The most productive eras corresponded to when the economies were most free market.
But my larger point is that I think "free market" eras also correspond with worse quality of life for the majority of citizens. I'm thinking things like pre-safety-regulations industrialization in the US; the environmental catastrophe that was the 60s (so bad that it led Nixon to create the EPA); the affordable housing catastrophe that has been the past 15 years.
We can obviously produce more if we don't have to worry about externalities like "worker safety", "being able to afford rent", or "habitable environments". Free markets create conditions where externalities aren't as important.
Almost nobody wants to pay for the pollution they cause via CO2 taxes. Meanwhile income taxes are considered efficient despite their dead weight loss. Everything is upside down on this planet when it comes to economics.
It’s usually defined as a market free from (excessive) government control.
I think you might be trying to shoehorn domestic policy concerns into a broader definition of free markets.
What collapsed were the banks, due to mismanagement by the Fed (the government). In particular, it was trying to maintain a fixed (government specified) exchange rate between gold and money while inflating the money 2:1.
Like all such pegging schemes, the result was a run on the banks, leading to their collapse. This (finally) stopped when FDR made it illegal to exchange gold for money.
You're conflating two different things here.
Pricing externalities is part of a functioning market, but most of those things aren't externalities. Pollution is, but free markets where emitting pollution is priced can still be competitive, they just take into account the cost of internalizing the externalized cost into the market price of the end products. Environmental regulations can be inefficient if they're poorly conceived or impose excessive administrative burdens, and that's a problem, but you can have simple rules like "no leaded gasoline" and "no dumping mercury in the river" without destroying the free market.
Whereas the reason housing is expensive isn't any market externalities, it's regulations that restrict where and how much of it can be built, and the supply of trade labor with which to build it.
There were millennia of unbelievably open markets which were marked by almost no growth at all.
Think of it like a potential gradient, or a gravity well, or a food source in biology.
Open markets where markets have been open for awhile (and no new game changing things like new technology, new ideology, etc. have happened) will maintain homeostasis at that level.
If new technology gets introduced, unless there is strong closed market forces to keep it from spreading, then you’ll have change (in this case growth) faster with open markets. It will equalize the potential faster.
Which, depending on who you are, may be desirable or not.
Free markets have always found that potential.
You don’t have to go back very far in history to find plenty of examples.
Recent history has had massive and rapid technological development, and it’s been relatively easy to find win/win trades, so it’s easy to think it is.
But the Caribbean slave trade, or US Deep South cotton trade, or Indian spice trade? Eh…. A little less clear.
Example?
> Caribbean slave trade
And yet the free market in the US buried them, and the Caribbean remains poor.
Technological development - decent ships, actually good and reliable navigation, and knowledge of exploitable opportunities (sugar markets, and later cotton).
Energy gradient - cheap labor (in the form of slaves) in Africa, cheap arable land (Caribbean, US, South America), hungry markets with excess wealth in Europe.
First, the Caribbean got exploited (with open markets!) rather brutally, until the slave rebellions starting in 1790, and further escalating.
Haiti in particular, won their rebellion - and then were completely economically isolated (by closing the market!) by the European powers. They still have not recovered economically, same for most of the Caribbean.
Around this time is when the US markets (less ideal to exploitation, but larger and more controllable) in both sugar cane and cotton started to take off using the same sources.
Which fueled significant tension between the northern states (no crops easily amenable to slavery, rather being capital manufacturing, livestock, and secondary goods like weaving/textiles) and the southern states (many labor intensive crops, amenable to slavery).
Attempts at controlling the open markets in these crops by dissimilar interests (by either banning slavery or by blockade) is what led to the civil war.
The south couldn’t ban slavery without bankrupting their economy. The north couldn’t allow free trade/slavery continue without making themselves less competitive, as Europe has more developed textile mills and heavy manufacturing. So them getting the goods directly was undercutting northern US competitiveness.
Notably, the British, being the first into the Industrial Revolution and the furthest along, were also the first major European power to not just ban slavery in their country - but all their colonies, and everywhere else they could reach.
To cut off the ‘energy gradient’ of cheap labor, and make their products (more capital intensive manufacturing) more competitive.
The Caribbean is poor because they rebelled against exploitation, but couldn’t capture the economic engine that was exploiting them - they got bypassed by a competitor.
And by the time their competitor (US Deep South) also got broken, the underlying energy gradient that led to them being exploited at all was cut off.
So all they had left was ruins, debt, and disease.
Sucks to be them.
So, depending on how you measure ‘good’, they’d have probably been a whole lot better off with a closed market that would never have let the initial energy gradient be formed to begin with, eh? Or at least not allowed the extremely rapid and rapacious exploitation.
Think of open markets as a full open floodgate, and closed ones as having a valve at various degrees of closed off.
Flooding is very ‘profitable’ if you can somehow harness it (very difficult to do), but can be very unpleasant and destructive for those caught in its path. It’s nearly impossible to die of thirst in a flood.
Restrictive flow doesn’t product as much ‘profit’ but has the potential to produce more desirable outcomes if used effectively. As long as the dam doesn’t burst of course. If the valve is misused or turned off, it’s easy for some (or even all) to die of thirst.
Pick your poison.
Free economies always outperform slave labor, by a large margin.
> Technological development
Oddly enough, happens first in free market countries. Turns out, you can't build a technological economy using slaves.
The Caribbean countries would be prosperous if they'd try free markets instead of socialism and communism.
The northern economy was MORE CLOSED than the South. For one, they banned slavery first. They had more import/export controls.
The south was as free and open* as you could imagine - anyone with the Capital could buy a slave, or sell goods, etc.
Trade was minimally restricted.
(* Notably, if you were a "free man". Slaves, Women, Children, and sometimes Indentured Servants all had significant restrictions on rights across the board in both locations that were very similar - both de jure and de facto).
The North were the ones blockading the South, not the other way around.
[https://history.state.gov/milestones/1861-1865/blockade]
The current Caribbean countries are also currently free markets? At least from what I can see.
Plenty of 'international banking' in many of them too.
Haiti finally paid off the restitution the French have been making them pay since the slave revolt back in 1947 [https://en.wikipedia.org/wiki/Haiti_Independence_Debt], and seem to be slowly gaining ground again.
The Dominican Republic (on the same island, other side of the fence, different government due to a revolt in the ~1850's) has been doing quite well for a long time, I think partially because they don't have to pay that debt back, being a "different country" and all. And they generally don't have the various travel blacklists that Haiti has had.
I suspect the argument you're trying to make is that mechanization/automation (and it's helpful companion, Capitalism) beats slavery.
Which I definitely agree with. One beneficial advantage being that it frees up people to do more thinking (and less, well, slaving away) and benefits significantly from economies of scale - both for the Capitalists, and everyone else. Which is why inventing is so useful (when it won't get stomped on by monopolies, anyway).
So it's mostly a beneficial cycle, as long as monopolist tendencies get reined in and someone is watching things to ensure it doesn't get too abusive. Unlike Slavery.
Slavery is also despicable in general, so I personally am glad to see it gone.
Free/Open/Closed/Restricted markets are not necessarily good or bad, independent of the circumstances - same as guns, IMO. They do have predictable outcomes, if used in predictable ways though.
The more closed, the more problematic IMO, but I have yet to see a truly open market (aka a black market, perhaps?) without some really nasty abuses of it's own. So YMMV.
The Southerners used slaves for cotton and tobacco farming. It was the only industry that could eke out a profit with them, and even that was failing by the 1850s.
The Northern economy BURIED the Southern one. That's why the South wanted to secede. It wanted to protect itself from the North. The North also won the war because they enormously outproduced the South in arms, uniforms, railroads, food, everything needed to fight.
The reason for the Gettysburg battle was Lee was headed for Harrisburg to loot the shoe factory there, because the Confederate army was barefoot.
Maybe you should actually read my comment?
They were fundamentally different, that’s the point. Just not in the way you seem to keep trying to say it is.
Industrialization and automation wins over slavery.
Which is a good thing! And literally what I said in my comment.
Consider that no country that had slave agriculture has ever been able to feed itself. Even with tractors.
Spartans and the Helots? [https://en.m.wikipedia.org/wiki/Helots]
Plus a dozen other examples from antiquity and recent history - including the Confederate states before the blockades and sanctions due to their use of slavery.
What are you even talking about?
"An estimate of the slave population in the middle of the second century, when the Republic was at its peak, was over fifteen percent"
The Romans couldn't have produced enough food with only 15% of the population. Not even close.
As for the Spartans and the Helots, isn't it interesting you have to go back 2000 years to a society of which very little is known? Spartans left behind very little writing, what we know of it comes from their enemies.
The Confederacy used slaves for cotton and tobacco, not produce.
"Slaves increased the economy, fed the entire republic through agriculture, and they also upheld important roles and was the glue that held Ancient Rome together. Slaves played a huge roll in Ancient Rome and was the reason for the great economy and without the slaves Rome would not have been as powerful as it was. "
Total US employment in the food industry (not just farms) is 10% of US employment, and only 5.5% of GDP.
Slavery is terrible. But pretending humans haven't used it (successfully) to run civilizations at scale is just being willfully obtuse.
Goodbye.
I think "homeostasis" is overselling it, even if I agree in the short to medium term.
Any growth potential leads to pressure to take advantage of it, which leads to runaway growth until some sort of scarcity sets in, where one entity's ability to exploit the potential is decreased by other entities'. This leads to competition, which results in pressure for each entity to take advantage of more of it than other entities, which leads to entities evolving ways to restrict others' consumption even at the expense of their own. Free markets expand consumption of potential to the point of scarcity, at which time they produce evolutionary pressure towards non-free markets (via monopolies, regulatory capture, or whatever else is available).
It's like a nutrient-rich drainpipe getting so clogged up with algae that the water stops flowing. Or fishing, where it's all good until you start making a serious dent in next year's breeding stock.
Free markets in times of plenty can produce massive benefits. They raise people out of poverty, dramatically improve healthcare and education and opportunities, etc. AFAICT, they're the most powerful mechanism for doing so. And then eventually, they consume themselves.
I take back the complaint about using "homeostasis". After all, it applies to systems that will eventually die.
Luckily, most have mechanisms to adjust - if they’re willing and able to do so.
Cancer, notably, is one such situation that hijacks that mechanism. I’d argue that culturally, we have such a cancer forming right now. And it’s not capitalism, or communism, or politics, or guns or anti guns, or whatever.
It’s our inability to focus on and care about what we, as individuals, actually need and want, and push for it.
An inability actively being grown and reinforced by a number of entities - and allowed because we refuse to acknowledge our weaknesses too.
It is in fact the opposite. Capitalism fails due to inevitable relative abundance. At some point you reach market saturation. Present abundant resources should be allocated to the future. This doesn't happen. When abundance happens, you no longer need full employment to produce all present consumption needs. However, the principle of hiring the most productive employees and letting them work full time results in the redundancy and unemployment of less productive people, because hiring a single employee has less fixed costs than hiring two employees assuming they both perform the same amount of work. The paradox is that the more productive person is producing the consumer goods of the person that was let go. That unemployed person can't afford to buy his own consumer goods since he doesn't get paid to produce them, because it saves the employer fixed costs. You could think of this as a greedy knapsack algorithm. This algorithm works while there is scarcity, since you can just hire all workers. It doesn't work when there is abundance, since workers have to earn enough income to buy their own products. Note how this relates purely to the structure of the economy. Now the classical objection to this is that the workers who produce but don't consume will save instead, which lowers the interest rate. This is supposed to happen even if the interest rate is already at zero or even negative. The capital market signals that present resources are supposed to be allocated to serve the future. This allows employers to hire the unemployed workers and let them work to satisfy future demand, such as interplanetary travel and colonization of the moon or building pyramids that last more than four thousand years.
If it's inevitable, there ought to be compelling examples?
The only that would remotely qualify would be guild organized professions, and even those rose to prominence in the high and latr middle ages.
What we consider free market came with the industrial revolution and colonialism and the national companies created to exploit those colonies. The first signs of that can be traced to the early renessaince era, with Italian merchant princes, the Fugger and the Hanse. Those were still subserviant to nobility and aristocratic rule so, while the industrial revolution capitalists and colonial companies were much less so.
Fun fact: The workers building cathedrals were fully unionized, with all the benefits that's with that: limited work hours and days, health care, social security.
Examples include the Hanseatic League (run by the various merchant guilds as a de-facto state) ans every single city in what now is Germany or Austria. Up to the point the rural nobles constabtly feuded with those cities.
You saidb t yourself, the textile manufacturer guolds of the low countries contributed a lot to the prosperity of those places, same for England. And for a long time, the trade between those cities was run by the Hanseatic League (which were arguable a lot closer to modern day capitalism than a local crafts guild).
https://www.amazon.com/Victory-Reason-Christianity-Freedom-C...
What does the book have to say about which kind of christianity is the source of all of that? Cathlocism, protestantism (which one?), the orthodox church (again, which one?)?
And how does Enlighment fit into all of that?
Edit: Focusing on the West is also extremely reductive. Up until colonialism really got started, the Mongols dominated the far east, China was a major economic and scientific power. None of which were even remotely Christian. It is true so, that the Western form of guilds is directly linked to European christianity. As the mongols and China show us so, there are more ways to prosperity than the "Christian" one.
The religious angle is not relevant to this discussion. It's about the emergence of free markets in the Netherlands, and the results.
As for China, China invented a number of things, but failed to apply them like the West did. For one take on why, see the book "The Triumph of the West" by Roberts
https://www.amazon.com/triumph-West-J-M-Roberts/dp/076070850...
In modern times, China adopted free markets with spectacular results.
It fails to look at the medival period as different, distinct periods. It also fails to brake those down by region. That can be called cherry picking.
It fails to look at all of that im context, especially by ommitting the history of the other side of Western dominance. That history is directly linked, after all Western dominance required a counter part to be dominated. So whatever happened at the other end is crucial to understand the shared history. This can be called ignorant.
And last but not least, this view on history is used to drive political narratives. As is the opposite political bias that shows in other books and papers. I do not like neither, historians shoupd at least try (one cannot be fully neutral ever) to be impartial and provide an objective study of history. Late pop-history doesn't do that.
But you dismiss them anyway. I'm not impressed.
The US is into free markets because historically it's interests were anti-mercantilist.
I think the most productive eras are really when everyone is picking low-hanging fruit. And the low-hanging fruit only seems so low because there’s been a burst of newly available mechanical technology. Then everything is picked clean, productivity drops, and the economy shifts to prioritizing useless consumption.
-- google "free market"
A free market without government control is an adolescent fever dream. Nothing like it has ever existed or ever will. The question is not whether there will be government control, it is how much?
> Nothing like it has ever existed or ever will.
The free North in the US.
They built up a massive industry of mining and processing raw materials like aluminum, titanium and steel.
Slave labour can be highly productive.