It seems to be assumed in most discussions about economics and the role of the government that free markets are better than government regulation, but I think before that discussion can happen we need to analyze what we mean when we say ‘free markets.’ In their pure form (which is the only form that is truly ‘free’) they rely on several assumptions about human nature and reality that don’t reflect actual practice. On a macro level, free markets require perfect information and perfect competition in order to function as proponents claim they do(eg. maximizing both individual and collective economic opportunity). By perfect information I mean that every individual understands all of their economic options and knows their own short-term and long-term best interest. Perfect competition means that everyone is on the same footing in the beginning. Theoretically, we should all have the same advantages and the best (most efficient) competitor should profit most.
Neither of these requirements (perfect information and competition) exist in our world. The tendencies of information and advantages are to accumulate with the wealthy and privileged, who have in turn inherited their position via their place of birth, socioeconomic status, race, and sex. Unless we are to take these factors as the basis for what we think people deserve, we must change things. Freedom of opportunity is hailed as the great leveler to allow those without advantages to still have a chance to change their destiny, but to accept this freedom as a given and to ignore the work that must be done to improve and maintain it is to live in a delusion.
Not only are ‘free markets’ a myth, but they are a myth that perpetuates the system itself by defining the debate as between freedom and regulation. This rhetorically powerful label of ‘free’ is used as a blunt object against those who argue for unregulated markets, but it does not reflect reality. I don’t believe in the cut-and-dry class struggle view of Marxism, but it is clear that ‘free market’ is a misnomer.
There is no such thing as free markets, nor will there ever be. There are only biased markets, and biased markets must be regulated by society in order to preserve justice and equality.