I. What is a Free Market?

A market is an environment in which the action of trade between a buyer (consumer) and seller (producer) occurs.  Trade is the exchange of goods, services, or ideas, and in modern times is often executed via an intermediate store of value such as currency.

A free market is an environment, absent of physical force, compulsion, or coercion, in which the action of trade between a buyer (consumer) and seller (producer) occurs.  Such force is often applied in subtle ways, but results in interference in the terms of trade. The source of such interference is the action of other individuals--typically other buyers, sellers or governmental officials--including those participating in the trade.  Thus, trade in a free market is strictly voluntary, and occurs only as mutual cooperation amongst individuals.

Note that the restriction of force in the definition of a free market does not establish the legality of such action, nor does it set into law any terms of enforcement.  This is the province of law and is established independently through political systems of governing.  Coercion and physical force can take many forms: assault, murder, theft, fraud, or vandalism—but the legality of such actions is enforced by a system of law, not a system of economics.

This single distinction--the restriction on the use of physical force, compulsion, or coercion--forms the only fundamental difference between a market, and a free market.

dgandhi says...

A free market is an environment, free of interference from third parties, in which the action of trade between a buyer (consumer) and seller (producer) occurs.

trade => property.
property = interference of government to enforce exclusive control of objects.
government = a third party.

=> having trade precludes the possibility of having a "free market".
=> your definition of free market is self contradicting.

imstellar28 says...

^dgandhi

I'm having a hard time following your logic. what do you mean by trade=>property and property = interference?

the political system of the participants is irrelevant in the definition of a free market. it sounds like you are suggesting that a government controls all objects? even if that were true, it does not contradict my definition of a free market, it only implies that it is unachievable (de-jure) under that particular political system.

dgandhi says...

>> ^imstellar28:
^dgandhi
I'm having a hard time following your logic. what do you mean by trade=>property and property = interference?


To trade a thing one MUST own it, if it is not owned the "consumer" party has the option of simply taking it => no trade.

Property is the privilege to exclusive use, or disuse/destruction of an object. Nothing in reality stops me from taking your "property" and using it how I wish. An agreement you have with the government, whereby the government agrees to use force of violence against me if I attempt to use you "property" is the only basis on which it can be said you own the thing.

"owner" = A
"buyer" = B
"government" = C

A has a contract with C to use coercive violence against B, that is a necessary condition of property, and therefore of trade.

imstellar28 says...

^dgandhi
To trade a thing one MUST own it, if it is not owned the "consumer" party has the option of simply taking it; no trade.

That might be how one defines legal trade, but that is not a definition of what trade is. Trade is the exchange of goods, services, or information between people--regardless of whether those items are stolen or unowned. Whether trade is fraudulent or illegal should not matter in the definition.

Nothing in reality stops me from taking your "property" and using it how I wish.

Nothing in reality stops me from stopping you. What you are describing is theft, not trade. The definition of theft does not invalidate the definition of trade. Whether theft is illegal or enforced has no bearing on whether two people can voluntarily exchange goods, services, and information.

You are correct that these issues need to be resolved somewhere--and I did by adding a derivation of property rights in section II. I do not think they present a problem with the definition of terms though.

dgandhi says...

>> ^imstellar28:Nothing in reality stops me from stopping you. What you are describing is theft, not trade.

While it is not trade, it is not theft, unless we agree that it is property.

If I have no contract with you which stipulates that I can not take object X, then you attacking me for taking object X is the initiation of violence, which is extra-contractual coercion, which seems to be your definition of non-free.

It appears that the only reason any intelligent person would be involved in a "free" market is precisely because it is non-free. Your market is predicated on the assumption that other actors in the market will use violence, or hire a government to use violence. if one does not participate in the property system the market is predicated on.

The ONLY reason we can not all just walk around taking/using whatever we see is because our society made up an arbitrary rule called property, some societies do not have this rule, it is not a given, it's a decision. You have not provided any basis for making that decision, and since that decision involves the implicit initiation of violence, it contradicts your definition of "free market".

imstellar28 says...

^dgandhi

I should have pointed this out earlier, or made it more clear: by third party interference, I mean anyone other than the buyer (or seller), which includes the seller (or buyer). That is why I wrote "-typically other buyers, sellers or governmental officials. "

Thus, a buyer (or seller) using force to take the seller's (or buyer's) object (regardless of ownership) would violate the definition of a free market. Does that resolve the issue for you? Thanks for catching that--I will try to revise the wording.

Crake says...

Who says you need a government to protect your property? In the absence of a national military or police force, you don't necessarily need much more than a sharp stick, or maybe a gun.

Or Blackwater.

dgandhi says...

>> ^imstellar28: Thus, a buyer (or seller) using force to take the seller's (or buyer's) object (regardless of ownership) would violate the definition of a free market.

I find your argument unclear. It seems, from what you wrote, that if I walk up to the house you live in, grab the garden hose, walk away, and you run after me with a sharp stick, attempting to take the hose in my possession, your initiation of violence is a violation of the free market?

imstellar28 says...

^how would that be a trade, as you are not exchanging anything for the hose? trade, I define, is the exchange of goods, services, or information. what you describe is theft (one-sided exchange). if you had left a note or some other object, it would be trade of sorts as it would be an exchange of goods between two parties. however, it would neither be voluntary or "free" trade as you would have forced it upon me.

I am saying that a free market is an environment where trade occurs between two parties, voluntarily, and in the absence of physical force, compulsion, or coercion. I cleaned up the wording to try to make it more clear. If it is still cloudy, feel free to suggest alternative phrasing.

dgandhi says...

>> ^imstellar28:what you describe is theft (one-sided exchange).

No, no exchange has taken place, I have simply picked something up. The act is only theft if you claim the right to initiate violence based on your claim of ownership, but you have asserted no bases for the right of ownership.

however, it would neither be voluntary or "free" trade as you would have forced it upon me.

Your cooperation is not required, and no force has been used against you, since you were not present when I took the hose. Since I am not entering a contract with you I have no responsibility to not take the thing, and I have not contractually granted you the right to use violence against me.

If you stipulate the social contract of property, and the violence inherent in that stipulation, then your claims of theft are correct. The consequence of that stipulation is that your market can not be free, by your own definition, because all interaction of property are based on an implicit threat of violence.

dgandhi says...

>> ^imstellar28:
^are you suggesting that I include some mention of property or ownership in the definition of trade?


No, I'm suggesting that leaving it out makes your argument incoherent by being incomplete, and that including it makes your argument incoherent by being self contradicting. Perhaps you have, but have not stated, a way around this, I would like to know what that is.

dgandhi says...

In reply to this comment by imstellar28:
are you saying that trade is undefinable? in section I im not actually arguing for anything, im only defining terms.


Definitions have consequences, and assumptions, your definition hides the assumption of property, and therefor you create a definition which is self contradicting.

It's like you say X=Y, Y=Z ,Z=W => X=W, while leaving out the fact that Z==W => Y=/=Z. By ignoring the manner in which your assumptions work as a group your definition becomes a paradox. Because it is based on assumptions which are ill defined it is not initially clear that your definition is paradoxical. The implication of property,meaning, for clarity, any concept of right of possession, with the explicit ban on initiation of violence means you assume one thing, which can not exist under your explicit ban. As a consequence you have a definition of "free market" includes two mutually exclusive things.

You can do away with the assumption of property in which case trade is effectively useless.

Or you can get rid of your ban on coercion, in which case it's unclear how your "free" market is different from any other.

I don't really see a third option.

imstellar28 says...

^in effect, you are saying that trade is impossible to define without physical force, compulsion, or coercion. I think thats simply a false statement. I don't think you've done anything to prove that is a viable assertion.

You are going wrong in at least one place-you are calling it an initiation of violence if I use force to stop someone who is stealing my property. That is untrue, I am using force as a response.

I really think you are over-thinking this.

I think it is easy to prove you are wrong, but I am going to use a really ridiculous and overly-clear example so you have no room to wiggle:

Everyone on earth is dead except for 2 people, john and mike. One lives in Australia and one lives in the US. All infrastructure is gone except a telephone and a magic tube (ala futurama) which can be used to send packages. Neither has the ability to physically reach the other. John calls mike and offers to send him an apple (which he picked himself in the US, and owns) if mike offers to send him an orange (which he picked himself in Australia, and owns). Both agree and at the same time send the items through the tube. Mike receives the apple and john receives the orange.

An action of trade occurred in the absence of physical force, compulsion, or coercion. AKA a free market. The fact that it occurred means it is possible to create a label to describe it (a definition).

dgandhi says...

^
Your theoretical presupposes the non-existence of property, since nobody can interact with any object accessible to any other, no method of dealing with such interactions is necessary. This example meets the criteria of doing away with property, and resolves the paradox, under those conditions a market like the one you describe could exist.

Which does not means it can exist in reality.

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