The Failure of the Free Market

Unregulated greed will result in the demise of our planet just as surely as it is causing the collapse of our economy.

There has been a morbid fascination lately in watching the "greed bubble" collapse, taking with it what is left of the equity in many American's homes at the same time as their retirement investments evaporate before their eyes. If allowed continued free reign, the same unregulated greed that resulted in the Great Depression also led to today's financial crisis and will just as surely take down the environmental systems of our planet.

What is the "free market" anyways? It is the basic philosophy that the laws of "supply and demand" will automatically regulate the pricing, manufacture and supply of goods and services. "The Free Market" essentially puts our planet's environmental resources up for sale to the quickest bidder who can consume and process those resources with maximum efficiency and speed to capitalize on available profits before the next guy gets to them first. Do we really want to continue putting our planet up for a once-in-a lifetime "fire sale"?

Free market corporate decision makers are responsible to their stockholders for maximizing the profitability of their corporations. In today's global market, unless a corporation is operating in a highly profitable niche market, this usually means mass producing products where labor is cheapest (essentially slave labor), environmental controls are at a minimum, and with little concern or regard for the future sustainability of the world. Spending extra money in any of these areas would cut into profits and may impair that corporate entity's ability to compete with other corporations that are already operating without ethical concerns for the welfare of their workers, pollution of the environment, consumption of nonrenewable resources, and so on. Society often applauds and rewards the corporate warrior whose dedication to the "bottom line" dictates the cold-hearted decision to replace older workers nearing the top of their pay scale with younger associates who are willing to work longer hours for half the pay of their more seasoned counterparts, or lay off thousands of American workers as they close local manufacturing facilities while opening similar plants in offshore locations.

There are several areas that our governments consider too important to leave up to chance and a free market policy -- including public education, our country's military defense, large dams and bridges, plus the giant network of interstate freeways. Why do we feel that we must leave our most important assets, the health and natural resources of our planet's ecosystems, up to this sacred cow called "The Free Market"? Would Hitler have been stopped if we left it up to the free market? When the stock market collapsed in 1929, plunging the entire developed world into a financial crisis known as "The Great Depression," governments stepped in to implement economic regulations and policies designed to boost flagging economies and put people back to work, as well as to put in place legislative safeguards designed to prevent such a global economic catastrophe from ever occurring again. When it was deemed important to America's national security and financial future, the U.S. government, under the leadership of Theodore Roosevelt, bought the failed French attempt to build a canal across the Isthmus of Panama and subsequently completed the project over a 10-year period extending from 1904 to 1914.

State, local, and federal governments often put together financial incentives to promote certain business ventures, such as the redevelopment of aging inner city neighborhoods or decrepit industrial parks and waterfronts. If we can support these kinds of non-free market incentives, and pay many tens of billions of dollars in tax breaks and subsidies for the coal, gas, and nuclear industries and hundreds of billions of dollars for a failed war in Iraq, then why can't we put the same kind of focus and financial support into building the sustainable technologies, infrastructure, and business incentives to create a world that works for our children and our children's children?

Today's Green Tip: Don't top off your fuel tank. Modern gas pumps have vapor recovery boots that helps keep polluting gasoline fumes from entering the air. Overfilling cancels the benefits of these devices.

Matthew Stein is the author of When Technology Fails: A Manual for Self-Reliance, Sustainability, and Surviving the Long Emergency from Chelsea Green. For more information, visit chelseagreen.com and whentechfails.com.

Comments

[JuniorNorman]

It was always a fixed market. Walmart knowingly imports prison goods from a prison in China. The factory is next to the prison but the goods are all made in the prison! VietNam has slave factories were Nike sneakers are produced. The woman sleep in dorms an cant afford good clothing or food! Thats another prison factory!
It s not FREE MARKET the banking system is controlled by a few.

[bmora]

One of the fundamental problems with Capitalism, and its practice, as a theory is that assumes competition is good for the market and the consumer. Invariably, the point of competition in a market situation is to destroy your competitor so that price is determined by the last corporation standing. If this is not regulated in some manner, Socialism or its variants, the market transforms into a monopoly or at the very best an oligopoly (even when the barriers of entry into the market are small) where the consumer get bent over. I never hear anyone in scholarship or in the media discussing this fatal flaw in our economic system.
Now, regulation came about for the reasons mention above, but it is rarely put in such stark and laymen terms. Maybe people would not fear regulation if folks were able to comprehend the basic fallacy of competition.