The Case for Clear-Market Capitalism: Why Free Markets Are Supposed to Clear

     Truly free markets are supposed to clear.

     In a free market system, firms that overproduce would not be saved, nor bailed out, nor protected, nor have their assets' value held aloft, through government intervention.

     Even if the Federal Reserve is supposed to act as a clearing house for bad loans, then it should only be in an emergency. And that should not mean that government in general should act as a clearing house, to help push overproduced products on people at inflated prices.

     Yet government does this; through 1) eminent domain, 2) taxation, and 3) spending that arguably stolen “tax revenue” to create programs tying consumers' financial futures to those of favored firms.

     Those programs include the F.D.I.C., through which taxpayers are made responsible for insuring producers' bank deposits. Additionally, our money is spent paying people to enforce legislation – and government contracts – which award favored firms all sorts of exclusive privileges and monopoly rights, including the right to sell in foreign markets unobstructed, and the right to unlimited profit (through the “right of increase”; the right to earn more and more each year).

     In real free markets – that is, in free and clear markets; in the absence of subsidies or bailouts or taxpayer assistance of any kind - the prices of overproduced goods drop.

     That's because keeping prices high would be unprofitable for the producer, and unaffordable for the buyer. Even if buyers could afford overproduced goods, then the mere knowledge that the good is overproduced, will lead the buyer to conclude that purchasing at a high price only benefits the producer and seller, not himself. Most importantly, there would be no way to force anyone to buy anything at a higher price than they can tolerate.

     As an example, in grocery stores, when customers aren't buying as much of a particular food item as the store anticipated, then the store will mark the price down, in order to accommodate the lower demand than they expected, while still selling something. The “price signals” which are sent - by the store marking the price down, and by the consumer choosing to buy something only when the price gets low enough – are communicated to other buyers and sellers. As a result, either less of the item is ordered, or the same amount is ordered so that it won't rot on the shelves.

     It is interesting to think about how, rather than to simply lower their price, food items are sprayed with chemicals, in order to preserve them. The effect is that they can stay on the shelves longer, without the appearance of decay. But industrial food preservatives are often toxic, so the idea that the goal of food preservation is solely to keep us healthy, is far from an accurate picture of what's going on. The purpose of food preservation - including the use of bleach in meat processing - is to keep items on the shelves longer, without losing value, through retaining solely the appearance of healthfulness.

     When they are allowed to clear, truly "free and clear markets" allow the prosperity that comes from from prices falling slowly over time. When markets clear, supply and demand curves are actually allowed to meet; so that an amount of demand can be satisfied with an equal amount of supply, and prices reach an equilibrium (that is, a “clearing price”), and stabilize.

     Then people can more easily afford to buy goods, but also plan their lives more easily, thanks to that price stabilization (although this is not to say that in free markets, fluctuations in price and supply wouldn't happen; they would, but they would be more tolerable).

     Free markets result in free stuff. Don't just “free the markets”; clear them! And do it without the government's “help”.

Post-Script:

     For those wishing to learn more about market clearance, and the notion that "free markets result in free stuff" (or even "full communism"), please read the following book and articles:

     - Principles of Economics, the 1871 book by economist Carl Menger (especially the section "The Theory of Price"). A PDF file of the book is available here: http://mises.org/sites/default/files/Principles%20of%20Economics_5.pdf

     - "Advocates of Freed Markets Should Support Anti-Capitalism" (2010), by Gary E. Charter, at:
http://c4ss.org/content/1738

     - "Who Owns the Benefit: The Free Market as Full Communism" (2012) by Kevin A. Carson, at:

http://c4ss.org/content/12561

     - My 2016 infographic "Government is the Source of Corporate Privilege", at:
http://aquarianagrarian.blogspot.com/2016/04/government-is-source-of-corporate.html

     - My 2017 article "You Don't Need Money to Live", at:

http://aquarianagrarian.blogspot.com/2017/02/you-dont-need-money-to-live.html

     - My 2017 article "A Market-Oriented Solution to High Health Insurance Costs", at:http://aquarianagrarian.blogspot.com/2017/02/a-market-oriented-solution-to-high.html

     - My 2017 article "Markets and Socialism Can Both Lead to Free Housing", at:

http://aquarianagrarian.blogspot.com/2018/08/markets-and-socialism-can-both-lead-to.html

     - My 2017 article "Supporters of Free Markets Should Oppose Gifts of Privilege to Property Owners", at:
http://aquarianagrarian.blogspot.com/2018/12/supporters-of-free-markets-should.html

Originally Written on January 16th, 2019

Edited and Expanded on January 17th, 2019

Post-Script Written on January 17th, 2019

Published on January 17th, 2019

Our Basic Needs Are Abundant, Not Scarce

     In late November 2017, I posted a commentary to social media regarding what I regard as the most basic and primary set of human needs, whether they are scarce or abundant, and how we could access and afford them more easily. The post, originally titled “Everything Should Be Free”, follows:

     The law of supply and demand dictates that if a good is abundant (i.e., more exists than people need), its price will fall towards zero/free.

     To clarify, resources existing in a fixed amount, does not necessarily guarantee scarcity by that fact alone. Nor does scarcity only refer to shortages; shortages which are locally felt may be a symptom of inefficient distribution, unequal distribution. Scarcity is a condition in which a resource exists in a smaller amount than the amount demanded or needed.

     We can verify that most things we need to survive are not scarce, by simply thinking about it. Which things do we need to survive, and which phenomena and technologies make them freer? Our most basic needs are air, water, food, shelter, clothing, and medicine. I have not addressed clothing here, nor the need for plumbing and sanitation; but I did not leave them out because they're any less important; they're no less important. Instead, I have chosen to comment on how to make energy and transportation more easily available to people.

     AIR is free to breathe, but there will only truly be no price for clean air, when there is no more unnecessary air pollution, and when the costs of cleaning the air up (that is, cleaning up after ourselves) have gone down to zero. But it is possible.

     WATER falls from the sky in abundance. We can collect it, but only when it's legal. Sometimes it's illegal for a good reason, like when altering rain flow affects our neighbors' property, or threatens wildlife in the area, or drastically changes the water table or causes flooding. But when collecting rainwater does not require creating an artificial lake, it can be done freely and safely. Through rooftop water filters and rain collection systems, we could make water much easier to afford and acquire.
There is also a product called LifeStraw, which converts contaminated water into free, safe, filtered, drinkable water. If this product were made easily and cheaply available to the third world, perhaps through charity or mutual aid, then struggling people would have a much easier time acquiring water, one of the most primary things we need to survive.

     Enough FOOD is produced on the planet annually to feed 10 billion, while we have to feed only 7.5 billion. While the US throws away 40% of food, France requires groceries to donate unsold food to charity. Teach people how to grow food, and let them do it in cities. Watch “Extreme Couponing” and look up the mutual aid organization Food Not Bombs.

     SHELTER could be easily made cheap, or even free, through liberalization of homesteading requirements, changing local building codes to keep up with modern safety innovations and allow experimental architectural techniques, and returning the vast swaths of land owned by the federal government back to the states and the people. This will make land more available, and in turn, more places to stay.
     There are now 6 empty residences for each homeless American. Remove all government supports (including police protection) for absentee property ownership. Allow people to host homeless and needy people in their apartments without requiring them to pay rent, and allow renters and trailer and tiny house residents to claim state homestead tax credits (in states other than Wisconsin, the only state in which residents can do so).

     MEDICINE is kept artificially scarce and artificially expensive through patents, taxes, insurance mandates, trade barriers (against foreign-made pharmaceuticals), deadly approval delays, and other unnecessary and often unconstitutional intrusions. Getting rid of these privileges and barriers could help reduce the prices of medical care, medications, and medical devices.

     ENERGY is kept artificially expensive through patents, regional monopolies, preferential subsidies for one energy source or the other, and more. Letting the market choose renewable resources like solar, wind, hydroelectric, geothermal, and Alternating Current energy could save money, lives, and the planet.

     TRANSPORTATION could be made cheaper by withdrawing all government and taxpayer supports from car dealerships, used car lots, and car graveyards. Vehicles in car graveyards, and aircraft sitting on government-owned lands, could be repaired and turned over to those who need them. The idea that car dealerships sit on cars, and have state-licensed private security guards and the police to protect them (sometimes at taxpayer expense) should indicate that price reductions are the only way to clear the market. The fact that supply and demand are not meeting, and causing markets to clear, ought to indicate that what's being sold simply isn't worth what they're asking for. Maybe it even indicates that there is not currently a free or fair market in transportation.

For more information:

- look up Citizens for Truth in School on Facebook,

- read my article "You Don't Need Money to Live" at http://aquarianagrarian.blogspot.com/2017/02/you-dont-need-money-to-live.html

and

- read my blog entry "Links on Homelessness and Moneylessness"
http://aquarianagrarian.blogspot.com/2018/05/links-on-homelessness-moneylessness.html

Originally Written in Late November 2017

Edited and Expanded on December 1^st, 2018

Published on December 1^st, 2018