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Nice short summary of why "free market" is BS used for persuasion.It begins with a misrepresentation of Adam Smith (as Michael Hudson tirelesslyy points out).Supporters of ‘free’ markets use the word ‘free’ to mean free from government interference. They often quote the economist and philosopher, Adam Smith, who wrote about the ‘invisible hand of the market’ creating good outcomes for society. However, his writing has been deliberately distorted to turn it into propaganda. Smith used the word ‘free’ to mean something completely different. He meant free from big companies and wealthy landowners with too much power, who could make unearned profits (these are sometimes called economic rents, or ‘free lunches’, discussed in later posts.) Smith was all in favour of governments interfering to
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Nice short summary of why "free market" is BS used for persuasion.Nice short summary of why "free market" is BS used for persuasion.It begins with a misrepresentation of Adam Smith (as Michael Hudson tirelesslyy points out).Supporters of ‘free’ markets use the word ‘free’ to mean free from government interference. They often quote the economist and philosopher, Adam Smith, who wrote about the ‘invisible hand of the market’ creating good outcomes for society. However, his writing has been deliberately distorted to turn it into propaganda. Smith used the word ‘free’ to mean something completely different. He meant free from big companies and wealthy landowners with too much power, who could make unearned profits (these are sometimes called economic rents, or ‘free lunches’, discussed in later posts.) Smith was all in favour of governments interfering to
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It begins with a misrepresentation of Adam Smith (as Michael Hudson tirelesslyy points out).
Supporters of ‘free’ markets use the word ‘free’ to mean free from government interference. They often quote the economist and philosopher, Adam Smith, who wrote about the ‘invisible hand of the market’ creating good outcomes for society. However, his writing has been deliberately distorted to turn it into propaganda. Smith used the word ‘free’ to mean something completely different. He meant free from big companies and wealthy landowners with too much power, who could make unearned profits (these are sometimes called economic rents, or ‘free lunches’, discussed in later posts.) Smith was all in favour of governments interfering to stop companies gaining that power, and to stop them making excessive profits.That is probably an excessive statement. Smith wanted government out of the business of micromanaging the economy, including trade, but as a philosopher of human nature, he was well aware that the regulatory function of government was needed to discipline excessive pursuit of self-interest as a primary motivation in commerce. He was also aware that government can be suborned to favor class interests.
Smith was arguing for an enlightened liberalism rather than promoting laissez-faire. He realized that there are two great power blocs – government and business. The should balance each other rather than one bloc dominating.
While Smith did not foresee it as far as I know, the worst of all worlds would be an unholy alliance of the two blocs, which history shows can take different totalitarian forms. The present challenge is totalitarian international corporatism that captures and suborns states.
The real economic problem the world faces now is not supply but rather distribution skewed by economic rent and rent extraction through exertion of power. Market power is often the result of political power, for example, anti-competitiveness, artificial scarcity and externalities.
Elephants In The Room
There is No Such Thing as a Free Market
Ron Driver
See also