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Home | Mises Library | Why They Hate the Market

Why They Hate the Market

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Tags Free MarketsProduction Theory

03/08/2004Art Carden

It is always the fashion among many intellectuals to blame society's ills on the free market. One publication argued that the market is "The god That Sucked." The course summaries in my university's catalog, the themes of the lecture series, and the editorial content of the student newspapers suggest that many students and faculty would agree.


To borrow from Robert Frost, we should consider how the heavens go before we try to change the world. In other words, we must consider what is before we talk about what ought to be. In this article, I do precisely that: I clarify the definition of a "free market" and argue that the so-called sins of the market are misconstrued.

It behooves us to define what we're talking about. Many disagreements have their genesis in misunderstanding and equivocation. So let's define the "free market:" dictionary.com defines a "market" as "an opportunity to buy or sell" and a "free market" as "an economic market in which supply and demand are not regulated or are regulated with only minor restrictions." "Free markets" and "capitalism" are practically synonymous, and George Reisman defines capitalism eloquently:


Thus, we can define a "free market" as a social system based on the voluntary exchange of property rights. And yet the "free market" is almost universally reviled within the academy.

Many popular criticisms of the market are so common as to warrant the charge of cliché (critics of capitalism might say "axiom"). They can be distilled into a few broad propositions, which we consider here. They are: the market is antisocial, the market tramples human rights, the market is the enemy of the environment, and the market is the weapon of the rich against the poor. Let's consider each in turn.

One of the more popular myths about the market economy is that it necessarily entails a Hobbesian "war of all against all," a man-eat-man world in which we all compete in a zero-sum scramble for resources. A recent op-ed in the Washington University Student Life posited that the "apocryphal idea of [the market's] reality . . . may lead the entire species to self destruction.3" That's scary stuff. It follows, then, that the market must be warlike: if resources are finite and everyone lives to consume, conflict—and war—must be the natural result.



Another popular criticism of the free market is that it tramples human rights. Slavery, racism, sexism, and "sweatshops" are the children of capitalism; therefore, the market economy should be overthrown post haste.


Third, we have to ask two questions when we consider the plight of "sweatshop" laborers.4 First, why are working conditions so wretched? Second, what are these workers' next best alternatives? Working conditions in the third world are wretched precisely because many third-world countries have only recently began to adopt the institutions that characterize the market economies of the west. Workers' next best alternatives are often appalling: many children leave lives of crime, prostitution, and starvation to work in sweatshops. If we close the sweatshops, they will likely return to crime, prostitution, and starvation.

It is also popular to charge that the market is the enemy of the environment. This is also untrue; environmental degradation occurs when property rights are poorly specified or enforced. If anyone or anything has failed in this respect, it is the state. There is ample evidence for this in former communist countries: many lakes and streams in the former Soviet Union are so polluted as to be unusable. Economist George Reisman devotes a sizeable portion of his masterful treatise Capitalism—the full text of which is available online at--to the interplay between the market and the environment, and he shows that the statement "the market is the enemy of the environment" is grounded in fiction.

The market economy is also accused of being the ultimate weapon of rich against poor. Capitalist "meritocracy" is responsible for widespread poverty, rampant inequality, and Big Business' choke-hold on the world. While these challenges to capitalist institutions make for intriguing rhetoric, they are also false.

Today's poor countries were poor long before modern liberal market economies developed in Europe and North America; therefore, we cannot blame capitalism for poverty. Many critics also point to the unequal distribution of wealth in the United States as evidence of capitalism's evils, but this overlooks two crucial points.


The reader should note that the power of "big business" is overstated. A unique feature of capitalism is that the greatest rewards go to those who cater to the common man. Consider Wal-Mart, a favorite whipping boy among left-wing intellectuals: Wal-Mart's clientele consists almost exclusively of the middle- and lower-class. Capitalism generates fantastic wealth, and the benefits accrue almost entirely to the least of these among us.

Ludwig von Mises put it succinctly in a series of lectures which were published posthumously as Economic Policy: Thoughts for Today and Tomorrow. He notes that "this is the fundamental principle of capitalism as it exists today in all those countries in which there is a highly developed system of mass production: Big business…produces almost exclusively to satisfy the wants of the masses." The "power relationship" of which Marxists are so fond is precisely the opposite of that which is most often supposed: consumers, not producers, are the masters of the dance.


Finally, it is deficient scholarship to merely point out the litany of crimes that the market (supposedly) commits and suggest that it has "failed" in any meaningful way. One must propose a superior alternative. In this case, both theory and history are firmly on the side of the free market. Mises and Hayek demonstrated that rational calculation is impossible without private ownership of the means of production. This isn't to say that "socialist economy" is inefficient—it is quite literally an oxymoron. Our experience with radical revolutions and planned economies in the twentieth century is hardly encouraging: in the name of "the people," Che Guevara killed thousands, Hitler millions, Stalin and Mao tens of millions.

It may be fashionable to blame the market economy for all of society's ills, but this blame is undeserved and many scholars' faith in alternatives to the market is misplaced. No socialist regime has ever held a free election, and no free market has ever produced a death camp. Popular academic opinions to the contrary, the market works. And we can take that to the bank.

  • 1. Defined in ibid, p. 21 the absence of the initiation of physical force (italics in original).
  • 3. Redden, Shawn. 2004. "Enslaved by 'Free Markets.'" Student Life, February 20, 2004.
  • 4. See Carden, Art. 2003. "Grit, Grime, and Economic Development." The Free Market 23 (12): 1–3 for a deeper discussion.
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