America Does Not Have A "Free Market Capitalist" Economy

I say quite often that America does not have a Free Market Capitalist economic system and sometimes the befuddled looks I get from those that hear this provokes them to question what I mean by it. The answer is simple and can be broken down into two parts, the two definitions of what is being asked.

"What is a Free Market?" and "What is Capitalism?"

The answers to these two questions together with an understanding of the current mode of economic activity gives a clear indication that the statement, "America does not have a Free Market economic system" is true.

So what is a free market economic system?
Free Market principles point to an economic system where business are unfettered by regulation, licensing, special fees and taxation, a system where all manner of salable goods are on the market without prohibition or exclusion. It is a system where the buying habits of those consumers would drive the manufacturers and distributors to produce or stock items that were valued by customers and discontinue or remove goods that have lost favor or marketability and sales numbers. This provides that customers are able to actually drive the economy by their buying habits and wants, without the interference of an outside entity.

This would of course be in contrast to the current system of high regulation, increasing taxation, special licencing, educational requirements and so on the American system is plagued by. Economists who advocate this idea of unfettered markets, also see that allowing prices and wages to form naturally and the availability and manufacture of goods to lie in the interest of those who have the capability to produce and the want to produce in trade for profit is a nearly unfailing concept in the ways of maximum efficiency of producers as well as maximum favorable market conditions for consumers.

With this some may say that the deregulation of businesses will (could/would) lead to businesses being able to skirt environmental concerns, livable wages, price gouging, and so on. In response to this one can argue on the case of environmental concerns that the information that a retailer or manufacturer was damaging the environment, the consumers voice could be heard by lowering or altogether abandoning or boycotting the product, manufacturer and retailers and distributors. When profits and sales decrease a signal is sent that certain practices are not favorable or condoned. This is the aspect of "market self regulation".

On the issue of wages. Wages should be set by employer and employee. If in the scenario an employer is offering too little pay the potential employee can ask for more or refuse. By no means should the wage of any person be determined by anyone other than the laborer and the job provider. In the system we have now wages are set by government decree, in an attempt to make a fair wage government actually provides yet another hurdle for a prospective employee to jump in order to gain employment. If the set wage is too high for the business, they will refuse to hire. Minimum wage laws also hinder the ability of these businesses to adjust wages based on experience of each employee, there is always a floor that they cannot overcome. Again a control on the level of wages offered by businesses is not a Free Market principle. It is a system of control.

Pricing controls work similar to wage controls, being that wages are prices and vice-versa, it stands that any interference in the marketable value being set by someone other than the seller negates the definition of free market practice.

So what is Capitalism?

Capitalism is defined many ways depending on the social structure lense those defining it look through. To make this easier we can go with two differing opinions, one from Wikipedia (which I use because of it's high use of editing from other editors) and then a definition from the website WorldSocialism.org (including this one because it highlights the idea that the word has different meanings depending on who you ask and how they define it).
According to Wikipedia Capitalism is "is an economic system in which trade, industry, and the means of production are largely or entirely privately owned and operated for profit. Central characteristics of capitalism include capital accumulation, competitive markets and wage labor.  In a capitalist economy, the parties to a transaction typically determine the prices at which assets, goods, and services are exchanged."  This is the definition, or close to it, that most non socialists agree upon.

With this definition in mind we can see that there are a large number of businesses and services that are not privately owned, ran, or funded but are so called public services and are controlled by government, whether county, state, or federal, and are funded through taxation instead of consumerism. This leads me, to say that we may define America as a mixed economy, but definitely not a pure Capitalist economy.

According to the website WorldSocialism.org though Capitalism is something to be feared and abhorred based on their claim of worker exploitation. The definition they detail is,"Capitalism is the social system which now exists in all countries of the world. Under this system, the means for producing and distributing goods (the land, factories, technology, transport system etc) are owned by a small minority of people. We refer to this group of people as the capitalist class. The majority of people must sell their ability to work in return for a wage or salary (who we refer to as the working class.)"

They go on to say,"The working class are paid to produce goods and services which are then sold for a profit. The profit is gained by the capitalist class because they can make more money by selling what we have produced than we cost to buy on the labor market. In this sense, the working class are exploited by the capitalist class. The capitalists live off the profits they obtain from exploiting the working class whilst reinvesting some of their profits for the further accumulation of wealth."

And with this in mind we can ask the socialist this question, "isn't the worker also a capitalist, as they value their time and effort less than the wage they are paid? If they did not value the wage more than the time or effort they would not work, as in a socialist society, goods are given freely based upon need and taken based upon production, or better said by their economic muse Karl Marx, "From each according to his ability, to each according to his need". This proclaims that no matter how productive you are, your effort is only for the benefit for the others who wish not to work or do not perform as you do. What incentive does that leave to work hard, or even harder? What incentive does that leave to work at all? What incentive does that leave to create, to innovate, or to improve upon goods? If there is no benefit for someone to excel at a good or service it will be done at a minimum speed and quality.


With that being said we can look at the American economy as a partial capitalist economy and a partial socialist economy. There are many areas that the State has complete control over production or service. Roads, Schools, Protection Services, Old Age Insurance are a few of the largest and easiest to see. In that the capitalist is still beholden to government entities in order to start or continue in their business. We can also see THAT is in no way a "free market" system.

Working on Thanksgiving Day? Good.

Why is it being seen as a bad thing for people to be working and businesses to be open? And why is this only aimed at retail workers?

There is growing discontent at retailers who have chosen to open their stores on Thanksgiving day this year in an effort to bring in more sales. The discontent felt by many is in response to their feeling that those retailers are taking advantage of their workers and forcing them to work these hours. Though the federal government in the US has recognized Thanksgiving as a holiday, there is not a mandate in place that requires all workers to be let off for the day, at least not yet. Unless specifically implied in an employment contract companies can require their employees to work hours that they set or days that may not be in accordance to "the norm" set by others. But this should not be seen as a bad thing.

In the theory that prices are wages and vice versa, those that are employed and work on these days are adding to the personal income while the employers are adding to their own sales numbers, cost and benefits to both.  All the parts to the market process win in this scenario. The worker earns his wage, allowing him to purchase goods. The consumer is able to buy goods, with their own wages, on an open schedule and with workers to run the transactions. The employer or business has both workers and consumers participating in the system. Allowing for both sides of the transaction the business has facilitated trade and helped a worker to earn a wage, in lieu of their labor. It really is a win-win-win situation.

They (the public at large) want employment. They want more products. They want consumerism. But they also want the ability to regulate who can work, where they can work, when they can work, and for how long they can work.
They want control over the businesses, not through market participation (or non-participation) but through the hand and fist of government. (This is a petition aimed at government workers, but others have been started to mandate holidays off for some industries, excluding some at the same time.)
They want to be able to buy their widgets, at low prices, with high wages for the workers and paradisaical hours and schedules without the hindrance of anyone else's wishes to be inconvenienced  by unopened stores or working late night hours. Quite Utopian a task to regulate such a feat to not impose on the wishes of others, or to not have your own wishes imposed upon.

It really is no surprise that there is the feelings of disgust and opposition towards holiday working hours and they are not aimed at the workers themselves directly,  they are aimed at the economic position of the worker, the business and the shopper alike. All of these work in unison to create the market, and the more regulation in the way hinders one or all of these three in some way.

Now this is only addressing the retail stores that are to be open on Thanksgiving day but take this a bit further in the thought process and we see what others miss. If we were to say that the retailers were to be forced to not open on specific days, holidays in fact, why would we not extend this same idea to all facets of service to others. Bus Stations, Airports, Rescue Workers, maybe even to force prostitutes and drug dealers to refrain from work by decree, all areas of services to others should be  In the name of mandated fairness that so many call for why should any of these other services be able to operate? Air travel should come to a halt for 24 hours, Policemen and women able to spend the day with their families, prostitutes forced to not take clients for one full day. If this idea is really in the name of allowing those workers in retail to have time with their family on any given day, this extended idea should be of no debate, it is after all in the name of the family structure and fairness. So we have to look at the long reaching effects of what is being proposed. Gas stations closed, toll booths and the roads the are on closed. Grocery stores closed. Not being able to run and get that one last piece for a joyful holiday all because working on holidays had been regulated away.  Every business following suit of retailers and being forced to close for one whole day.