The "free market" is an economic concept. As such it has no physical reality. It is not a thing, like the New York Stock Exchange. Neither is it a place, like Wall Street. The "free market" is a mode of human action in which free individuals mutually and voluntarily exchange what they own and control in a manner of their own choosing, without supervision, interference or intervention from a third party.
Consider the arguments made against capitalism in Section C10 of something called "An Anarchist FAQ." The author(s) deride free market capitalism based on aggregate, economic statistics which supposedly describe the historical outcomes of proprietary societies:
Looking at the history of capitalism, it appears that social-democratic capitalism, with strong unions and a welfare state, produces not only more growth but also more equitable growth (as one expert notes, "[i]f the 'welfare state' were abolished and taxes reduced accordingly, society would become a great deal more unequal." [John Hills, "Inequality and the State," p. 195]). Movements to more laissez-faire capitalism has [sic] resulted not only in lower growth but also growth which accumulates in fewer hands (which makes sense considering the basic anarchist insight that a free exchange benefits the stronger of the two parties)."There are three kinds of lies: lies, damned lies and statistics." I am always amused by critics of the free market who are eager to ground their arguments in the fog of history and statistics. Economic analysts on cable TV debate historical economic statistical data nightly, literally for hours, and in the end they must always agree to disagree because economics is not physics. Economic theory must be proved or disproved by ratiocination, not empirical data.
For example, I've defined the free market as follows:
The process by which free individuals in a proprietary society, in the manner of their own choosing, mutually and voluntarily exchange what they own and control without supervision, interference or intervention from a third party.I challenge critics of the free market to demonstrate, by means of statistical analysis, that the process described above must somehow result in unsatisfactory outcomes for particular individual participants in the process, when satisfaction is considered from the point of view of the individual participants themselves.
Now expand and extend this trading experience to an entire proprietary society of individuals, millions of A's and B's mutually and voluntarily exchanging property. Isn't it true that all individual traders in this scenario must benefit? How could the critic of the free market use statistics to "prove" that each individual trader did not benefit, or that some group or class of traders did not benefit, or that some class of traders exploited another class of traders and thus benefited at the other's expense?
The truth is the critic can prove nothing...unless he makes one or both of the following assumptions. First, he analyzes each trade from his own point of view rather than from the point of view of each trader. Second, he assumes the trade was not really mutual and voluntary. Honest readers will notice that the anarchist response above makes both assumptions.
First, the anarchist argument uses value-laden and nebulous concepts such as "growth" and "equitable growth" as arbitrary benchmarks of analysis and, second, it relies on something called the "basic anarchist insight" to prove "that a free exchange benefits the stronger of the two parties," which is an obvious contradiction in terms. How could an exchange be "free" on the one hand, i.e., mutual and voluntary, and on the other hand be coerced, i.e., not mutual and voluntary, by the "stronger" of two individuals making the exchange?
Psychobabble and sloppy logic is not economic analysis. A market is either free or not free. An exchange is either mutual and voluntary or coerced. Logic won't allow us to have it both ways. In a free market both individuals benefit. End of story.
This is where, as they say, the rubber meets the road in discussions of private property vs. public property, of capitalism vs. socialism. Capitalists concern themselves with the circumstances of the trade. They insist that all property traded be private. They insist that all trades be mutual and voluntary. Socialists concern themselves with the outcomes of trades. They insist that property be either collectively owned or collectively controlled. They insist that all trades be supervised and coerced by the rules and regulations of some social authority.
Obviously, by means of society individuals can organize themselves into any trading or economic system they can mutually agree upon. But, as Ludwig von Mises and other economists deftly point out, each of these economic systems produces differing results and consequences. Aggregate individual satisfaction in these societies is not independent of the means by which trades are consummated, and production of goods and services in these societies is not independent of the means by which these goods and services are distributed.
In a capitalist system the young, the old, the poor and the infirm are provided for by insurance and discriminating friends and family, along with religious and other private fraternal organizations and associations. In a socialist system, all individuals, by virtue of their being human, are provided life's necessities as determined by availability and the will of the state authority.
There is no such thing as a free market socialist. That would be like trying to make a silk purse out of a sow's ear...