Challenges to Free Market Anarchy

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    I just finished lesson 10: Is Regulation Necessary; I have just a few questions so far in what’s wrong with textbook economics. I’ve noticed after just a few episodes how differently instruction has been compared to my two economics courses in college.

    I was speaking to a friend of mine about the material I’ve been covering lately & suggested free market anarchy economically seems to be able to produce more efficient & prosperous outcomes. She told me that a free market would require having equal grounds in negotiating contracts. A bit later emailed me a link (below) to demonstrate the error in my ways, but I noticed that much of the responses and criticisms seem to be knocking down arguments that haven’t really been espoused in the explanation I feel like I’ve learned from this course so far.

    Do we require a form of government to have equal grounds in negotiating contracts? Why does textbook economics suggest that we require an equal ground in negotiating contracts? Where did the assumption come from that businesses will inherently exploit their workers & customers? It seems that we already have a government in place, but I feel as though the question presupposes that we have equal grounds in negotiating contracts now.

    I, also, have a question to inquire further about when you mentioned, from what I believe to be, Game Theory. It is said that every action, good or bad, can be rationalized in self-interest. At my first glance of game theory, it appears to argue that cooperation between players is always the rational strategy, at least while participating in the game. The initial notion sounds great, but I’m very skeptical of it due to exogenous variables for these types of experiments. It seems like it makes it seem like even in losing the game you come out with a good outcome. In the presentation, you mentioned to consider regulation like an umpire in a game, but ends up hamper players more or less the same.

    When you mentioned it I thought of Sweden & how the policies they have can’t be duplicated to the same effect elsewhere in other societies. Is that because it so homogeneous in race & culture there? Are these types of games not fastidious enough in their fixed rules or that its simply not feasible to accurately test due to exogenous variables?

    Thank you,


    The article at the link is criticizing neoclassical, mathematical demonstrations of the efficiency of the market economy. Austrian make the same criticisms. And then go on to show that the defense of the efficiency of the market economy does not depend at all on neoclassical models.

    The only equal ground for negotiating contracts required by the market economy is the integrity of everyone’s private property rights. On the reason for animosity toward the market, take a look at Mises’s book, The Anti-Capitalist Mentality.

    And Hayek’s article, “The Non-Sequitur of the Dependence Effect.”

    It turns out that Sweden is not an exception to the laws of economics.

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