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America's Free Market Myths pp 189–202Cite as

Palgrave Macmillan

Myth 10: Free Market and Laissez Faire Are the Same

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Abstract

Myth: A free market’s distinguishing characteristic is the lack of government intervention. Government involvement destroys free markets. Bans on various types of economic behavior, including those intended to protect competition, go against free market principles. Government is easily corrupted and works on behalf of powerful interest groups therefore is not the most suitable institution to safeguard competition.

Reality: Competitive free markets and laissez faire are not interchangeable. Proponents of laissez faire oppose government intervention even to protect a market. Therefore, their concern is not the preservation of markets but the prevention of government involvement; two different concepts. It is not coercion that concerns them because they have no objection to coercion imposed by private parties even if it leads to the destruction of a market.

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Notes

  1. 1.

    Friedman(1962).

  2. 2.

    De Long (1990).

  3. 3.

    Hayek (1994).

  4. 4.

    In parallel fashion laissez faire writers see a nation of farmers who could easily return to their land when losing a manufacturing, or more recently, a service job.

  5. 5.

    Crouch (2011).

  6. 6.

    Other argument against government attempts to enhance competition include Joseph Schumpeter’s well-known thesis on creative destruction and the primacy of innovation and economic growth over concerns about allocation efficiency and competition and Lipsey and Lancaster’s (1956) theory of the Second Best.

  7. 7.

    De Long (1990).

  8. 8.

    Hayek (1994).

  9. 9.

    However he would also like to stave off what he sees as eventual state monopolies taking over from syndicalist or corporate organized monopolies.

  10. 10.

    The discussion is based on De Long (1990).

  11. 11.

    De Long (1990).

  12. 12.

    Polyani (2001).

  13. 13.

    Through the actions of either corporations or unions writes Polyani (2001).

  14. 14.

    Polyani (2001).

  15. 15.

    Block (2001).

  16. 16.

    Polyani (2001) and Chang (2011).

  17. 17.

    Mirowski (2013).

  18. 18.

    Madrick (2009).

  19. 19.

    Perelman (2007).

  20. 20.

    Polyani (2001), Madrick (2009), and Crouch (2011).

  21. 21.

    Polyani (2001) criticizes laissez faire attempts made during industrialization to turn labor into a commodity no different than any other commodity and justify it by the principle of freedom of contract.

  22. 22.

    Prindle (2006).

  23. 23.

    Shaanan (2010).

  24. 24.

    Kuttner (2007).

  25. 25.

    See Perelman (2007) on the fate of economists who did not believe in Friedman’s ideology.

  26. 26.

    Madrick (2009).

  27. 27.

    Mirowski (2013).

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  1. Bryant University, Smithfield, Rhode Island, USA

    Joseph Shaanan

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Shaanan, J. (2017). Myth 10: Free Market and Laissez Faire Are the Same. In: America's Free Market Myths. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-50636-4_11

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  • DOI: https://doi.org/10.1007/978-3-319-50636-4_11

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  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-319-50635-7

  • Online ISBN: 978-3-319-50636-4

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