The following is a decent definition of a free market economy.
“DEFINITION of ‘Free Market’
A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sellers are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.” http://www.investopedia.com/terms/f/freemarket.asp
In the beginning, the U.S. economy was largely free in nature. In a new land with little structure, a free market system developed naturally. The free market concept worked so well, the founding fathers saw fit to separate from England rather than accept government interference. From day one in the new country anyone who could used government as a means of living off the efforts of others. But, the opportunities to do so were minimal. As the country grew and became more complex this changed. Corporations became very powerful and increasingly pressured congress to rig markets. From the 1980s on government policy killed off the free market system.
Adam Smith, father of free market thought, addressed the problem in his classic, Wealth Of Nations.
“Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”
? Adam Smith
“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
? Adam Smith, The Wealth of Nations
Today, for the most part, government decides what citizens purchase and what they pay. Health care is a good example. It is the largest segment of the economy. Government policy dictates that patients pay an insurance company first. The physician is paid by the insurance company. The insurance company plays a role in determining treatment and what medicine is prescribed.
For the most part citizens are happy with the lower living standards of a rigged market system because they are relieved of the stress of making decisions. They are happy to pay more in return for the illusion of being taken care of. They have no choice so they might as well be happy. Government frequently decides what they buy and they don’t mind.
History’s most famous rigged market system was Germany under Hitler just prior to World War II. One of the seldom mentioned attributes of a free market is peace. As a country moves away from free markets, the chances of war accelerate greatly.
Karl Marx is often noted as history’s most destructive economist. In years to come he will probably be supplanted by the names of Ben Bernanke, Henry Paulsen and Janet Yellen. These are the economists who with the authority given them put the last nails in the coffin of the American free market system.
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