That doesnt sound right. If there is large demand and little supply (the difference is big), there is little competition as all suppliers will overcharge like hell as they will be able to sell anything they can manufacturer anyway. If there is large supply and little demand there can be competition, though usually this results in companies leaving the market until you have: If the supply and demand are about equal, you SOMETIMES have competition that keeps things in balance. Or you can have a monopoly for whatever reason and that market has again little to no competition. In other words, in no single scenario is competition guaranteed. Actually, there is good reason to assume markets move to monopolies naturally in all cases. In a market that is turning from early adopters to mass market, there is always focus on economies of scale. Companies need to get bigger to make sure they have the lowest cost price (best competitive edge) and to keep their shareholders happy as they demand growth to make their investments worth more. Bigger companies means fewer companies on the long run, as the market is always limited. This means companies will take over other companies until only a handful remain. Voila. Actually, if it werent for (anti-free market) anti-monopoly rules lots of markets would only have 1 company left. That company would be so big it would be impossible for a new entry to push them out of the market or even get a foothold unless the market itself crumbles because a newer range of products exist that make the old one obsolete. Again, without rules governing economies, things just go bust.

Which was what happened in the derivatives market. It was a completely deregulated market that was exploding itself as there were no rules governing it. When it did explode (ie when the free market failed) there were 2 options left: Let all banks fail or bail them out. Think of the consequences of following your recommendation: If 1 bank fails, it will pull the others down with it as they are all strongly interconnected. As banks are key in the economical world, the entire system would collapse. The amount of devastation would be huge, would probably kill the entire system. Now, you can argue that would be good for us, as we could build a fully new system. But before we would get there, there would be years if not decades of nightmares.
I agree with you that the fall of the derivatives market should never have happened in the first place which is exactly the reason to not follow free markets.

Above clarifies a bit my way of thinking: for many of these markets (be it banks or utilities or employment) the consequences of letting that market fail are just too big. If you have the guts to follow free markets to the end, it might work (isnt proven though) but you come to a point where you destabilize your country in such a manner that things like revolts and all kind of nastiness are highly possible and even likely. That is not progress, that is barbarianism.

You mention yourself that there are practically no free markets anywhere. You say that is because they havent been tried. I say that they have been tried again and again but never last.

@rbar np, take your time, I'm quite busy as well.

Did East Germany have a great economy? Like you said, it faired well in some sectors, highly subsidized sectors I might add, at the huge expense of the rest of its economy which was miserable compared to West Germany (or to what it could be if it were capitalistic). Think of all the "luxuries" enjoyed right outside the Berlin Wall that were denied to east germans. Can you see purchasing or providing those products and services as economic activity being denied, and, therefore, less cooperation?

You have to question your assumption that capitalism universally strives for competition, or that it always should, or that it's the philosophy of free markets to make everyone compete. There are forces *for* and *against* competition everywhere in capitalism, from those who benefit and lose from it, respectively. I think that's what you mean by "near perfect competition", the perfection being the balance between competing and not competing as required.

Why are labor unions formed? So workers can compete less with each other and cooperate for better employment terms. Does that favor companies? No, but who cares, it's meant to favor the workers. Why are cartels formed? So companies can compete less with each other and cooperate for better profits. Is that good for the consumers? Usually not, but it's good for the companies in the cartel. Why are consumer groups formed... you get the point. These institutions operate against competition, but that doesn't make them any less capitalistic or contrary to the incentives of free markets, assuming they're formed without the use of force, criminal or lawful. A lawful association between individuals or companies to cooperate instead of compete with each other is capitalism at work too.

When you talk about situations where there is less or no competition, you're not considering the competition that arises on the other side of the demand-supply relation!

If there is large demand and little supply, you correctly point out that there is little competition *among suppliers*, right? However, aren't you overlooking the increased competition among the *demanders*? Like I said, competition is increasing as supply and demand differ. Who is competing with whom is beside the point.

You might argue, "well, how is competition among the demand going to help??", because it sucks to be in the demand for something in low supply, that unmet demand represents an incentive for more supply. Supplying something in high demand is a coveted position. Resources from elsewhere will tend to be allocated towards that coveted position, supplying that demand, and increasing competition in what started out as a less or non-competitive environment.

So, I don't follow your "markets universally tend towards monopolies" argument. As much as companies like monopolies, they like it because it profits from the clients/consumers' desperate demand for it, but these people are not ok with fighting each other for something in low supply. THAT is the incentive towards competition, towards destabilizing any monopoly that abuses its position.

The derivatives market is a complex example, but you're blaming the "free market", when the banking system is far from a free market if there's a central bank. Banks should be allowed to make risky investments and, if these investments don't pan out, they should pay the price with loss and bankruptcy, like it happens with any business that makes bad decisions. That is one of the best incentives to make good decisions! If the whole banking system is to blame for that, then it would collapse, which would be disastrous, but it would expose the disaster that is central banking.

Would the government want society to realize that central banking is terrible? Of course not, they're the ones who profit from it the most, which is why it stepped in with a massive taxpayer-funded bailout. None of what I just described is allowed in a free market.

Just like people realized the Church and State should be separate centuries ago, it will take a while for people to realize the State and Banks should be separate as well. The evidence is unravelling right before us.