Rebutting an Anti-Free Market Comment

In a thread on the LinkedIn discussion group Citizens and Societies - Building better societies together! titled 'It is my opinion that one of the biggest challenges to better modern societies is what I'll call the "Free Market Myth"' Wade Fransson posted a comment further explaining his hypothesis that free markets can't exist (reproduced below). I respectfully offer this rebuttal.

The first mistake Wade makes is to conflate legality with regulation, they aren't the same thing. The rule of some kind of law is indeed necessary for a free market to function. (How this law is enacted and enforced and by whom is another discussion.) To have markets we must have private property. To have property we need a legal system of some kind to protect property rights. It should be noted that legitimate law is almost entirely reactive. When aggressed against the victim or victims seek restitution from and punishment for the transgressor.

Regulation is another matter. It is proactive. Regulations often require licensing, inspections, reports, and, of course, compliance. All under threat of punishment without a crime having been committed. This is a violation of the Non-Aggression Principle, the idea that no one has the right to initiate the use of force nor the threat thereof. Once it is established that force can be legally initiated by some against others the door is open for abuse and corruption. To be free markets must be free of people initiating coercion. Retaliatory coercion is necessary and the role, the only role, of the law.

Though he didn't use the word regulation Fredrick Bastiat covered the subject in his book “The Law”:

“What, then, is law? It is the collective organization of the individual right to lawful defense.”

“Thus the principle of collective right — its reason for existing, its lawfulness — is based on individual right.”

“...since an individual cannot lawfully use force against the person, liberty, or property of another individual, then the common force — for the same reason — cannot lawfully be used to destroy the person, liberty, or property of individuals or groups.“

Since as individuals none of us can claim the “right” to go to another's place of business and demand information, demand that they get our permission to operate their business, or make any other demands while threatening them with using force on them if they don't comply the collective can claim no such “right” either. Yet this is what regulation does.

Wade wrote:

1) Robbers (Participants introduce the transaction type known as "Theft" into the Marketplace)
2) Cops (Participants introduce Regulation to counteract the Theft),

The idea that regulation is implemented to counteract theft is naive at best, willfully ignorant at worst. It is the legalization of theft. It is what Bastiat called legal plunder in “The Law”. The history of regulation is one of entrenched interests calling for regulation to protect and enlarge their market share and wealth, I.E. to stifle competition. A great example of this is the creation of the Federal Reserve System. JP Morgan was behind it. Yet somehow, many believe the government created it to take power away from old JP. Ayn Rand wrote about the process as it applies to broadcasting here. “Why Doctors Don’t Want Free-Market Medicine” describes the process in the health care field.

Further evidence of Wade's confusion on the issue is found in the very comment he made. At one point he writes “regulation to prevent Robbers often becomes part of the problem”. He then strangely goes on to write 'The Illegal Forceful Trick is to "sleight of hand style" turn the Cop into the Thief. This is what some of Jeff's comments seem to do.' Wait a minute, turning the cops into thieves isn't a rhetorical trick someone else did. It is something that Wade himself has acknowledged is reality. Given that reality it is irrational to advocate for the thief.

Below is the comment being rebutted:

"Jeff's oversimplified "Market" (I prefer to call it "Cops and Robbers Governed Marketplace - vs. Free Market - since "Free Market connotes a myth where there is no theft) is a very good, very helpful two-dimensional model. It covers neither the third dimension - depth (which I'm using to denote complexity) nor time (the fourth dimension).

Regulation often seeks to confront Theft that can only described by depth and time - vs. Jeff's two-dimensional description of Theft (deadly force).

Let me unpack these statements: Jeff wrote:

"No, stealing is always a threat to survival because it sets a precedence that if it is rewarded then it should be repeated."

Here Jeff compresses the four dimensions of...

1) Robbers (Participants introduce the transaction type known as "Theft" into the Marketplace)
2) Cops (Participants introduce Regulation to counteract the Theft),
3) Complexity Arises - various types and degrees of theft and regulation
4) Time (and change) - the increasingly complex system adapts

...into a simplified 2 dimensional model.

This model is almost a Caricature, really, but I'm OK with this particular representation, for purposes of this discussion, because it is a really good, useful model, and it is the one Jeff prefers, and he has introduced tremendous value into this thread - thanks Jeff :) ) of "Deadly Theft" and "Legal Force".

Jeff's bias seems to be to blame the Cops for the outcomes related to Theft, because their regulation to prevent Robbers often becomes part of the problem. This is upside down, or inside out, or backwards - pick a metaphor of choice. Because Theft. The Robbers, are the problem. They are the "Action" which - per Physics - requires an equal and opposite reaction.

The legal "trick" is in getting the Reaction right. The Illegal Forceful Trick is to "sleight of hand style" turn the Cop into the Thief. This is what some of Jeff's comments seem to do.

And this is where Jeff and I have yet to reach agreement - the fourth Paragraph of my Opening Post.

It descends, logically, from the point of legitimate disagreement we've already identified - the question I asked of Jeff a number of posts ago:

"2) Can you live with "develop rules of behavior which become "Regulation" in the market" or do you insist that all regulation which is not directly discoverable in Nature is "Illegal Force"?"

Because where Jeff's legitimate two-dimensional model becomes an illegitimate caricature, which steals from this discussion, is where he begins to define Government as unable to "discover Natural Law" which becomes the domain of the "Seer" who has somehow magically established that "Government IS the thief".

This is deadly force, and it gets to the Crux of what my Opening Post calls "The Free Market Myth".

How Dare You Want To Know What "Your" Government Is Doing!

In his excellent article "Bad Regulation Drives Out Good" Mr. Richman makes the point that government regulation doesn't work very well. One thing that he doesn't mention is how Sen. Charles Schumer (D-NY) is actually advocating secret government.

While describing regulatory changes on MSNBC's "Morning Joe" the senator states:

There will be a strong, quiet, hopefully more unified federal regulator. And he's gonna be tough–or she. But they're gonna be quiet. So like when Bear Stearns began to run into trouble, they're gonna call the heads of Bear Stearns in and say, "All right fellas, you're getting rid of those two hedge funds; you're gonna raise more capital even if means you have lower profitability. We're not gonna tell anyone you're doing this, but you do it or we're gonna take sanctions against you."

Why does Schumer think we need "quiet" regulators that aren't "gonna tell anyone you're doing this"? Since when is government supposed to operate in the shadows out of public view? This is nothing short of advocating an unaccountable, tyrannical, and corrupt government. Have we really sunk so low that he thinks he can get away with this?

Believe it or not, it gets worse. The senator goes on to say, "You need a tough, strong regulator, unified—no holes in the system— who sees the problem ahead of time, so they have complete transparency, they know exactly what's going on". In Schumer's dream world the government gets to know everything that private companies are doing, "no holes in the system ", while the same "tough, strong regulator, unified" gets to operate in secret! Transparency will only apply to the private sector, not the government.

The real reason for regulation is now nakedly revealed. It's not about protecting the people, it's about controlling them. As Ayn Rand wrote, "We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force."

We can't let this nightmare come to pass.