April 7, 2013

Free Markets Vs Capitalism

I learned not everyone defines capitalism and free markets the same. I discovered this while writing a blog, freefreemarkets.com, since the economic meltdown of 2008. For me they are the same, markets operating under the model defined in Adam Smith's book in 1776 called Wealth of Nations. For others the two concepts are different.

Society selects an economic model based on its objectives, an economic model does not select a society to best meet its goals. I recently got into a fun debate with a young lady attending Harvard where I was defending free markets while saying one the greatest impediments to free markets meeting the needs to society was our government being derelict in its role as the "umpire" to free markets. My debate opponent kept coming back to me and saying by definition a free market does not have a regulator and set of rules to follow and therefore such markets are not bound by the objectives of society.

At the end of the day, both of us did agree that no matter how we defined it, there must be some regulation overseeing societies economic system in order for that society to succeed. A major reason  for the historically high inequality of income and worth in our society today is that our government is failing in its role as referee to our economic system. More and more our economic system is being run like a NFL football game with amateur referees.

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