The “Free Market” Is A Myth

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.
—John Maynard Keynes

The dumbest thing that otherwise smart people glorify is the free market. It’s the central ideology of libertarians, the party of people who pride themselves on sounding much smarter than they actually are. That alone should make you question free market rhetoric.

Ben Shapiro is a smart guy, but when he preaches the free market myth, his intellectual faced fades just enough to expose the personal greed in his heart. Adam Carolla is an insightful guy with an interesting rags-to-riches story, but when he starts talking about a free market economy powered by competition, it only shows how out of touch he is with his roots as a construction worker.

In the video below Ben Shapiro interviews Ann Coulter about her book on immigration. She argues that its America’s biggest problem very well. While Ann says that it hurts American workers when companies hire Indian immigrants using H1-B visas, Ben argues that by not allowing that it could hurt free market choice. Ann replies by saying that doesn’t really matter unless it works for Americans.

Ann is patriot and cares about American workers. Ben is greedy and cares about his stocks.

The Lie We Want To Believe

The best book exposing the free market fallacy is The Transformation of American Capitalism by John R. Munkirs. It’s hard to find and can sell for hundreds but if you’re lucky you can find a cheap copy like I did.

In chapter two of the book, Munkirs gives a chronology of this myth starting at the 1860s. After our nation was founded we had a period of expansion. Industries were being established. Urban populations rose. Infrastructure was in perpetual development. Westward expansion lead to what might be the only true free market in any industrialized state—The Wild West.

Once businesses and industries were established, monopolies formed under the name trusts. A trust is an umbrella corporation that controls all the stocks and holdings of the businesses in the trust. In effect, trusts and later holding companies (same thing, different name) acted as monopolies. They were able to use their resources to easily establish dominance over businesses not in the trust.

The free market economy driven by consumer choice quickly became an irrational ideology. The government still believed in it though. In his book The Folklore of Capitalism, Assistant Attorney General of the U.S. during the 1930s Thurman Arnold writes, “…the anti-trust laws enabled men to look at a highly organized and centralized industrial organization and still believe that it was composed of individuals engaged in buying and selling in a free market.”

Here is a picture I took from my copy of the book. It shows how much of an industry was controlled by just a few trusts/holding companies and which families dominated those trusts. Notice that Rockefeller comes up frequently.

The free market at work

The Dog and Pony Show

Eventually there was enough outcry from citizens that the government had to do something. That’s when TrustBuster Teddy Roosevelt stepped in. Long story short, Congress passed a few bills in to law but they were poorly worded, poorly supported, and poorly enforced. Naturally, they were ineffectual.

This cycle of increasing monopolization, public outcry, and ineffectual legislation repeated itself a few times up to the 1970s (the book was published in 1985).

Various economists justified the system in a few ways. They said countervailing powers like unions kept the adverse effects of the market in check. (How strong are our unions today?) They said the government should only intervene to keep unemployment low and wages high. (How well did the government do at the only two things it should do according to idealized economist John Keynes? Yet somehow the government successfully bailed out banks and the automotive industry).

The government at work

2008-2016 Really shows you something

Do We Even Want A Free Market?

Our economy is better described as being dominated by oligopolies (which act more like monopolies than free market competitors). The rest of Munkirs’ book describes how companies in the same industry share many of the same board members (that would make competition pretty hard I imagine). It goes in to great detail describing how the guys who sit on so many of these boards are able to manipulate the market and an industry at their whim.

There are downsides to this type of economy: low wages, long hours, high unemployment, etc., but these are also the only organizations that can give consumers what they want—mass produced goods widely distributed for cheap and the technology to achieve this. How outraged are people about their low wages when they can still walk out of Wal-Mart with bags of cheap crap?

Modern technology has only emphasized how easily subdued we are. How many people should have been outraged by the big bank bail out but were scrolling through Facebook instead?

Like it or not, concentration of wealth in the hands of the few makes social mobility increasingly impossible. The economy we have in America enables this and has been getting better at doing so for 150 years. Cheap goods trick people into believing the free market myth. Social media sedates people in to not caring. Smart phones ensure people never have to look up and see the truth behind the free market myth. And if that wasn’t enough, intellectual fools like Ben Shapiro confirm what blue pill economists want to believe.