A Free Market is a market free from governmental regulation and intervention (in the form of tariffs, regulatory codes, workers’ and environmental rights, etc.) except to enforce contracts and protect property rights. A free market is allegedly “self-regulated,” ethically speaking, by market participants (firms, owners, workers, buyers, sellers, etc.) associating on the basis of non-coercion and mutual consent.
Contemporary free market theory was espoused and most strongly advocated for by University of Chicago economist Milton Friedman. Friedman built upon the work of Austrian economist Friedrich von Hayek, and believed that free markets were the surest route to perfect competition among market players, a necessary condition for the maximization of efficiency, productivity, and ultimately the creation of wealth.
An absolutely free market has yet to exist in “developed” economies, but Friedman’s ideas have been highly influential in forming economic policy across the globe, from the Americas to Africa, Asia, the Middle East and Europe.
The most dramatic expression of free market criticism was the 1999 protest at the World Trade Organization (WTO) conference in Seattle. Protestors claimed that by transferring regulatory power from (hypothetically) democratic governments to privately owned institutions, citizens’ right to self-determination was compromised. They saw international financial institutions such as the WTO, International Monetary Fund (IMF) and World Bank as instruments of wealthy corporations to pressure countries in economic crisis into adopting free market policies.
Defenders of free market capitalism point to the fact that where free markets appeared to exacerbate social or economic ills (i.e. Argentina, Mexico, Chile, Poland, South Africa, Russia, Malaysia, China), there were still governmental interferences which contributed to market distortions and malfunctioning.« Back to Glossary Index