In all the discussions of economic problems that I read, and hear about, there is one problem that never seems to get mentioned, or addressed. That problem is the fact that a free market system is inherently unfair, unfair to the point of creating an exaggerated unfairness. Although the word "free" n "free markets" implies, ideally, no unfair manipulation of the market by humans, there is an obvious and pronounced natural unfairness in the results of free market operations. The basic unfairness is that for the sale of a given type of product or service there are always many fewer "winners" than "losers" of the available market within the practical transportation and communication range of a given group of sellers. If every person had a different product or service to sell then a free market would simply function to determine the relative barter value of each product or service. But, of course, many people will be trying to sell similar products or services. In this situation the free market will favor the very smallest minority of sellers who are able to supply the products, or services, at even just a slightly lower price than any of the rest. The consequence of this selection process is that if someone can provide a product or service at, say, 2% less than his competitors, he will likely get a 100% to 1000 plus % increase in his sales volume and income. Is this disproportionate increase in income relative to price drop fair? Has this seller really provided 1000% more economic benefit to his community? I think not. I believe it is just the result of a mischievous over rewarding idiosyncrasy of a free market system. This unfair result can, of course, be quickly escalated into a much further unfair advantage. A free market has been shown to be much better at selecting useful production priorities than does a planned economy, mostly because it puts a great many heads together working on the problem rather than just a few, but it leaves the matter of an economically sound distribution of income in as indifferent and primitive state as the law of the jungle. The free market idiosyncrasy referred to above does a great job of building up "the nation's" capital facilities, but do these capital facilities, and their income, really belong, quantitatively, to most of the people of the nation, or to just a comparatively few? There is a mantra that goes "Capital investment creates jobs". It is true, of course, that if capitalists can hire people fast enough to create improved capital facilities faster than the use of improved capital facilities replaces the need for workers, or if they can produce "make work" products and services like grossly redundant Dot Coms, then there will be a concurrent increase in the number of jobs. But this is an obvious treadmill which the Federal Reserve has a very hard time keeping well oiled, and I personally can't picture it running well forever. I will not drone on here, though, about all the kinks in the capitalist machinery. I simply want to make the point that the typical distribution of income brought about by a free market system tends to be drastically unfair without any necessary intention on the part of its participants, although I'm sure that most people who are involved in trade, or even just contemplate it theoretically, understand the winning and loosing odds involved. But nobody seems to mention that this situation spells economic and social trouble. I think that this natural tendency toward a maldistribution of income in a free market system could be most easily compensated for by the use of a negative income tax rather than the expensive, clumsy, abusable institutions we currently have. I welcome contrary comments.
Hi Kmguru: Regarding your reply to this same thread on the Ethics forum. Thanks for your thoughts on my concern about some apparent mischievous effects of free markets. But in referring to the free market as an ecosystem you did not make note of the fact that in a healthy ecosystem all the necessary resource factors are continuously, and fully, being recycled. Such is definitely not the case in the activities of our, at least semi, free market system today, as reference to the two URLs below will abundantly attest regarding the factor of money. http://alltheweb.com/search?cat=web&lang=english&query=Economic statistics http://www.brook.edu/views/op-ed/baker/19990205.htm I gather by your references to Dr. Hammer's ideas that you believe any malfunctioning in an economic system can most appropriately, and effectively, be fixed by using his system rather than such a grossly simple system as systematically slightly rebalancing the distribution of wealth in the world by use of a negative income tax. I tried to learn about Dr. Hammer's ideas on the Internet but I was only offered the option of hiring a speaker on the subject. Could you perhaps summarize for me the essence of his ideas?