The Free Market Myth?


I spent the last evening on train yet again. It was as bad as most train journeys are- indefensibly long, bumpy and extra depressing. Despite the discomfort I managed to crystallize my thoughts on a debate I got thrown into recently.

The night before that I was trying to explain to a friend of rather socialist disposition why capitalism is not all as evil as it is made out to be. Capitalism too like all other ideologies has its failings, shortcomings as it were. In isolation all systems are problematic. Obviously what all my raving and ranting suggests is not unleashing market forces on the unsuspecting poor all of a sudden. Phase economics, transitional reform that is what all of this is about.

I’m suggesting that it might be a better idea for people to govern themselves as opposed to regulation. I believe that if we give creativity and entrepreneurship a chance India can actually do rather well for itself as a service sector economy. I believe that only free and fair trade can overcome this country’s lumbering babudom, misplaced jingoism, dangerous fundamentalism and a whole host of other miseries including but not limited to casteism, racism, classism, untouchability, religious bigotry and such.

Markets aren’t meant to achieve equality or justice or fairness- they are meant to be ruthlessly efficient. To harness that efficiency effectively is what the free market vision is about. Markets aren’t supposed to replace ethics or religion for that matter and few things will be worse than economic fundamentalism (read monopoly) and there is no turning away from that. Those ten market assumptions your economics textbook lists at the beginning of any economics course tell you that they are pretty unreal– they assume that all things can be marketed and put a price on, they tell you everything is fungible, that participants have perfect information and that there are no monopsonies or monopolies.

My friend says this: “Free markets are a myth, a utopia – politely, truthfully they are a goddamned lie”. Arundhati Roy’s says something similar she says that privatisation is all of about private partnerships between the state and a single private corporation acting against the interest of the people. Here is my utopia: A country where the hawker and vendor can earn without paying bribes to the police wallah, a country where I can trust government hospitals to give me a blood transfusion without giving me AIDS, a country where I can get my driving license legally in a week and not a year….

Isn’t every political ideology about a utopia? Socialism as much as capitalism? Is it really about labels? Or is it more about a methodology that works. Sure we’ve had the Ambani’s- an economic monopoly that went wrong! We’ve also had the Indian Government, whose welfare schemes and non-welfare regulations have killed and maimed many more. So let’s just vest more power in the hands of the state- let’s make everything one big centralized plan that will eventually amass enough power to squash every individual’s desires. What is wrong I ask about my utopia? A utopia which gives power to millions of people to run their own lives- call it decentralization with capital power at its roots if it sounds better!

Utopia serves a purpose gentlemen, and that is to make concrete a vision that is but amorphous. A powerful vision that does more that lament and name call- but seeks to find solutions.