This week's column:
"The man being coerced, therefore, always loses in utility as a result of the intervention, for his action has been forcibly changed by its impact.” – Murray Rothbard, Man, Economy, and State
There are few things that are so misunderstood as the free market. The very term conjures up hobgoblins: from robber barons and Dickensian businessmen, to Gordon Gecko and Bernie Madoff.
Yet the free market is nothing more than a system of voluntary exchange. A producer offers a good or a service to consumers; in a primitive economy, the consumer offers a good or a service in return; later, some form of money—historically, it has usually been silver or gold—allows a single good to take the place of an endless series of bartered items. This allowed for greater specialization: rather than having to acquire the good the producer wants, consumers can exchange money with the understanding that the producer can then, as a consumer, offer this good in exchange with another producer. Money allows for greater specialization, but it does not alter the system as one of voluntary exchange.