Free the Market How We Can Save Capitalism from the Capitalists

Abstract

The free market works because no one person or company is making the decisions. In a competitive market, businesspeople make the wrong decisions all the time, just as central planners do. But the consequences of those decisions don’t infect the market as a whole. Businesses that guess wrong lose money or go out of business. But as long as there is a competitor out there who guesses right, the market provides people what they want.

But it turns out that the very last thing capitalists want is a free market. Capitalism may thrive under conditions of robust market competition, but most capitalists don’t. They would much rather operate in an environment free from government restraint but also free from the discipline of a truly competitive market.

Unfortunately, we have obliged them. At every turn, we have allowed the dominant forces in a market to erect barriers to protect themselves from being dislodged and to maximize their own profits at the expense of everyone around them. The result has been that while we have a capitalist economy, we no longer have a free market. Nearly every market sector is less competitive today than it was fifty years ago. We have centralized control over important sectors of the economy in a handful of companies. And we have given them the tools to use that control to prevent new competition, to make it hard for consumers to take advantage of what competition there is, to drive down wages, and to extract as much short-term profit as possible rather than invest in long-term productivity. Late-stage capitalism isn’t the free market run amok. It is the capture of markets by actors who have a vested interest in making sure there is no free market. And the consequences have been dire, not only for consumers, but for inequality and political stability in the U.S. and throughout the world.

The good news is that we have the tools to reverse that process and to free the market – and many of them are legal tools. These are big problems; much bigger than the law. But many of these problems are traceable to our failure over the past forty years to enforce legal rules that regulate markets. Enforcing the antitrust laws we already have will make a good start at undoing this harm. There are also a number of other laws we can pass that can help free the market, restricting mergers, opening markets, protecting consumers from corporate efforts to block consumer access to information, and ensuring a free market for employees. And one agency – the Federal Trade Commission – has both the authority and the motivation to open markets to competition. In this paper, I discuss the ways in which capitalists have prevented market competition and how we can reverse those changes.

Keywords: Capitalism, Labor, Employment, Free Market, antitrust,