When I was a kid, every Thursday night during the summer my dad used to take all of us to a farmer’s produce market not far from our summer home on the Jersey shore. This was an old-style farmer’s market where the local farmers would load their trucks with baskets of their just-harvested fruits and vegetables and bring them to an empty lot where they’d line up in rows, unload their bushel baskets, and wait for the locals to come by and, hopefully, buy their produce.
The baskets would be marked with a hand-written sign that indicated the price the farmer was charging. And each farmer sought ways to make his (few woman were involved as I recall) fruits and vegetables look like a more appealing purchase than those displayed by the other farmers.
For example, if fresh corn was on our shopping list (as it almost always was for my dad), we might find some farmers might charging fifty cents a basket instead of the seventy-five cents most of the others were charging. (Yes, a bushel of corn went for four bits back then, but, of course, we’re talking the late 1950s.)
Or some of those charging seventy-five cents might fill their baskets so they were nearly overflowing while others only filled theirs to the rim. And some farmers peeled back the ears of the corn on the tops of their baskets to make them easier to size up, while others made the customers pull back the husks to look for themselves.
All of these different approaches were basic marketing decisions, made by the farmers to sell more of their produce than their colleagues (or, at least, to sell as much of their produce as they could, since they made nothing from the produce they had to load back on their trucks and take back to their farms).
The result was a form of competition that, on an admittedly very small scale, epitomized the classic market-driven economy. Note the basic principles at play: Supply and demand kept the prices down, since there were usually many more farmers, with much more produce, than there were potential buyers. And marketing strategies, starting with the prices charged, were of critical importance, since most of the buyers were not going to buy their corn from more than one of the farmers and most (unlike my dad, who sometimes seemed to spend hours considering his options) were not about to devote a whole lot of time to the process.
The other aspect of the old-style farmers’ markets that made them work so well was the absence of any middle-persons or corporate branding. Each farmer was an independent economic unit, free to make whatever pricing and other marketing decisions he felt brought the best results for his business. And each buyer was free to spend as much or as little time studying the options and considering whether to make a purchase from any of them.
Today’s economy is not as simple, not by a long shot. In fact, to speak of a market-driven economy in today’s world of mega-corporations and layers of wholesalers and retailers is to make a mockery of the time in America when the same person who made or grew something sold it. We aren’t that country anymore (even in the world of farming, which is now largely controlled by the agri-businesses that essentially lease the land to the individuals who grow the crops).
Thus, much of the current political cry for a return to a free-market-driven economy unrealistically fantasizes and romanticizes the term. To speak of a truly free market economy would require a return to sole proprietorships and individual entrepreneurs. But, except for a relatively small number of niche businesses (private music lessons, the quaint bed and breakfast, and maybe your local barber shop are a few that come to mind) those entities don’t exist anymore.
Instead, we are an economy built around and run by our corporations, and they are not as easily manipulated or influenced as the farmers my dad bought his corn from back in the day. In fact, today’s corn is grown by farmers who work in one way or another for a corporation that sells the corn to a conglomerate that sells it to a super market chain that then distributes it to individual franchises that sell it to folks like my dad.
But those buyers aren’t able to go to the next aisle to check out a different farmer’s basket of corn. Today’s buyers of corn (and any other edibles) go to their market of choice (usually the one closest to their home) and buy the corn that is there provided. Their only choice is whether to buy corn that day or potatoes or lima beans, not whether to buy this farmer’s corn or that one’s.
This change in our economy has occurred over the last fifty years, and it has led to a variety of problems. The first and most significant is endemic to the basic structure of a corporation. Although they are treated as human beings in the law of the land, corporations are, in fact, entirely impersonal, with decisions made by management teams that are guided by a board of directors that has as its principal motivation to maximize profits.
What we have now is a modified form of the classic free-market economy. The freedom that my dad and the farmers used to have has now been severely restricted or lost entirely. Buyers have less true freedom, because their choices are so much more limited. And the farmers (and their equivalents) in today’s world have much less freedom because they are not able to sell directly to their intended customers, let alone decide how to market their wares (such as they are).
In the absence of that direct buy-sell check on excessive profits and inadequate return, policy makers (i.e. governments) seek to intervene. Thus, health and safety measures are passed to protect buyers from the impersonal, profit-driven decisions of corporations, and regulations are imposed to keep the “corn” fresh and edible.
It isn’t a perfect economic model by any means, but given the reality of our society, it’s the best we can do.
Ed,
I haven’t heard many people asking for a return to a free market economy. When Starkist, Bumble Bee, and Chicken Of The Sea spend hundreds of millions of dollars to get you to buy THEIR tuna, all of which are available in the grocery store, it’s tough to argue that consumers don’t have a choice.
Look at the breakfast cereal isle. Foster Farms, Tyson, and If you go into a grocery store looking for Tuna, you have at least 3 to choose from. Tyson and Foster Farms, and several others fight it out for your chicken dollars.
I would argue that we have plenty of choice and plenty of competition. The regulations for health and safety have improved our food supply and are a necessary part of our fabric, and the whole thing works very well.
I think you’re confusing the “pure free market” with the “simple” or “primitive” free market. There’s nt such thing as a pure free market – it’s like a Platonic ideal – not something that actually exists. Deviations from purity are not the result of the evolution of additional layers in the market, as you described, but by government intervention in the “free” functioning of the market.
The most free-market capitalists (though not some libertarians) accept the need for some such interventions. They are required to cope with market failures, with the concentrations of power that can occur as some market agents accumulate too much market power and where some public good(s) are not being provided by the market. Generally, in other words, these interventions restrict individual liberties in favor of fairness or equality.
The debate is always over how much intervention is appropriate. On the Reagan right was a firm belief that the regulatory regime had become too much of a drag on both economic efficiency and individual freedom (Milton Friedman).
Anyone who claims “corporations run the country” has never really worked in a large corporation. Without denying that they sometimes conspire to achieve their ends, the notion that they have the competence to run anything is belied by their record of failure and the institutional dysfunction that bedevils any institution of any size or age. Most couldn’t manage their way out of a paper bag.
The market is not bad and there is no “pure market. We can, however, have a reasonable debate about how much regulation of economic activity is consistent with the often contradictory constraints of individual freedom and equality. There is not a single answer to this question and the mood of the country changes over time, responding to circumstances. What we need is some perspective and some basic knowledge, please, of economics.
Isn’t the fact that most corporations couldn’t manage their way out of a paper bag a big part of the problem though? The statement that corporations run this country is hardly inconsistent with their blatant incompetence and institutional dysfunction. No one has claimed they’ve done a good job running this country.
Many corporations run this country without even intending to. Our “free market economy” applies primarily other companies rather than to the individual consumer. Sellers of goods will tailor those goods to the demands of their biggest consumer and all other consumers often end up with that same product whether they want it or not.
Monoculture for example is becoming an increasing problem as larger chain restaurants demand genetically identical crops to produce food that taste the same in Louisiana as it does in Oregon. The individual consumer regularly eats only the particular strain(s) of tomato that food corporations demand. People aren’t the market anymore; companies are.
The problem stretches beyond food. Recently, articles have exposed the fact that the state of Texas may be controlling the content of textbooks for the entire United States. Though unlikely that the state has any master plan to dominate the country, it happens to be the biggest purchaser of textbooks in the country (and coincidentally the most political) and hence represent “demand.”
The Board of Education in Texas decides which textbooks to purchase for their public schools based on what they believe their children should be learning. Sellers of textbooks each add/excise content to tailor the books to this Board’s demands. Many of us outside the state are subject to what the Texas Board of Education decides our children should be learning.
Yes, at the end of the day some publishers won’t tailor their textbooks to Texas requirements and some farmers will grow strains of tomatoes outside Taco Bell’s specifications. But a handful of hard-to-find options outside what has been pre-chosen for us does not a free market make.
I also went to the farmer’s market and certainly our summers were enriched not only by the experience, but of having those wonderful tomatoes and peaches and corn all summer.
I do recall the women farmers being present, absolutely.
on another topic, look how life has changed for children and youth who have lost the essence of simplicity without the bombardment of new age communication all day and night.
nice story
I just went to the local Farmer’s market last Thursday. It is still a great place to buy local and fresh! I think many people seek to buy local and support small local businesses, many of which are struggling to survive despite certain burdens of doing business placed upon them by the powers that be- and I’m not just talking about large corporations or a poor economy.
I recall somewhere along my way in wife that one of my professors remarked, “There is little difference between the country that owns the means of production and the one where the means of production owns (runs) the country.” Until we get campaign finance reform, the corporations will (and are) running the Congress. If this continues long enough, we will lose our democracy – if we haven’s already.
My Econ prof used to say, “Price competition is the essence of the free enterprise system.” – and how much price competition do we have today? – particularly in energy – gasoline. And the more mergers we have, the less price competition we are likely to have. While we may not have monopolies – we have more than sufficient oligopolies.
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