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Is The Death Of The Free Market Upon Us?

Most every red-blooded American has been taught about the value of capitalism and the free-market system, as well as the historical failure of socialism and all of the evils that tail along with it. At the same time, we also have been educated on the Robber Baron days and the dangers of capitalism left unchecked. The market must be allowed to operate efficiently.

Like representative democracy, the free market has often been described as a terrible mess, but 100 times better than the next available alternative. The inescapable part of capitalism is competition, which by its very definition creates losers along with winners; it also encourages consolidation, as the most efficient absorb the least efficient.

So, by its nature, there’s always a receptive audience for those who want to talk about the inequities of the free-market system. We all want equal opportunity, but those who perceive themselves as winning, oppose equal outcomes; and those who perceive themselves as losing, prefer equal outcomes. Whether it be ethanol subsidies, GIPSA, or some form of EPA regulation, the government has become the biggest determinant of industry size, industry structure and industry profitability.

That’s caused many people to question whether the free market is merely a myth that’s been superseded by government involvement in the marketplace. If that’s the case, and people feel hopeless to reverse the trend of government intrusion, the only solution is to try to position oneself favorably with the government, or socialism. The trouble is that it’s a slippery slope with no return.

The concept of socialism does remain viable, however, as long as you remain right of the competition on the scale; and therein lies the real rub. While it will always lead to declining lifestyles over time, socialism is only sustainable over the long haul if everyone is on board.

Socialism diminishes under the weight of its own output, while capitalism is diminished by the ballot box. It’s the great paradox of human nature and an age-old debate – do we want a piece of pie that is the same size as everyone else’s, even if the pie is shrinking; or will we tolerate someone else getting a larger piece of a growing pie?

America tried the hybrid, where we would try to preserve some capitalism and free enterprise, while adopting various forms of socialism without paying the bill. Admittedly, that works extremely well until the day of reckoning when one can no longer pass the bills on to the next generation. As Margaret Thatcher once said: “Socialist governments… always run out of other people’s money.”

That is where we find ourselves today. And that is why we are seeing the debate between the free market and socialism beginning to be talked about openly in our national discourse. It is the issue that divides our country, and has divided our industry as well.