Title: Free Market - Econlib
Headings: Free Market
Free Market
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Content: Exploitation occurs not in the free market, but where the coercer exploits his victim. In the long run, coercion is a negative-sum game that leads to reduced production, saving, and investment; a depleted stock of capital; and reduced productivity and living standards for all, perhaps even for the coercers themselves. Government, in every society, is the only lawful system of coercion. Taxation is a coerced exchange, and the heavier the burden of taxation on production, the more likely it is that economic growth will falter and decline. Other forms of government coercion (e.g., price controls or restrictions that prevent new competitors from entering a market) hamper and cripple market exchanges, while others (prohibitions on deceptive practices, enforcement of contracts) can facilitate voluntary exchanges. The ultimate in government coercion is socialism. Under socialist central planning the socialist planning board lacks a price system for land or capital goods. As even socialists like Robert Heilbroner now admit (see socialism ), the socialist planning board therefore has no way to calculate prices or costs or to invest capital so that the latticework of production meshes and clears.