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Free markets are described in economic theory by mechanisms that do not exist and/or cannot exist in reality. That is why neoliberalism does not work and is apt to seduce ideologues, politicians and political consumers into supporting ill-conceived economic policies. See also (1) Neoliberal Economics and Its Rival.
That is not to say that economic orders that we may have good reasons to describe as being freer than others are both more effective performers and more adequate to the human being than their more rigid rivals. See also my If Equilibrium Economics Is Wrong Why Is Capitalism Still the Best Economic System?
Neither the political theory of liberalism nor its economic pendant characterise free societies adequately — or I should rather speak of societies that we are justified by certain defensible criteria in calling freer than others.
The reason why is that these two prongs of liberalism fail to properly account for politics. They do not accommodate the decisive fact that economic activities are always embedded within a matrix of political decisions — indeed, a human community void of this foundational and all-pervasive matrix is an impossibility. Falsely, liberalism suggests that adherence to certain rules can create a largely unpolitical social order of which markets with practically no political interference are a central ingredient.
But this is an illusion because both the micro-structure of markets — the detailed conditions and circumstances of their operation — and the interplay of markets and economic activities that we try to describe in macroeconomic theory are shaped by constant political molding. The effects of politics on the economy and its the interaction with society may follow roundabout paths, dissipate in complicated ramifications and elude human awareness — but exists they do, as their can be no such thing as pure economic action; human interests need to be weighed, balanced, pushed and pushed back all the time.There is no market capable of settling all the issues of a contentious kind that make themselves felt when humans engage in economic action. See more here.
The source.
And if you enforce open borders this is a highly political scheme which will bring about highly political reactions. There is simply no levelling out at a free market equilibrium, as the neoliberal model promises that the modern Left seems to be smitten with.
Free trade is another of the Left's new foibles that are ill-conceived as they are based on unrealistic neoliberal suppositions. If the perfectly self-regulating free market insinuated by neoliberal economics does not and cannot exist, then the theory justifying free trade must be false too. Instead, we need to take a more pragmatic approach to trade policy, one that takes account of the political nature of economic exchange.
The case for it might be expressed like this:
The source.
Why do these countries "cheat"? They do because the mechanisms that free trade is supposed to run on do not exist, while trade related issues that must be resolved by political means abound — including decisions taken in the spirit of free trade which bring forth further constellations of interests and rivalry that the market has no means to settle.
The reason why is that these two prongs of liberalism fail to properly account for politics. They do not accommodate the decisive fact that economic activities are always embedded within a matrix of political decisions — indeed, a human community void of this foundational and all-pervasive matrix is an impossibility. Falsely, liberalism suggests that adherence to certain rules can create a largely unpolitical social order of which markets with practically no political interference are a central ingredient.
But this is an illusion because both the micro-structure of markets — the detailed conditions and circumstances of their operation — and the interplay of markets and economic activities that we try to describe in macroeconomic theory are shaped by constant political molding. The effects of politics on the economy and its the interaction with society may follow roundabout paths, dissipate in complicated ramifications and elude human awareness — but exists they do, as their can be no such thing as pure economic action; human interests need to be weighed, balanced, pushed and pushed back all the time.There is no market capable of settling all the issues of a contentious kind that make themselves felt when humans engage in economic action. See more here.
… the living standards of the huge majority of people in rich countries critically depend on the existence of the most draconian control over their labour markets – immigration control. Despite this, immigration control is invisible to many and deliberately ignored by others, when they talk about the virtues of the free market.
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[T]here really is no such thing as a free market, but the example of immigration control reveals the sheer extent of market regulation that we have in supposedly free-market economies but fail to see. While they complain about minimum wage legislation, regulations on working hours, and various ‘artificial’ entry barriers into the labour market imposed by trade unions, few economists even mention immigration control as one of those nasty regulations hampering the workings of the free labour market. Hardly any of them advocates the abolition of immigration control. But, if they are to be consistent, they should also advocate free immigration. The fact that few of them do once again proves my point [...] that the boundary of the market is politically determined and that free-market economists are as ‘political’ as those who want to regulate markets …
The source.
And if you enforce open borders this is a highly political scheme which will bring about highly political reactions. There is simply no levelling out at a free market equilibrium, as the neoliberal model promises that the modern Left seems to be smitten with.
Free trade is another of the Left's new foibles that are ill-conceived as they are based on unrealistic neoliberal suppositions. If the perfectly self-regulating free market insinuated by neoliberal economics does not and cannot exist, then the theory justifying free trade must be false too. Instead, we need to take a more pragmatic approach to trade policy, one that takes account of the political nature of economic exchange.
The case for it might be expressed like this:
I love free trade in principle, OK? But, in practice, we just don’t have it, OK? We just don’t have it. Everybody cheats. China cheats. Japan cheats. The Europeans cheat. So therefore we need to be smart, and have fair trade, and protect American jobs and manufacturing. And, if we need tariffs, then that’s smart trade.
The source.
Why do these countries "cheat"? They do because the mechanisms that free trade is supposed to run on do not exist, while trade related issues that must be resolved by political means abound — including decisions taken in the spirit of free trade which bring forth further constellations of interests and rivalry that the market has no means to settle.
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