Thursday, September 12, 2013

Transparency and Friction

Free markets are effected by interested parties only if the market has complete transparency and resources move in a friction-less manner. 

Some actors will try to control every market by removing transparency or bringing friction into the market.

When ever a body of people is able to shade the market or place friction into it, the market ceases to be free.  
What ever institution monitors the market, in order to ensure its both friction less and transparent  is by default called "the government".  One can name it committee or congress or agency or what ever we wish, but each market's monitor will be it's "government".

Some would have the "free market" be "the government".  For select markets, being free may be just the right institution for that market best meet the needs of humanity.  However, not all markets can be absolutely free.

Libertarian and anarchic ideas, in general,  aim to make markets governed by Adam Smiths "blind hand".  This view advocates letting markets go to "the natural order of things".

However, one must first prove that the "natural order of things" is the best existence for humans.  I maintain that this simply and obviously not so.  Rather, we manipulate our environment constantly in order to improve for ourselves.  Our markets are just another form of human manipulation.

There is no natural law that says markets will self balance optimized to human needs any more than there is any law that says campfires will burn at the right temperature for cooking.  The unaltered natural order is not what is always best for us.

What I have yet to see from these viewpoints is how, in a realistic manner, with out some form of "government" markets will work properly.  What systems will actually effect pragmatic and practical transparency and friction-less movement in markets?

It appears to me that humans will always be struggling to find a balance between "controlling" markets and allowing them to be free. 

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