Contrary to propaganda from the likes of Ludwig von Mises, the free market is not some kind of optimal solution to all of our problems. And it certainly does not produce excellent software.
What Mises proposition was - in essence - is that an autonomous market with enough agents participating in it will reach an optimal Nash equilibrium where both offer and demand are balanced. Only an external disruption (interventionism, new technologies, production methods, influx or efflux of agents in the market) can break the Nash equilibrium momentarily and that leads to either the offer or the demand being favored.
This roughly translates to "optimal utopian society which cannot be criticised in any way" right? Right??
Free market is an approach to negotiation, analogous to ad-hoc model in computer science, as opposed to client-server model - which matches command economy. There are tons of nuances of course regarding incentives, optimal group sizes, resource constraints etc.
Free market is also like evolution - it creates thing that work. Not perfect, not best, they just work. Fitting the situation, not much else (there is always a random chance of something else).
Also there's the, often, I suppose, intentional confusion of terms. The free market of the economic theory is not an unregulated market, it's a market of infinitesimal agents with infinitesimal influence of each individual agent upon the whole market, with no out-of-market mechanisms and not even in-market interaction between agents on the same side.
As a side note, I find it sadly amusing that this reasonable discussion is only possible because it's offtopic to the thread's topic. Had the topic been more attractive to more politically and economically agitated folk, the discussion would be more radicalised, I suppose.
Just to expand on this really interesting topic. That's where the common pitfall on planned economy begins. Because to some degree a free market can withstand some amount of regulation; after all, external agents trying to manipulate the market are just that, agents in the market. As long as there are other autonomous agents intervening the market will keep functioning as it was. So the bureaucrat has both the incentive and the justification to expand the intervention. In other words, his economical plan didn't work because it was not intervened enough and just if they intervene in this extra thing it will work for sure. That loop continues until the market is 100% intervened, and at that point it requires such a enormous structure of power and control that makes it difficult to fight it (clientelist networks, repressive states, etc).
As I see it, planned economy is strictly not a market, and it is not created as an intervention in the market. It's a rigid resource distribution system without on-the-fly negotiation, typically highly optimised, and without slack and any leeway for its agents. It can be optimal in a limited scope for a limited timespan, but it is rigid and doesn't adapt automatically. These are issues that could be overcome in theory with faster reassesment and distribution adjustment, but there is also practical issue that its agents are, in the end, imperfect people, and they have conflicting incentives. The other side of low slack is low resilience, any unforeseen problem has severe consequences, and it creates destructive incentives for agents.
Janos Kornai has a book "Economics of Shortage" (I haven't read all of that, honestly) that, as far as I understand that, says that lack of openly availible resources in planned economies causes agents to bear a risk of not being able to execute more-important-than-usual orders of their superiors that happen on some special ocassions and thus face severe consequences, in case something in that agent's operations breaks. And due to lack of market, agent cannot fix the issue on-the-fly, only in the next planning cycle. That incentivises agents to not execute their day-to-day roles and hoard any goods they have - in order to exchange them on black market for some other goods and favors wheen need will arise - and it will arise as there will be orders from above and something break and go wrong.
> external agents trying to manipulate the market are just that, agents in the market. I tend to think of a market not as a whole economic system at once, but as a subsection of it - in this way that there are essentially multiple categories markets, as in goods market, labor market, etc. In this viewpoint, external agents are often not a part of market. Regulations affe ofct the agents but are not agents themselves. Target financing - the same. Marketing campaign is out-of-market (as in specifically goods market) manipulation on the consumers by producers to change perceived value of producer's product.
I suspect I could be not terminologically correct there, and the existing terminology here is a bit confusing, again. I'd like to call what I understand as free market "pure market", while the free market is what's commonly understood - an unregulated one. The completely free market, I suppose, tends to not be pure in long term due to positive feedbacks causing some of market's participants to be not-infinitesimal and in the end forming a monopoly or an cartel.
> and at that point it requires such a enormous structure of power and control that makes it difficult to fight it (clientelist networks, repressive states, etc).
Of course, replacement of one massive system with another requires enormous amount of power and control. And planned economy concentrates control and decision-making in one place, instead of it being distributed across all agents, thus obviously the planner would be massive.
I am not an economist in any way, not even education, I was just fascinated by the economic failure of USSR and whether it was avoidable in any way since childhood.
For the health system or public transport the nash equilibrium of offer and demand is not what feels optimal to most people.
For manufacturing s.th. like screws, nails or hammers; I really can't see what should be wrong with it.
On a micro scale it is possible, and sometimes favorable, to intervene. On a macro scale to intervene economically becomes impossible due to the economic calculation problem. It is widely accepted in modern economics that the unit of maximum extent where economical intervention is possible is a business/company/enterprise. Or in sociological terms the maximum unit is the family. Anything broader than that and the compound effect of the economic calculation problem becomes apparent and inefficiencies accumulate. Autonomous decentralized mechanisms (like a free market) are the only solution to it, but not the most optimal.
When they push back against certain narratives and extrapolations they usually don’t succeed, because the same mechanism applies here as well.
The only thing they can do about it, is throwing around ashtrays.
https://en.wikipedia.org/wiki/The_Ashtray_(Or_the_Man_Who_De...
Although in this original case the image (that allegedly happened) used to criticize the philopher (Kuhn), so kind of the other side of the coin of what I said above.
An ashtray is such a temporally rooted object, the phrase, "throwing around ashtrays," immediately conjures a bunch of peripheral concrete imagery.
I imagine there will soon be generations of young people who wonder what a tray of ashes was used for and why people used to collect them all over their homes and offices.
"Momentarily" can mean years or even decades, and millions of people can suffer or die as a result.
Also, the last time I checked, the US government produced its goods and services using the free market. The government contractors (private enterprises) are usually tasked with building stuff, compared with the government itself in a non-free, purely planned economy (if you refer to von Mises).
I assume that you originally meant to refer to the idea that without government intervention (funding for deep R&D), the free market itself would probably not have produced things like the internet or the moon landing (or at least not within the observed time span). That is, however,a rather interesting idea.
For example, you can't freely produce missiles and have it in wallmart where "the governament" purchase at shelf price.
Ah yes, situation where the government makes a plan and then hands it to the one (1) qualified defense contractor whose facilities are build in swing states to benefit specific congressional campaigns is completely different from central planning.
He caused a MAJOR issue for Greece that still affects everyone in his country today, after reassuring people for 2+ years it was never going to happen: https://en.wikipedia.org/wiki/Greek_government-debt_crisis
(He'd kill me for saying this but he was lying back then too. He was trying to pull a Thatcher (I could compare him to someone else that did the same a long time ago but ... let's just say if you know you know). He was trying to double Greece's public debt by lying to everyone about what he was doing. He failed, and then started threatening, and when his threats didn't work, he got fired by Greece's prime minister, his oldest friend. It ended the friendship. He lost. And he's not a good enough sport to accept that he lost, frankly he got caught and couldn't talk his way out of it. This, despite the fact that he was finance minister, and so will be paid, very well I might add, for the rest of his life despite what he did, and despite the fact that every Greek today is still paying the price for what he did)
Oh and he's pro-Russia. All Russia wants in Ukraine, according to Yanis, is help the European poor. More detailed he is of the opinion that the current course of action of the EU will lead to a war with Russia, in which a lot of European poor will be forced to fight in an actual war, facing bullets and bombs in trenches. This could be avoided by giving Ukraine and the Baltics to Russia. In the repeating tragedy of Yanis Varoufakis' life, I have to say, yet again: he may be right (I just strongly disagree that offering Ukraine and the Baltics up to Russia is an acceptable solution to this problem, and in any case, this is neither his, nor my choice to make)
He does not live in Greece, his own country, he lives in the UK, making the case for Russia.
https://www.yanisvaroufakis.eu/category/ukraine/
And I get it, his life has become this recurring tragedy. His father was a victim of a rightist dictatorship in Greece, and he was imprisoned and tortured for that, as well as losing his job, living in poverty for a very long time (yes, Greece was an extreme right dictatorship not that long ago, really, go look it up). Yanis Varoufakis himself became the victim of a cabal of laissez-faire very, very rich people who destroyed his career right at the peak of everything he achieved. He has been the victim of one or another form of extreme-right policy (in the sense of laissez-faire parties that capture governments) since he was 4 years old, right up to today. Over 60 years his life was sabotaged in 1000 different ways, some very direct. And, sadly, I agree with his "extreme-right" enemies: he can never be in allowed near any position of power ever again because of this, which isn't even his fault. (extreme-right according to him, I would refer to his enemies as "the status quo", and point out it's working pretty well for everyone)
care to explain what exactly he caused and how that still affects everyone in his country? in particular how he managed to jump several years backward in the timeline?
That link goes to the Greece financial crisis which, according to the Wikipedia page, started in 2009. Varoufakis was elected minister of finance in early 2015 and resigned only half a year later. From the outside, it seems impossible that his half year miniterial tenure could have caused a crisis half a decade earlier. At the time, Greece had already defaulted twice on their loans and were about to do it a third time.