Most people who have given any thought to economics visualize an economic spectrum ranging from "free market" to "socialist" and place themselves somewhere between those two poles. Oddly, the poles themselves are rarely well defined in debate and most people place themselves on that spectrum based largely on how they define "free market" and/or "socialist."
For example, there are quite a few liberals who define "socialism" as support for state-owned industries and since they themselves only support welfare and regulatory agencies these liberals are often offended when someone calls them a socialist. There are also many conservatives who qualify their support for the free market by prioritizing domestic business through tariffs and strict immigration policy. Then there are many people, right and left, who consider certain policies that are arguably anti-market to be part of a free market. For example:
Anti-trust laws are supported, even by many free market advocates, as a way of guaranteeing competition. Yet, such laws (in practice) punish firms for providing goods "too cheaply" or simply failing to have any current competitors. Is it truly a free market when a firm can be punished for its success?
Anti-discrimination laws are a blatant violation of property rights. What sort of property rights do not convey upon the owner the right to determine who can or cannot be present on a property? Yet, again, many people consider such laws to be consistent with a free market.
As a final example, consider the Federal Reserve. Many proponents of the free market accept the existence of the global financial system despite the fact that this system is perhaps the single greatest example of central planning in human history. Can a society whose money is controlled by a centralized bureaucracy be fairly considered a free market?
As you can see, there is a great deal of disagreement as to what actually constitutes the "free market." In the interest of clarity, let me lay out a very basic definition of the market in order to get to the heart of the matter. This definition is my own, but it would be agreeable to many (but not all) people who support free markets. For many on Newsvine, this description of the free market will be entirely new. For those who have never heard the market described this way, I hope you find this illuminating. Enough preamble:
For simplicity, I'm going to use the term "goods" to describe all things that people desire that do not inherently harm other people. Goods would include everything from a new car to a soothing massage to the love of one's family. In short, goods constitute any beneficial outcome that human beings must put forth effort to achieve. To obtain goods, people will take actions that will fall into one of three broad categories:
1) Production: The creation of new goods by combining one's labor with existing goods.
2) Trade: Giving up existing goods that you value less in exchange for goods that you value more.
3) Theft: The forcible acquisition of existing goods from others.
Let me give some unusual examples to demonstrate how general this argument is. An unusual example of production would be procreation. Procreation creates a new person who can provide the parents with all sorts of new goods (probably the most immediate being love). An unusual example of trade would be a husband who agrees to his wife's request to do yard work (a task he dislikes) in exchange for an uninterrupted block of time to watch football with his friends. Finally, an unusual example of theft is failing to notify a buyer about intermittent roof leaks in a home that one is selling. The seller has obtained a higher price by misrepresenting the "trade."
When I use the term "free market", I refer to actions in the first two categories and exclude actions in the third category. Ideally, all human action would involve market actions (per this definition). Unfortunately, there are circumstances where Theft (broadly defined) is necessary. A simple example is the case of a mugger who threatens a man with a knife and demands the man's wallet. Fortunately, the man is trained in self defense and he disarms and then restrains his assailant. This is a type 3 action, but it prevents another type 3 action.
The problem with defensive actions is that people can come up with some fairly clever reasons why their act of Theft is defensive and not an act of aggression. The line between defense and aggression can often be very fine indeed. Consider the mugger above. What if the mugger picked his target based on the perceived social class of the target? Perhaps he justified his actions based on the belief that the man was somewhat responsible for the mugger's lack of a peaceful means to obtain certain goods.
Or, for a timely example, consider the War in Iraq. Invading a country certainly falls under type 3 action but that invasion toppled a regime which was habitually engaged in type 3 behavior. Was this defense or aggression? We're still arguing about it today.
The problem with Theft is that it never creates new goods, it just redistributes them -- and unlike in a Trade, the new distribution is disfavored by one of the parties involved.
The primary argument for anti-free market policies is that sometimes Production and Trade are camouflage for Theft. One cannot deny that many aggressors will try to depict their actions as defensive or even entirely peaceful behavior. But, the question is -- does the existence of predatory people justify ongoing intervention in the marketplace?
To me, the obvious answer is no. While it is appropriate to address grievances where they occur and have a system for handling those grievances, a presumption of predatory behavior is only a justification for other forms of Theft. Going back to the mugging example, what if a full-time martial artist was hired to look for people carrying knives into public areas and immediately tackle and disarm them? Even if some of the martial artist's victims turned out to actually be muggers a whole lot of innocent people would end up assaulted and robbed. This "intervention", while well-intended, is a net loss to society.
Apply that argument to economic policy overall and you have a powerful reason to maximize market actions in all aspects of human affairs. Systematic restrictions on Trade and Production in order to "pre-empt" acts of Theft are themselves acts of Theft. We gain nothing from that sort of behavior.