The Free Market vs Capitalism: A Case for Market Socialism

Economics, Medium Reads, Uncategorized
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Capitalism and the free market, two ideas that over the last century have been conflated with each other to a point where they’re used interchangeably in mainstream politics. The issue is that capitalism and the free market are not the same and there are a few reasons for this.

To begin with, we must look at the fact that the free market is defined as a voluntary market system whereas capitalism is inherently coercive. The way capitalism functions is based on a top-down system where the top, the capitalist class, must rely on the people below them to be poor or lack their own means to produce things. When the capitalist class is the class that holds all the wealth and means of production, they become more powerful than the working class. They then use this power mixed with the workers’ lack of a means to produce to coerce the workers into working for them. If every worker could produce things and had their own means of production, they wouldn’t “voluntarily” work for someone wealthier than themselves. Now for the forced part, if a better example is needed, you can always just not work for an employer under capitalism, you’ll most likely starve or fail to make a business and fall into a hole of debt though. Although co-ops may seem like a solution to the issue of this unequal playing field and exploitation from a boss, co-ops aren’t capitalistic in the slightest degree and fall under market socialism instead of under capitalism. 

Secondly, it’s just as important to look at the fact that no market can be free if there’s no equal playing field and that’s something capitalism has always lacked. Capitalism rather than a field has a slope with the rich at the top and everyone else at the bottom. A better example of the free market is the barter system where you needed to labor to profit. Without the equal playing field, no system, no matter how free it may appear on the surface, is free.

Another issue with capitalism that is a big part of the system itself is the fact you can profit from just owning land, interest on loans, and anything that isn’t genuine labor. This has allowed for the rich to stay rich by not only exploitative coercion but owning part of nature or preying on those in need. When it comes to owning land for a profit it should be seen as air is, air is natural and needed like shelter and land are but only land is used for a profit, imagine if people started buying plots of air and made you pay to breathe in them. 

Finally, the only free market systems are Market Socialism and Mutualism. Now these systems and ideas are lesser-known, especially in places like the U.S. where propaganda is more important than education, so I will take my time to lay these ideas out, some of the differences between them and then make a singular case for them against capitalism.

The ideology and system that is market socialism was best represented in the former country of Yugoslavia, where they had both a market and socialism that allowed for the fulfilment of labor and capital and an equal playing field. Market Socialism advocates for an anti-capitalistic market system where the public and co-ops own the means of production instead of a single or a few people owning them. Market socialism vastly differs from non-market socialist systems like Leninism because it uses the market mechanism for the allocation of goods and capital. What it has in common with almost if not all types of socialism is its belief in the labor theory of value, naturally here’s where the part on co-ops come in, by using co-ops to avoid any top-down exploitation by having the capital distributed among all employees for their labor.

The only big difference between market socialism and mutualism is that mutualism is an anarchist school of thought that believes in the abolition of the state whereas market socialism is only libertarian and allows for a state. There are quite a few minor differences, however. The most notable ones are occupation and use property norms and the establishment of a mutual-credit bank with minimal interest which is used to run the bank itself. Occupation and use property norms are the belief that one shouldn’t be able to own property they don’t use so that those who actually need it can use it. Mutual-credit banks are banks that aren’t run for a profit, but to issue free credit so that money could be created for the benefit of the participants rather than for the benefit of the bankers.

Now the case for market socialism is a rather simple one compared to a case for non-market socialism because most people don’t have such a bad example of it in their heads like they do when someone says that they’re a Maoist or Stalinist. 

The first argument for market socialism is that it’s an economic system that allows for markets, but in contrast to capitalist markets, money and capital could only be gained through labor and not things like owning an apartment complex or interest on loans. This takes the already popular idea of “the free market” but makes it a genuinely free market where everyone is on an equal playing field and can make money from laboring. 

The second reason is the labor theory of value allows for the full price of one’s labor to be paid back to them to end the exploitation that is wage labor. Instead of slaving away for others, one can have self-determination and control over what they want to produce, do, and create for a living.

Yet a reason that tops all of those is the fact that market socialism allows for human nature to be practiced as we’re both a bit selfish and very cooperative and market socialism uses these as an advantage. Instead of constant individual competition between one another and causing alienation, as is the case in a capitalist market system, market socialism creates workplace environments where people can just work to their best ability and not worry about the constant competition as everyone in their business is equal. 

However, this as all essays are or at least should be is to be left to the reader’s interpretation, but I’d like to leave you with this; “Philosophy will not change the course of events: destiny will fulfill itself regardless of prophecy. Besides, must not justice be done, and our education be finished?”

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