Free Market Theory
Free markets cannot exist: they are an ideal model in microeconomic theory. While almost everybody accepts free market theory, the real world diverges from its assumptions very strongly. Also known as the Standard Model. (See Free Market for the propaganda term.)
- A Dim View of Libertarianism, Part III: Market Fundamentalism [More...]
- "The widespread acceptance has been accomplished through simple repetition, devoid of argument and rich in the rhetoric of “freedom.” About the only supporting argument forms of note are anecdotal evidence and false generalization."
- Corporate Destruction of Free Markets Rules Us [More...]
- "Corporatism makes massive exceptions that rig markets and tilt the seller-buyer balance heavily in favor of the former who become bigger and bigger global corporations." Several good points about how corporatists have rigged markets so they do not fit the free market model.
- Does free market theory support free markets? [More...]
- "Free market theory demonstrates that in a free market economy, economic agents should adopt monopolistic and manipulative strategies that go against global economic efficiency. This is the part of free market theory that has empirical support."
- Economics 101 (62 links)
- Also known as neoclassical economics and economism. Libertarians are fond of applying standard Economics 101 microeconomics principles to bash the state. They forget the many concealed ideological biases of Economics 101, they forget that the real world doesn't often match simple models, they forget market failures, they forget the purposes of markets and they forget that microeconomics is not enough: you need macroeconomics too.
- Fallacies of Free Markets [More...]
- "Perfect competition is the ideal state in classical and neoclassical economics, and functions properly only when held to certain assumptions."
- How Neoliberals weaponise the concept of an ideal market
- "[N]eoliberalism is a political strategy promoting the interests of big money that utilises the economist’s ideal of a free market to promote and extend market activity and remove all ‘interference’ in the market that conflicts with these interests."
- The Fantasy of a Pure Market [More...]
- The distinction between markets and government is blurred because property and contract rights are not obvious, and whatever their definitions end up as, they make the market not "pure".
- Theory vs. Reality: Why Market Absolutism Fails [More...]
- Lists six basic assumptions of Free Market Theory that simply do not hold in the real world, actually existing market system.
All models are cartoons, but the standard model is particularly cartoonish, especially as it’s taught to students in Econ 101. They’re introduced to a fantasyland where perfectly rational people with perfect information in perfectly competitive markets come together in a beautiful dance of supply and demand -- with the “invisible hand” perfectly maximizing the welfare of society... The world of the standard model is a place where the free market is so perfect, government interventions only do harm; where workers are paid their marginal product, so exploitation doesn’t exist; where everyone is so rational, people are always best left to their own devices; where culture, history, institutions, identity, norms, emotions, and morals fall to the wayside, and human beings become cold equations narrowly maximizing their own pleasure (or “utility”). To critics, it’s a cocktail of fantastical ideas profoundly divorced from the real world—and textbooks force kids to slurp it up for crude ideological reasons... The fact that the standard model not only doesn’t accurately describe the world but also supports right-wing policies has led progressives to argue that the reason it remains central to Econ 101 is ideology.
Greg Rosalsky, "Freeing Econ 101: Beyond the Grasp of the Invisible Hand"
[N]eoliberalism is a political strategy promoting the interests of big money that utilises the economist’s ideal of a free market to promote and extend market activity and remove all ‘interference’ in the market that conflicts with these interests.
Simon Wren-Lewis, "How Neoliberals weaponise the concept of an ideal market"