Yves here. We’ve often discussed the fact that “free markets” is a myth, including devoting a chapter of ECONNED to the topic: “How ‘Free Markets’ Was Sold.” Richard Murphy provides a full bore take-down below. He includes the way market operations are failing in late-stage capitalism and some suggestions as to how to replace neoliberal ideology and systems.
By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at Funding the Future
Markets are not natural, spontaneous or free. They are legal, institutional and political creations of the state. Without law, money, regulation, wages, accounting standards and trust, markets collapse into monopoly, coercion and extraction.
In this New Year’s Day video, I explain why the neoliberal myth of “free markets” is not just wrong, but actively destructive — and why rebuilding the state, rethinking capital and restoring democratic accountability must define our economic direction for 2026.
Markets are tools. It’s up to society to set their purpose.
This is the audio version:
This is the transcript:
It’s New Year’s Day, so happy New Year, and let’s talk about something that is going to be a recurring theme on this channel for 2026. That is that markets are not free.
The claim that markets are free is part of the neoliberal myth, and it’s as antisocial as everything else that culture puts forward.
There is no truth to this claim, and that’s what this video is going to be about. But what is more, the belief that markets are somehow free and deliver better outcomes for society than government ever can is precisely what is destroying our economy. That’s the issue that we need to discuss, not just today, but for the whole of 2026, because until we get our heads around this idea, we can’t get our heads around what might replace this myth.
The core claim is that markets arise naturally and are the best form of allocation of resources within society. That claim by antisocial neoliberal thinkers is just wrong. There is no evidence at all that markets in the form that we now have them arise naturally. They do not, in fact, exist independently of the state. Markets are constructed, maintained, and enforced by a government and without the state, there are no markets of the sort that we now see. There would only be power, coercion, and extraction.
Markets are legal constructs, and that has to be true because every market transaction depends on the existence of law. Property rights must exist, and the law defines them, and who’s behind the law? Government is.
Contracts must be enforceable, and who defines contract law? Government does.
Disputes must be resolved, and what is the mechanism for doing that? Law courts, and who provides them, the government does.
Fraud must be punished because if we are to have people operate on a level playing field, which is what fair and efficient markets require, then fraudsters must be eliminated from the game, and none of that happens spontaneously because fraud itself must be identified and tackled by the government.
In other words, it’s only the existence of the state that permits markets to exist. The claim otherwise is just utterly untrue.
What is more, the state creates the money that markets are dependent upon because markets exchange goods and services using a unit of account. What is the unit of account? In the UK, it’s the pound. Who creates the pound? The government does.
In the USA, it’s the dollar. Who creates the US dollar? The government does, and we could keep on going with that list going right around the world.
The point is that if prices must be denominated and debts must be settled and tax must be paid, they are all done using the currency that the government created, and this is an operation of the state. Markets do not create money; markets use money, and it’s money that creates the possibility of markets as we know them, and therefore they are utterly dependent for their existence upon the government.
What is more, markets require participation, and that requires that there be institutions, all of which exist as a consequence of government action. Let’s look at a few examples.
Companies only exist because governments let them be incorporated by law in their state, defining what rights they have and what membership they can be constituted by and so on.
Banks are regulated by states, and that’s essential because otherwise they would not be trusted and payments would not clear.
So trust in banks and regulation and company law and deposit guarantees and all the other things that go around this require the existence of the state. Remove regulation, and people will stop trusting markets.
And markets collapse without competition rules because, without competition rules, a monopoly becomes the normal form of supply by private companies. Monopoly represents the control of the supply of a particular type of product by a single company or one or two companies, when it’s called oligopoly, but the difference is immaterial for our purposes. The point is that in those situations, dominance destroys choice, power replaces price signals, and innovation is suppressed, and it’s only the state that can actually enforce competition through regulation, which is the supposed virtue of free markets.
Markets themselves do the exact opposite of that. Even Adam Smith knew this in 1776 when he wrote the first ever economics book in the world called The Wealth of Nations, where he pointed out the threat from monopoly. So, without regulation, markets cease to be markets at all, and yet the free marketeers claim otherwise; they talk nonsense.
There’s another participant in markets who the free marketeers entirely ignore and yet who are absolutely essential, and that is people who can afford to buy the products that are made available for sale. A market does, of course, require buyers as well as sellers. Tell that to a neoliberal, and they’ll scratch their head in puzzlement. ” Who are these people?”, they will say. They are employees, of course, in large numbers of cases, and their ability to participate in markets as buyers, which is critical to the well-being of the market as a whole, is entirely dependent upon there being fair wages, job security, predictable incomes, enforceable rights, trade union rights, even. These are not gifts from markets; they come from labour, law, collective bargaining and regulation. And again, without them, markets collapse, and demand fails, and that means there is no profit motive of consequence, and yet the neoliberals ignore this.
They also ignore the fact that regulation is the basis of the trust on which the sale of so many products depends. For example, why would you go out and buy a coffee from anyone but someone you personally knew, unless there were health and safety regulations to ensure that the product you bought was safe? You only trust markets because products are regulated, standards are enforced, and risks are reduced. In other words, health and safety regulation – the thing that perhaps is most hated most of all by neoliberals- is in fact the thing that makes most of exchange possible.
There’s something else that markets require. This is a long list, but it’s an important list, and that is that financial markets need accounting regulation because capital allocation within financial markets depends on information. In other words, if somebody’s going to buy a share, they need to know why they want to buy that share, and they need reliable information to do so. That is what accountants and auditors are meant to do, and it is company law that defines what data the users of capital markets should get to make their decisions.
Accounting regulation ensures that the results of different companies are comparable so decisions can be made. It defines profits. It defines what an asset is. It defines a liability. It makes sure that risks are disclosed. This requires accounting standards, audit, and enforcement, and without that regulation, financial markets allocate capital badly, or not at all.
We are, in other words, looking at a situation where the great neoliberal lie is completely exposed by reality.
Neoliberalism claims regulation undermines markets, but the truth is the opposite. Markets cannot exist without regulation; they fail when regulation is removed.
What we are seeing now is not overregulation; it is a regulatory collapse that is threatening our future well-being, and our governments are delivering that regulatory collapse under pressure from the monopoly-oriented companies like the big tech firms that are demanding it so they can exploit us.
Everything has gone wrong. Today’s markets are failing because monopolies dominate; information is hidden; tax is not paid by far too many companies – 40% of small companies in the UK do not pay their corporation tax liabilities – and regulators are weak and captured. These facts in combination destroy the level playing field on which fair competition takes place. In fact, competition becomes impossible, and our markets are ceasing to work as a result.
This is the consequence of many of the failures of the conditions that I have already noted. For example, wages have stagnated, job security has declined, and too many people cannot participate in markets now because they do not get the opportunity to do so, because government is refusing to support their employment.
A market without participants is not free; it is empty. Late neoliberal capitalism is collapsing because it has excluded the very people on whom it depends, and nowhere is this more apparent than with regard to labour.
This is self-destruction, not state failure, that we are seeing. Let’s be clear, markets have not been undermined by the state; they have been destroyed by a narrative that denies the state’s essential role in the creation of markets. Neoliberalism has eaten the foundations of the system it claims to defend.
What this means is that we require a broader understanding of capital. Markets claim that they exist to serve the interests of financial capital, and the entire accounting systems that we have in our economies now are designed for that sole purpose.
The truth is, financial capital is a derivative form of capital. In other words, it has no value in itself; it only exists because there are real forms of capital which actually sustain our economy, and they are
- productive capital, the things that we use to make stuff;
- human capital, the investment in our knowledge and our well-being and our health and our care;
- social capital, the institutions of state that ensure that markets can be regulated for all the reasons I’ve noted in this video, plus, of course,
- environmental capital.
We need to look after this world that we live upon.
Ignore all of these, and we guarantee long-term failure, and yet our antisocial neoliberal system of financial capitalismignores almost altogether the value of our productive human, social and environmental capital. So, what we need now is not deregulation; what we need is regeneration, strong institutions, effective regulation, and empowered participants in markets, which means you and me.
Markets must be redesigned to serve society and not dominate it.
This is the goal for 2026 and what I will be talking about. This requires a politics of care: care for people, care for institutions, care for the environment, care for the future. Markets are just tools. The state sets their purpose. We need to reset that purpose, and democracy provides legitimacy.
There are no free markets. There never have been. Markets only exist because states make them possible, and they fail when regulation does. So, in that case, if we want markets that work, we must rebuild the state, rethink capital, and restore democratic accountability. That is the direction of travel we need for 2026, and that’s why I’ve talked about it on this New Year’s Day.
Happy New Year. It’s going to be a difficult 2026, but one that is going to be worth talking through because we are going to get a better direction of travel if we understand the concepts I’m talking about here.
Every economic student is taught free market vs nationalisation, or at least from circa.1980s.
They both had pros and cons leaving the argument which is better to a case by case study and judgement. Then since Margaret Thatcher and Reagan over there we were preached free-mktas the the way for markets and its companies. So we de-nationalised State operated companies especially strateggically important utility companies, because the infrastructure “capex” was paid for / funded by taxpayer. This trend of de-nationlisation has run its course and we are seeing the effects of these neoliberal economists eg Milton Friedman – it has certainly been ‘antisocial’ to put it polietly. The lobbyists the ‘PoliticiansRcriminals has been seduced by have denigrated & destroyed regulations intened to make the social contract between businesses and customers fair. So as the emiritus professor suggests “Governments” are needed to preserve or conserve corprate governace but unwitting or more correctly corrupted politicians have allowed tweaks in existing rules to provide loopholes for malfeasant and perfidious practices in business. Lets get back to proper mixed-economy state of affairs.
This is the biggest load of S@#!t i have seen in a long time. Government is a regulator and nothing more. In the US the government has failed disastrously at their job. To say markets are somehow only possible with government is insanely stupid. It’s even more insane that the person doing this video is British! The “markets” destroyed the landed class and forced in existence a government system to allow them to strive with legal backing, not the opposite. So trying to revise history with this horrible video should never be presented on this site!
I get the rage at US regulatory failure—it’s catastrophic. But that’s not proof markets work alone; it’s proof they can’t.
You’re conflating trade (which predates states) with modern markets (which require them). Yes, merchants once self-regulated—until transaction complexity outpaced reputation networks. That’s when states codified property rights, standardized currency, and enforced contracts at scale. The British landed class fell because Parliament legislated enclosures and commercial property law to enable market capitalism, not because markets magically overcame feudalism.
Here’s the insight: Regulatory failure is market failure. Monopolies, fraud, and stagnation don’t appear when government overreaches—they appear when it stops enforcing the rules that make competition possible. What you’re witnessing isn’t markets thriving without the state; it’s monopolists capturing the state to rig the game.
The real fight isn’t state vs. market. It’s democracy vs. capture. You’re right to be furious. Just aim it at the right target.
Well said!
I believe the notion of Utility functions is crucial to the discussion (can we agree on what constitutes a ‘legitimate “Utility” to a civil society— there is a rub there- but I digress)
One of my favorite college textbooks was, Between Capitalism and Socialism”, by Robert Heilbroner. Timeless topic. The Middle Path.
For a Nation of saavy proud business people, America really does some very stupid policy, promoted and embraced by the Chamber of Commerce membership.
Whoops! https://www.goodreads.com/book/show/4250997-between-capitalism-and-socialism
Pholosophy: Try taking a look at the U.S. Constitution some time.
Ohh, article 1, the powers of the Congress:
Clause 5 Standards
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
Clause 6 Counterfeiters
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
Clause 7 Post Offices
To establish Post Offices and post Roads;
Nothing but a regulator? Please, is that you Uncle Milton?
Because as someone born in the U S of A, I don’t give a hoot about the destiny of the “British landed class,” most famously fodder for Monty Python.
Especially since that landed class depended on an indirect state subsidy in the form of high tariffs on food imports (better known as the Corn Laws). And it was the same landed class that also controlled the Parliament which enacted the Corn Laws in the early 1800s. Funny how these things work out.
Oh, a factually unsupported rant that its writer appears to think rises to the level of an argument. That identifies you as a textbook case of Dunning Krueger syndrome. Then you have the temerity to tell us what to publish.
I trust you will find your happiness on the internet elsewhere.
If you’re going to win an argument, you need to understand (1) the first thing about what you’re holding forth about and (2) your enemy. Murphy doesn’t.
Neoliberalism claims exactly what Murphy says it doesn’t: that markets exist because states make them possible, and they fail when state regulation fails. That is, that states are necessary to enforce markets. It’s neoliberal doctrine’s next intellectual move that makes it so pernicious. To quote The Use of Knowledge in Society by Friedrich von Hayek, (1945) —
https://www.kysq.org/docs/Hayek_45.pdf
“The marvel is that in a case … of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause, tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; that is, they move in the right direction.”
In other words, this is a claim that the Market is essentially a godlike computer with perfect information allocating resources perfectly, in a way that mere human governments never could.
Hayek was essentially swiping from early cybernetics thinking about neural nets to construct a justification for an ideology of, firstly, why’ markets’ – the activities of capitalists – must be insulated from the demands of democracy, social interests, and ‘the masses’; and, secondly, why markets must be inserted into every area of human social activity that they can be inserted into.
And so from that neoliberalism says that governments very much have a role – and this is to enforce market discipline, or facilitate and privilege capital and the operations of capitalists above the demos and all else. In other words, a government’s primary role is to serve capitalists as capitalists dictate, and to ring-fence their operations from interference by the masses.
See in the Mont Pelerin’s Statement of Aims –
https://montpelerin.org/statement-of-aims/
Forex-
‘…re-establishing the rule of law and of assuring its development in such manner that individuals and groups are not in a position to encroach upon the freedom of others and private rights are not allowed to become a basis of predatory power.’
Now there are any number of good reasons to attack neoliberalism. It’s an essentially religious doctrine that makes less sense than the Divine Right of Kings, which at least wasn’t falsifiable in the real world as neoliberalism has been falsified by e.g. the 2008 GFC, the promotion of financialization over industry that’s led in turn to the growing technological supremacy of China over the US, mass anger in the West, the rise of the populist Right and its ongoing destruction of the US scientific base, the inability of Western neoliberal states to win wars, etc. etc. etc.
But if you fail to make the necessary effort to understand the first thing about neoliberalism as an enemy and how it works, you have lost the battle before you start. That’s pathetic and shameful intellectual laziness.
Harsh, but on spot.
I sometimes wonder if articles like this aren’t written with a belief that without changing the story, the audience won’t get the ending. Maybe true.
Ugh … shorter version is when Hayek’s non history version [he was ignorant] about so called free market dynamics [bastardize Smith] were failing badly he had the epiphany of Ordoliberalism. Yes that Liberalism[Tm] emphasizes the need for government to ensure that the free market produces results close to its theoretical potential.
FKMD that you would link to a MPS anything … half the reason we are all here now …
On MPS – see Philip Mirowski – The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective, With a New Preface.
“That’s pathetic and shameful intellectual laziness.”
Look in the mirror before casting aspirations less you be one mate, not to mention MPS was the first to suggest globalism of markets overseen by absentee investors. YMMv …
Skippy: On MPS – see Philip Mirowski – The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective, With a New Preface.
I’ve read the Mirowski. Also, his Machine Dreams: Economics Becomes a Cyborg Science. Though I then went to Hayek’s writings to check that Mirowski was being fair, where do you think I got this intellectual framing from?
In which case, what is the point you imagine you are making?
Because the fact that Hayek may have started as a bog-standard free-trader in no way obviates the reality that it’s the intellectual superstructure he arrived at that’s been neoliberalism’s core argument and ideological justification. Pitiful confetti as that argument and justification might be.
Skippy: not to mention MPS was the first to suggest globalism of markets overseen by absentee investors.
Yes, of course. Again, how does that in any way, shape or form obviate the argument that neoliberalism frames the role of governments as being primarily to facilitate markets and capitalism?
See forex von Hayek in his “The Economic Conditions of Interstate Federalism,” —
https://fee.org/ebooks/the-economic-conditions-of-interstate-federalism/
–explicitly framing the free movement of capital, goods, and labour – a “single market,” in von Hayek’s own words – among a federation of nations as the most promising means to subordinate employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.
This doctrine of a ‘single market’ would then explicitly be the model for the creation of the EU — at that time (in the 1950s and 60s)the European Coal and Steel Community (ECSC)– as it was established by high-level members* of von Hayek’s Mont Pelerin Society.
*e.g. Wilhelm Röpke, personal advisor to Konrad Adenauer, West German Chancellor, and his Minister of Economics in the late 1950s, supervised the creation of the ECSC/EC on the German end, before leaving to literally become president of the Mont Pelerin Society in 1961-62. Ludwig Erhard, the second West German Chancellor from 1963-66, was a member of the Mont Pelerin Society since 1950.
That’s right. Billionaires are not the result of the free market. Rather, they are the product of government intervention that favors them, including tax cuts, subsidies, and intellectual property laws.
Indeed.
It blows me away that some on NC, after how long, still cling too some of the early neoliberal proponents dressed up as philosophers, intellectuals, economists, when in reality they were payed for propagandists gaslighting [Dumbing Down[tm] – see Charlotte Iserbyt] firstly the U.S. and then the U.K. and ultimately the E.U. Ayn Rand was the Herbert Spencer of her day, darling of the elites, spawned Greenspan/Summers [his love for Hopple]. Deirdre N. McCloskey [formally Donald] fully card carrying Libertarian that is on record for equivocating children as economic commodities. Murray Rothbard come down the mountain only to do the flexian thingy after helping to establish CATO. Then the kill shot of Milton Friedman wrong on money, wrong on socioeconomics, yet so many were as with Says law said “WE’ needed it. Not that before he was put on a pedestal he was found guilty of producing propaganda for the RE developer lobby. I mean the list goes on and on and on ….. Hayek, Lippmann press, Kochs, it never ends and all elite funded … some are confused …
Then the Newtonian neoclassical mob that thought market based pricing mechanisms based on ideological notions/axioms could be reduced to bad maths and econometrics based on it with predictive analytics – boom GFC … Barter Theory and Says law have a lot of explaining to do in how this all came about.
Looking at you Wuk et al …
We’ve had unlimited food thanks to Bosch-Haber, unlimited oil thanks to the bowels below us, and unlimited fiat money since Bretton Woods, and pretty much unlimited population-going from 2 billion of us a century ago to 4x that, impressive!
I’m for keeping this perpetual fiat notion machine part of it alive and kicking, as its the only game any of us know, and so far inflation has been mostly measured so that you wouldn’t notice that a Nickel candy bar when you were 6 is now a buck fifty, it has been a slow but steady grind from the $4995 new pickup truck to the $49,950 new pickup truck you park on the driveway of the 1964 3/2 that sold new for $18,500 and now Zillows for a million… but here we are no worse for wear.
I’m for keeping the $tatus Quo, but you can sense fiat’s day in the sum is nearing its nadir.
Oh, and every market is manipulated-just a matter of how much.
Yet you love the anti social crack libertarian Oprah of her day, head spun around by its projections about gov and markets, how you could have a better life with out all the riff raff bringing the vibe down on your well earned economic travels. Then you suppose that I should just accept your world view based only on the vigor of your personal ideological belief – ???? – FK that mate.
Dang the whole unlimited thingy smacks of eugenics – are you better than others?>
FFS you have no natural history depth outside a narrow ideological environmental bias and content comments of fluff is not a good look.
Your whole Idea of money is not supported by all of history – its just like you think value can be stored in a commodity regardless of state, transcends it, and in that you anti society if they are not like you.
We should have learned by now that there are no free markets when it comes to things the government is interested in.
2008: TARP, bank bailouts;
2009: Bernanke allows banks to mark toxic assets to fantasy values;
2011: Draghi: “whatever it takes” to backstop European debt
2020: Powell backstops even junk corporate credit in the wake of the COVID crash; Congress points a firehose of fiat into the air and says “what, me worry?”
2025: COMEX raises margins on silver multiple times when it threatens to break $80/oz and do the monetary equivalent of clowning the Fed
Freedom always comes with more risk, like the frontiersmen and women who took the risk of an arrow in the back or just dying from old man Winter or starvation. When governments meddle, they put their thumbs on the scales of fortune.
Part of me wants to be around when Mother Nature teaches even the Bernanke’s and Yellens of the world a harsh lesson, but part of me doesn’t.
Are you mad Wuk – “Bosch-Habers” process you say, like the Green revolution in AG? You mean the destruction of family farms and with it the seed corn of its off spring – as kids. How that has effected America or radicalized its people with notions like MAGA et al. I mean if you are a Corporatism sort and think its just a money question and then endlessly bleat on about how many other have it all wrong due to QTM due to your past income flows and based on your own family wealth – if not it would never have happened.
All you see in this life is notional value depicted by some physical object and nothing more … everyone can burn till it sorted right in your world view.
What’d they use for fertilizer before the Bosch-Haber process?
Ever seen 19th century photos of giant piles of buffalo bones turned into bone meal?
Oh, it changed everything, Bosch-Haber.
And by the way i’m not mad, just living out life in my version of being smack dab in the middle of a Maxfield Parrish painting, and so far-so good.
When I studied economics in college many years ago we were taught that a free market required an informed seller and an informed buyer. That equilibrium was upset by advertising as I learned slowly after college. With advertising, the seller takes over the market and it is no longer free. With advertising, the buyer is manipulated into associating a product with a catchy jingle or a pretty girl. Advertising has become more and more psychologically manipulative over time. It becomes harder and harder for a buyer to become informed. Advertising has converted markets that were perhaps once free into sellers’ markets. All we have now are sellers’ markets.
Growing up teenager in the midst of the sexual revolution it seemed that just about every advert and tv commercial was selling sex and assorted sizzle in all of their offerings.
TV commercials were often in regards to grooming, what if that hawtie on the elevator saw dandruff on your collar, or have you brushed your teeth enough to attract the opposite sex?
I couldn’t wait to be an adult and join in the fun, and then Aids shows up and sex doesn’t sell anymore, all of the sudden.
Nowadays, tv commercials are for online gambling, or some outfit that can make my $84,543.98 personal debt go away in a jiffy!
Operators are standing by.
Which is why the privatized U.S. health-insurance system is such a mess. Kenneth Arrow made the diagnosis years ago, and since then, U.S. economists and policy makers have either carped at Arrow, ignored the diagnosis, or taken sketchy donations.
From Arrow: “But it is contended here that the special structural characteristics
of the medical-care market are largely attempts to overcome the lack of
optimality due to the nonmarketability of the bearing of suitable risks
and the imperfect marketability of information. These compensatory
institutional changes, with some reinforcement from usual profit motives,
largely explain the observed noncompetitive behavior
of the medical-care market, behavior which, in itself, interferes with optimality.
The social adjustment towards optimality thus puts obstacles in its own path.
The doctrine that society will seek to achieve optimality by nonmarket means if it cannot achieve them in the market is not novel.
Certainly, the government, at least in its economic activities, is usually
implicitly or explicitly held to function as the agency which substitutes
for the market’s failure.'”
link:
https://assets.aeaweb.org/asset-server/files/9442.pdf
With this in mind, I’m wondering with all the effort to officially put multinational corps rights above sovereigns such as the tpp, isds et. al. what the market would look like were it to happen.
It already happened de facto (in US, think Citizen’s United). Corporations are People, Money is Speech.
Why officially codify it, when one can perpetuate a charade, and many of the plebiscite believe in their hearts that the Oligarchs are heroic (a la Rand). Adoringly, they seem to harbor profound delusions that they, too, the unwashed masses, will each earn their Place in The Sun .
Lip-service to free markets— business folks abhor competition, and work toward control, monopoly, and destruction of competition, by action including gaming through abetting with that reviled government.
Perspective and perceptions: I have a pal that adores and admires Elroy, Jeff, Mark, and Bill… I revile them with a profound poison -as abusers of their stations, apparent insatiable greedy monopolists.
Not from a position of envy, sour grapes, or jealousy… I traded measuring sticks a long time ago, and walk a very different path. As Bush Two once said, “it’s haaaard work!” not toeing The American Line
Great article and spirited discussion…. seems like NC is a balm during what can be a spiritually tough time of the year– thank you all!
Now follow up with “there are no states,” please
Richard hits it on the head. Free markets only exist in the collective dreams of neoliberal mythology.
“The state sets their purpose. We need to reset that purpose, and democracy provides legitimacy.”
The legitimacy is derived through the consent of the people which cannot exist without information …..
“If a nation expects to be ignorant and free, it expects what never was and never will be … The People cannot be safe without information. When the press is free, and every man is able to read, all is safe.” – Thomas Jefferson….
“Pholosophy-Government is a regulator and nothing more. In the US the government has failed disastrously at their job” If the premise is ‘Government is a regulator and nothing more’ (I would add) or nothing less… and, therefore, they have failed at regulating what?? – I would say they have failed at financial regulation….the regulation of the neoliberal mythology called Free Markets
Without a government, no framework exists – unless you can name one – where the domination of finacial capitalism or any capitalism can occur. If the ‘government has failed at their job in the US’ is it not true, therefore, that the people have failed in their own governance??? Is it a failure to recognize an important caveat… “A republic, if you can keep it.” –Benjamin Franklin
“We, the People, are the rightful masters of both the Congress and the Courts. Not to overthrow the Constitution, but to overthrow the men who have perverted it.” – Abraham Lincoln
I would say that this iteration of Neoliberal financial capitalism – where the self-proclaimed financial wizards are the men who have perverted the constitution.
“How can capitalism, a system grounded in private accumulation of socialized production, bear any relation to democracy, a relational form of life dominated by consultation, participation, and the general will? The incongruity of the two have forced liberals in the West to choose: democracy or the tyranny of capital.”- Carlos L. Garrido
I believe democrates and republicans have been induced through neoliberal free market ideology to choose “the tyranny of capital”
“To achieve victory, high finance needs to disable government, which is the single power able to regulate, tax and otherwise curtail its expansion. To disable political democracy, finance buys control of the electoral campaigns so as to promote politicians acting as its officers. It also buys control of the television, radio and published mass media, and uses endowments to buy control of the academic process. Together, these are the various organs that represent the “brain” of society.” Michael Hudson
Given the quote by Michael Hudson…. where is the evidence that a FreeMarket exists in the USA.
An ominous thought occurs to me regarding “”Together, these are the various organs that represent the “brain” of society.” Michael Hudson””” …. this brain of society is the objective of AI/ASI to be contured and controlled by those who’s private interests most benefit.
Can a Free Market exist? ,, Can a Free AI/ASI exist? and Can a FreeMarket exist with a Free AI/ASI?
There needs to be an awareness that there is a difference between critiquing the idea of Free Markets by pejoratively calling it “myth,” equating myth with untruth, and then detailing its falsehoods, and critiquing that idea as myth, accepting that myth is a gross, but necessary, simplification that converts complex and obscure dynamics into a simple, memorable narratives of agency, that embed “why,” “how,” and “toward what” into popular culture. Murphy, Michael Hudson, and Adam Smith have done the former, effectively speaking understandably if not always persuasively to economists. In many ways, though, they fail to create an effective counter-myth, able to displace the destructive Free Market myth, which is necessary for real change.
The myth of Free Markets assumes that the foundational problems to be solved are that of exchange and liquidity. Its narrative is falsifiable, but remains durable, largely because critiques leave the the problems to be solved unquestioned. The prerequisite problems that markets actually solved were those of larceny and looting, the precedent being that goods had by one and desired by another were taken by cunning or force, rather than exchanged, power and stealth making negotiation unnecessary. Markets, in an alternative myth, necessarily identify unequal power as the root problem, and recognizing that its solution is about the imposition of restraint, rather than its removal, that physical security must be prior any mechanism of liquidity. That re-mythologizing is the real task. Bickering about mechanics of exchange and liquidity will still go on, but will be be demoted to a secondary status, while the ur-myth serves to acknowledge whatever unfreedom actually created a marketplace, and whatever restraint is necessary to contain, not only physical thuggery, but also financialized larceny and looting, let alone warfare, in the markets.
I suppose it all depends, as usual, on what you mean by “markets.”
If you mean buying and selling, sometimes with money and sometimes by barter, then that has gone on for much of human history, with or without governments. As societies became more complex, governments did intervene, but often to protect special interests, or just to raise money through customs duties. And in many cases, governments, far from encouraging markets, actually sold the rights to monopolies, to raise money. Nor is government protection essential: some of the most lucrative markets in the world, for drugs, guns, human beings, rare animals and stolen financial details function against the express efforts of governments. And finally, there are many areas of the world where markets, both literal and metaphorical can be, as they say, informal. I bought and wore for many years a shirt sold by a Malian stall-holder in a market in Johannesburg. Apparently his brother bought them wholesale from the manufacturer and shipped them South by lorry. I doubt if any governments were involved at all.
Of course, all these markets are regulated in some form, often violently so, and competition sometimes takes a rather extreme form: shoot-outs between drug gangs are a feature of life in most large European cities. The question is who does the regulating. In that sense Murphy is right. But it’s also true, and has been well-documented, the Liberalism from the start understood that its mirage of “free competition” could only be obtained through ruthless government action, rigorous enforcement of contract law, and prohibition of any type of counter-organisation like trades unions, or any environmental legislation, which would make competition less “perfect.”
“What is more, the state creates the money that markets are dependent upon…”
Back in 2014, Richard A. Werner wrote one of the first empirical studies on how banks actually work (See Richard A. Werner “How do banks create money and why can other firms not do the same? An Explanation for the existence of lending and deposit-taking,” (International Review of Financial Analysis 36, 2014).
This empirical analysis was shortly followed by another Werner article “A lost century of economics: Three theories of banking and the conclusive evidence,” also in International Review of Financial Analysis 46, 2016. To my mind, these 2 articles ended the centuries old debate about whether banks are:
(a) mere financial intermediaries passing on savings (deposits) as loans to borrowers, as most of the leading journals and textbooks still proclaim today,
(b) whether they need central bank reserves or deposits to then lend these on to their customers (fractional reserve theory) so that each bank is an intermediary; but, in aggregate, more money is created by the banking system in a collective fashion–as previous generations of central bank spokesmen have argued, or whether
(c) banks are instead not financial intermediaries at all but creators of most of the money supply so that each bank creates new purchasing power that is added to the money supply when it extends a loan, thus deciding about the amount and allocation of new money creation as a pivotal function in our economy.
Option (c) indicates that banks to not need prior savings nor central bank reserves or other deposits to lend and instead banks create new money when they do what is called bank lending and add it to the money supply.
Accepting option (c) creates potential common economic ground for both the populist Left and Right to begin to experiment with exciting new institutional banking strategies that have been at the foundation of economic success in China, Japan, and Germany.
Gulag … Werner is a classic example of what I note above. So called Economists that create – out of whole cloth – how financial systems have worked, regardless of currency choice, since antiquity. I mean a quick wiki of him sorts out his predictive powers e.g. coined the term/theory of “quantitative easing”. Its as bad as the so called Greenspan Put. Yet as slippery as he was he was honest in that congressional hearing that the Gov called all the shots and the only question was what future assets were deemed preferable.
This is in contrast to someone like Hudson that has had decades of personal experaince, both in banking and industry. Not to mention all the ideological/geopolitical dramas, its there that reality is manufactured and proceeds any notions of what is money/currency and its social effects. Its the never ending story of elites, antiquity [see Rome], various European/UK/US dramas e.g. WWI leads to WWII due too elites. Same can be said of Greece after the GFC and PIGS investor driven outcomes, yet the potential of MMT is reserved for keeping the neoliberal dream alive … free riders[tm] ….
It blows my mind that after YS wrote Ecconned and endless posts on this blog that some still cling to the idea the whole drama is centered around money/currency when it does not have the ability too think[.] Not to mention deregulation allowed PE to white ant US mfg for paydays of C-suite and Investors in the short term = money is a 8 ball of coke and living life large thingy.
Russia and Chins are bad for being non neoliberal in some respects to international investors wants …
Murphy raises an important issue, and one that deserves more salience. And the resulting discussion here, whatever one thinks of any individual contribution, is incredibly valuable.
I don’t know whom to credit with the observation that “NC is the best commentariat” but it remains apt, and I remain grateful.