Is there such a thing as "the free market"

A free market means that there is an absolutely level playing field. All transactions are completely transparent and buyers can assess all the sellers - and such a market doesn't exist anywhere. I doubt it ever has, outside barter economies at village level.

In today's complex economies where governments interfere to subsidise or tax many aspects of the economy, in many cases for entirely virtuous purposes, it is impossible to have an absolutely level playing field. Nor can we cannot assess every suppliers offer. Just how open and transparent is the domestic energy market where there is supposedly a free market, to choose but one obvious example?

The mistake that governments have made since the Thatcher era is to assume that opening a market up to competition makes it a free market. If it is so free why do we have to have so many laws to stop companies in this 'free' market from colluding and fixing prices, conditions of delivery, making life difficult for new entrants, running monopolies etc etc?

Then there are ethical issues, like those surrounding the manufacture of the inexpensive clothing we expect to find in every supermarket and chain store. What do we know about the manufacturing processes and human rights issues behind the cheap clothes and food we buy. Look at the way the recent Tesco debacle has revealed how many supermarkets bully and undermine their suppliers, in some cases driving them into bankruptcy.

'Free' markets are a chimera, like fairies at the bottom of the garden. They do not exist.

"Historically, governments have protected themselves … by preventing access to the market or by controlling price, but never by controlling patent protection – this is the next wave, if you will. And this goes to the very core of the pharmaceutical business model, founded on this virtual monopoly created by patent protection."

www.theguardian.com/sustainable-business/patent-wars-india-takes-on-big-pharma

In the case before the court, XXXXXXX is accused of paying off would-be generic manufacturers of their blockbuster drug XXXXXX, a synthetic testosterone used by hundreds of thousands of AIDS patients, cancer patients, elderly men and others who suffer from low levels of testosterone. The generic companies were happy; they made money for doing nothing. XXXXX continued to reap huge profits by keeping its monopoly in the market. The only losers were patients who have had to keep paying much higher prices for their name-brand-only drug.

edition.cnn.com/2013/04/25/opinion/caplan-prescription-drugs/

And to think that tax payers money is used to finance a fair chunk of R&D (although the Wellcome Foundation is independent), you'd think that patients would get a better deal.

A very good example Eloethan

As was said by a woman whose name I didn't catch: there are a lot of people making a lot of money out of making sure that consumers have no real choice.

I agree Hollydaze. There are virtual monopolies running vital services - e.g. energy companies. "Competition" was meant to protect the consumer but it seems that this handful of large energy providers just follow each other's lead and put up prices - the notion of competition is illusory.

No, the free market does not exist (quite apart from government interventions (and not always for the right reasons)) - think about how the multi-nationals will restrict, or even prevent, new competitors from entering the market. If it was a truly free-market, that would not happen (and neither would it be allowed to happen).

I think the idea that the "free market" does the best for most people is about as true as Communism doing the best for most people.

I thought "free market" and its bedfellow "trickle down" had been comprehensively exposed as fake concepts quite a while ago.

I'm agreeing with you both!

Banks and insurance companies have been fined massively for mis-selling lately, but I bet it's the consumer who pays the fines in the end, not the individual who made the mistake of believing in his plan to get more money out of the consumer.
There is now coming in a system whereby bankers and other directors who get bonuses are to have them taken away if any problems are found within seven years of them leaving, but I do not know if it is retrospective. Actually, it can't be, can it, otherwise they would all have had to pay back their bonuses by now, and wouldn't dream of asking for another one.

I do see your point, but if these institutions think that they can behave like hoodlums and then get the taxpayer to bail them out, there will be a never ending cycle of boom and bust - with those that caused the bust benefitting from the boom and everyone but them paying for it.

Given that allowing the banks to go under would have meant a complete restructuring of the market and all sorts of financial chaos, perhaps it was justified to bail them out. What I object to is that on the one hand they decry regulation on the grounds that it inhibits free market conditions but on the other they abuse that freedom from tight regulation to line their own pockets, bringing a state of financial chaos to the country. They then expect to be saved by the very governmental authorities that they have shown such disdain for.

If individuals were at fault - and it seems many were - they have not paid the price for their recklessness. In fact, even following the meltdown, they continued in the same old way - mis-selling, rigging rates, etc. In addition, they have re-classified their "bonuses" as "allowances", thus side-stepping attempts to prevent these huge pay outs being given to them.

In which case there is no free market involved, as Eloethan says.

If free markets are such a good thing, as Osborne and Cameron say, why are the talks about the TTIP being held in secret?
Shouldn't they be out in the open so we ordinary people can be given a better knowledge of the free market principle?

But aren't bail-outs sometimes for the protection of ordinary people Eloethan? What would have happened if RBoS hadn't been bailed out?
Rocks and hard places spring to mind.

That's true jane. But the sort of protections to which you refer - licensing and safety regulations, child labour, etc., etc. - have invariably been - and, in the case of safety regulations, continue to be - vehemently opposed by free market proponents. However, the free market principle seems to go out of the window when subsidies and bail-outs are required.

U.K. Prime Minister David Cameron will urge corporate leaders to defend business and the free markets from “dangerous rhetoric,” less than a month after his government stripped banker Fred Goodwin of his knighthood.

In a speech in London to charity Business In The Community, Cameron will attack the idea “that wealth creation is somehow anti-social,” arguing that “business is not just about making money, as vital as that is; it’s also the most powerful force for social progress the world has ever known.”

This was in February 2012. Do you think Cameron and Osborne should check each other's speeches? He was talking to a charity.
Eloethan, I think at the moment that the US is taking our banks to court for those mortgage losses, I read somewhere last week. RBS and HSBC are being sued.

eloethan Surely markets are regulated by the State to protect ordinary people?
I can't comment on global economics and whose interests were protected by the US government's intervention, but to give a more prosaic example, suppose there was a free market in the supply of electrical installations.
That would mean that anyone could sell their services without being properly qualified, with potentially disastrous results.
It is Parliament's job to ensure that the right people's interests are being served by regulation of markets, and perhaps that's where they fall down and the rub lies.

That's exactly what is happening in the NHS, Eloethan.
The privatised bits that did not make profit, like 111, get handed back to the NHS, after the private companies have made a bit but not enough to please the shareholders.
Hinchingbrooke Hospital the only private one, is being subsidised by the tax payer, until soon it will breach its conditions and have to be rescued. It is being massively subsidised anyway, at the moment.

Look what happened to the East Coast mainline. It made losses for Stagecoach, was handed back to the public, then started making a profit - the only rail company to do so - and now the government want to hand it over to a conglomerate, part French government, so they can try and make money out of passengers.