Freemarketeers vs. The Free Market

 To recap: Freemarketeers are people that believe the free market is the only moral arrangement for a society, and any laws regulating or restricting it are immoral without exception. They often like to call themselves anarcho-capitalists or libertarians. There is some variation within the definition but the idea that free market capitalism is the ultimate moral ideal is a common thread in their thinking.

One of the greatest contradictions in a free market is that ultimately it will grind to a halt because anti competitive practices hinder its greatest advantage: competition. Competition is one of the main selling points of a free market. If competition is eliminated, so is choice, one of the free market's other great advantages. 

In order to maintain the advantages of a free market, governments regulate competition with laws. However this flies in the face of the premise that the market must be unrestricted. 

The aim of the regulations are to monitor for and stop anticompetitive behaviour.

An example of this is when a supplier is purchased by its customer, and the prices of the goods supplied is hiked or hindered for all other competitors. Freemarketeers suggest that the market will self correct over time, but this is wishful thinking for several reasons. 

If you hinder the supply of something, it will take time for the market to react. In this time, superior products may fail to stay in the market, because the supplies they depend on are hindered. This lag time can be significant, amounting to decades of lost competition and innovation. The original buyer also gains very much by the rest of the market competition collapsing. With monopolization comes cost savings. The need for competitive actions like marketing, research and development, or competing for suppliers goods can effectively become needless. Consumers may also pay more, because they have no other options. 

 Another good example is price fixing. Competing sellers need to compete on prices. This is sometimes tough, and results to a race to the bottom, especially with commodities. If your product has very few possible differentiators, a price war with a competitors hurts both sellers. With price fixing they agree to keep the same prices. This way both sellers can continue to make consistent profits. 

Freemarketeers will argue that another seller will enter the market and restart the price competition, which is not guaranteed. 

The result of anticompetitive behaviour is stagnant markets. Freemarketeers rely on the presupposition that markets should not be tampered with, and thus hold on to the false and unproven belief that markets will self correct over time. It's like magic you see. Even if this was always true, the amount of time for this correction to take place is not guaranteed. While everyone waits for these corrections to take place, everyone suffers from the stagnant market, and those who have exploited anti-competitive tricks keep gaining money and power at the expense of the societies they live in.