Tuesday, December 1, 2009

Fatally flawed freemarket

Above is the BBC survey results. Click on the image to reach the BBC article.
Wikipedia defines freemarket as:
A free market is a market without economic intervention and regulation by government except to regulate against force or fraud. The terminology is used by economists and in popular culture. A free market requires protection of property rights, but no regulation, no subsidization, no single monetary system, and no governmental monopolies. It is the opposite of a controlled market, where the government regulates prices or how property is used.
The following are probably true for the above survey:

- The software (Excel or some statistical software) used to collect and analyse the data ran on an operating system (Windows, OSX or Linux) powered by powerful hardware. All of these were supplied to BBC via capitalism.

- The BBC site is powered by Apache webserver running on Linux operating system [1]. All of these are Free software, provided to them by an almost laissez-faire industry of Free and Open Source[2] software.

- The hardware and software that you are using to access this site and BBC site are provided to you by freemarket.

Given that there is no industry in the world where there is no regulation, the computer industry (both software and hardware) is probably the least regulated industry of all. It is also probably the only industry where the products (hardware and software) becomes cheaper while quality and features improve day by day, despite the massive devaluation of currency by central banks.

However, this industry is also coming under attack from regulations and also powerful corporations seeking special privileges in the form of patents, draconian copyrights, stupid internet regulations and others. All of these stifle innovation and reduce competition in the industry.

So maybe, just maybe, the deregulated nature of the computer industry is what makes it highly competitive and innovative, which results in better and cheaper products.

Not to mention that BBC itself is funded by mandatory TV licensing fees taken from the public! Whether you watch BBC or not is irrelevant, if you own a TV, you must pay BBC.[3]

[1] Technically, Linux is just the kernel, but the word 'Linux' is also used to refer to various distros.

[2] Yes, Free and Open Source software are very much a free-market phenomenon. The profit in this industry is largely non-monetary, though most software companies have jumped on the open-source mantra. It is clearly laissez-faire, because anyone can start a FOSS software project to scratch their own itch. There is absolutely no artificial barrier to entry, no prior permission or license from government, no restriction on price or features or what you can call your software, no regulatory requirement to meet a standard (infact, its all self-regulated via de-facto and other voluntary standards as set by IETF, IEEE, W3C, OSI and others).

[3] Yes BBC does produce good quality documentaries, and news coverage is very good.


Stewie said...

i think its a misused term in this case. 'Free-market' simply means 'voluntary exchange'. Voluntary (free) exchange (market). The 'free-market' is simply a description of a way people may interact. and it is not the same thing as capitalism.

Monetaryism, fascism, corporatism - these are the economic systems of today and we see the delights of free-market very rarely such as what you have explained. open source and digital media etc..

Anonymous said...


"Neighbouring countries are producing the vaccine, but it is going to the West,there a difference between who needs and who gets the vaccine."


Anonymous said...

western ideology which failed to work for them as well.

meekaaku said...

It is still capitalism since the means of production are owned privately, rather than the state. But heavy regulation and special privileges for the elite make it state-capitalism/fascism/corporatism. The other end of this spectrum is freemarket-capitalism where its less regulated, barriers to entry are low, subsidies and special privileges are absent etc.

Maybe something to do with Baxter having a monopoly patent on the h1n1 vaccine? Something that was filed before there was the outbreak! If not for the patent, many many manufacturers will be able to produce it, thus making available to larger population at lower prices.

How has it failed? Yes it is by no means perfect and trouble free, but failed and fatally flawed?