Free markets
growth. However, protectionism is still used, but in smaller degree.
the name of preserving the future. Some may argue that these are positive processes which result in more righteous social norm and law. However, they also clearly suggest the difficulty of postulating an objective criterion for a free market. In addition, no market can be free from politics. Immigration is a good example. If a market is completely free, then it is logical to think that there should be no barrier to immigration. If so, countless foreigners, including someone who is willing to work at low wage, will pour in to a country. Consequently, according to supply and demand, as there are more supplies of labour whilst the demand for workers stays the same, the wage rate will decrease. Moreover, the firms will tend to prefer the immigrants who are happy with low wages, so that they can slash their costs and maximize profit. Consequently, there is a high chance of domestic workers losing their job while wage rates fall. However, such a thing never happened, because there are policies which restrict immigration. Now, if the market cannot be completely free, how free should it be? What level of freedom in the market would most benefit us? The fact is that there have been an increasing number of restrictions in the market over time. There are many rules and boundaries which restrict what can be traded, who can participate in the transactions and how the goods can be traded. For example, a medicine needs to be tested and prove its safety before it can be sold and trading armaments is banned in most countries. Surely, the market became less free. Some may even argue that individual freedom is weakened. So, are we going in a wrong direction? Is a freer market capitalism the most efficient and the most beneficial system that will boost economic growth? This is contestable. The free market capitalists passionately support the idea that more free and opened markets will stimulate economic growth. It is true, apart from the restrictions within the markets that I mentioned above, that the market became internationally freer. Protectionism is considered as an old-fashioned, outdated system which is inefficient and distorts the market thus results in slowing down economic
The irony is that, most of the rich nations such as USA and UK, who are regarded as a frontier of free market capitalism, were once protectionist. They used government power to defend their domestic infant industries so that they can grow up with stronger competitiveness. During their early economic rise in 19 th century, Britain and USA were protectionist countries, providing massive subsidies to domestic firms and weaken foreign products’ competitiveness by high tariffs. The free market was introduced when they were fully prepared, when their industries were superior enough to dominate international markets. However, nowadays, in the name of globalization, lots of developing countries are recommended, or even forced to adopt free market capitalism and abandon protectionism. Will this benefit them? I cannot give a definite answer, however the figures demonstrate us something. During 1960s and 1970s, Latin America’s income per capita grew at 3.1%, whilst the growth rate was only 1.1% between 1980 and 2009. 99 Some may argue that it is unfair to ask these developing countries to compete ‘freely’ in international market with developed countries who established their industrial foundation through strong protectionism. However, fairness is also a complex matter, and people often question whether free market and free trade is equal to fair market and fair trade. Again, we cannot establish an objective standard for fairness, just like the degree of freedom. According to the points I mentioned above, it looks like free market capitalism is a mere delusion, but is it really? A strong government intervention may provide us a secure life, prevent us from starving to death. Some nations may even manage to achieve higher economic growth. But is economic growth directly related to happiness? Is it impossible to achieve a secure and high economic growth in a free market? Milton Friedman, a world famous free market capitalist, elucidates how free market and free trade will function
99 Ha-joon Chang, 23 Things They Don’t Tell you About Capitalism
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