The Free Market
Introduction
There is an important distinction between the market and the economy. The former is essentially the latter out from under the overbearing weight of politics and government. There is an inherent skepticism that comes with unregulated entities such as the free market. Why is that the case? I think people tend to fear things that they do not understand because it is easier to brush aside than to put in the work to educate yourself. When people here free market they have some idea of dark web exchanges and a world that will eventually devolve into chaos; a view born out of ignorance. A free market allows unbridled competition which serves to directly benefit the consumer, so society as a whole would be better off.
Free Exchange
Fundamental to the market is the idea of free exchange. A free exchange is when any two people swap goods or services. If two people come together and agree to make the transaction, then they should be allowed to do so. If both parties were not better off, they would not enter into this agreement. In that sense, a free exchange maximizes the net positive, assuming there are no nefarious actions being taken by either party. The main goal of the entrepreneur is to identify a product or service that allows them to enter in many free exchanges to make a profit. Simply put, the entrepreneur values the capital he is paid more than the product he sells. Bylund says, “the economy is people acting and interacting… it is how we act to satisfy our wants, to make us better off” (p. 15-16, 2022). Every transaction an entrepreneur enters is an exchange where both parties leave better than they came. The free exchange is a valuable utilitarian tool central to the concept of a free market and is imperative for unbridled entrepreneurship. Restrictions suppress innovation and the consumer suffers as a consequence.
Economic Cost
Entrepreneurship can be risky because of how quickly things change. If someone puts a lot of resources and capital into making a product that takes weeks to produce, there is no guarantee that it will be relevant once it is finished. Bylund talks about this phenomenon and how time becomes an important production factor (pp. 8-9, 2016). Any time someone puts resources toward something there is an economic cost that is unseen which is the value those specific resources could have generated had they been used in a different manner. Obviously there is no going back once production has begun, but the best entrepreneurs attempt to minimize this economic cost through careful choices. Bylund sums up the internal dialogue of the entrepreneur with, “We know that actions are directed toward attaining something—some outcome—that the actor considers beneficial. In other words, actions are intended to achieve something the actor personally values” (p. 23, 2022). It is impossible to predict the future but it is possible to prevent over-leveraging in production and remain flexible to be ready to adapt when the time comes.
Disruptive Innovation
Entrepreneurship is laced with uncertainty. It is often those that respond to the unexpected with a positive attitude that find success. One way to harness the unexpected is to think outside of the box in an effort to break into a market with a product that changes how something is done or thought about. This “disruptive innovation” revolutionizes the norm of a given industry and sets the standard for future entrepreneurs to reach or exceed. This is a powerful tool for entrepreneurs to harness, but it is also something they must compete against. Bylund stated, “Business do not only compete with existing businesses, but also compete with businesses that do not exist yet” (p. 45, 2022). The ability for a competitor to crop up and change the game at any moment requires constant vigilance and renewed innovation; both qualities that drive the market forward and manifest as lower prices, more options, and increased advancements to the consumer. In his work “The Seen, the Unseen, and the Unrealized”, Bylund goes so far as to state, “entrepreneurs can, through disruptive products, educate consumers about their own wants, which until that point remained ‘hidden’ and latent—even to themselves.” (p. 11, 2016). This quote shows the power the entrepreneur has to change lives by introducing something so revolutionary that consumers didn’t even realize what they were missing out on. The free market encourages this kind of innovation and provides the opportunity for brilliance through unhindered competition.
Conclusion
The free market is like a playground for entrepreneurs. Having the ability to compete for business allows the truly best product to win out, which only serves to increase quality overall. Innovation runs rampant in a free market and individuals are free to enter any exchange they so please which makes society better as a whole. Although we may never see a pure free market, I think a lot of the ideas and reasons behind it can be implemented to loosen restrictions and increase quality of life for consumers. Doing away with things like tariffs and embargoes would allow people to trade more freely with other countries and also may open doors due to freed up resources from domestic companies. It would be interesting to see the impact just a few free market policies on our current economy.
References
Bylund, P. L. (2016). Chapter 1: The How of the Market. In Seen, the unseen, and the unrealized: How regulations affect our everyday lives (pp. 1–14). essay, Lexington Books.
Bylund, P. L. (2022). Chapter 1: What Economics Is. In How to Think About the Economy: A Primer (pp. 15–20). essay, Mises Institute.
Bylund, P. L. (2022). Chapter 2: Economic Theory. In How to Think About the Economy: A Primer (pp. 21–26). essay, Mises Institute.
Bylund, P. L. (2022). Chapter 4: A Process, Not a Factory. In How to Think About the Economy: A Primer (pp. 41–50). essay, Mises Institute.
I thoroughly enjoyed how the writer opened their essay by explaining how many people may misunderstand the free market or not educate themselves. They seemed to be educated/ have a good understanding as to why people "brush aside" things such as the free market and choose not to learn about it. They then go into the act of free exchange, which is a significant factor in the market.
This is the understanding of Professor Bylund's point of how both parties benefit from free exchange. They should leave better off than how they came, and the writer marks a great outline of this and describes how this works and sometimes does not.
Moving into the economic cost section of the essay is wonderfully put together in the sense of acknowledgment of how it works and runs.
I enjoyed how he described this section in particular because it gives an excellent overview of how things can change and how production is such a huge factor that ties into the economy. Economic cost significantly affects how the economy runs and grows daily. It can affect the entrepreneur particularly or in a not-so-good way. What we have to remember, and the writer pointed out, is that economics is about making a choice. It took me so long to understand that or even know it. However, I have realized that it is and can be as simple as making a choice.
What I took from this section of the writing is a better understanding of why the entrepreneur is always working and having to produce a product or service that will be desired now and in the future. That is something I have come to learn recently, and I can't get it out of my head; however, I love how my peers have a great understanding of it and talk about it as if they are economists. I couldn't agree more with what my peer states in this section of the writing as he talks about the role of the entrepreneur and how everything comes together within disruptive innovation.
In conclusion, I agree entirely and love how the essay was written and described more thoroughly in how the writer grasps the concepts we read about in the chapters from professor Bylunds book. I enjoy learning about the economy and how entrepreneurs fit into the system. Primarily how they work and constantly have to be innovative to stay in the light of the market to succeed in whatever they are trying to produce.
I had a good time reading your essay. You made a lot of points, and a couple stood out to me. I would have liked to see more summarizing, but then again, Bylund does not give much after a few sentences. I mostly agree with your idea that a freer market is better than the current system.
When you mentioned this, I could not help but think about all the times a freer market has actively weakened consumer choice and power. The development of anti-trust laws was based on the rise of price fixing. We have seen compact discs, dynamic random-access memory (DRAM), capacitors, perfume, liquid crystal displays (LCDs), air cargo, and, in more recent years, even tuna all fall victim to profit seeking price fixing. Do I even need to mention the medical prescription drug market?
The impacts can be far-reaching, affecting small businesses, consumer choice, and, depending on the market sector, even the price of goods and services. There are some proponents for price-fixing, though; some believe it can ensure a stable market for both consumers and producers and that any short-term benefit of increased price competition will force some producers out of the market. This can then cause product shortages and raise prices. To that, I would say when do we, if ever, see a company fix prices in the name of the consumer? All of the examples I gave were moments where the fixing was done in the name of profits.
This is why I mostly agree with this conclusion. I find it more measured than the early statement at the beginning of the essay. I mostly agree because the idea of a freer market would allow it to respond to the changing world quicker. The amount of legislation in place can sometimes get in the way of what the basic market is: a voluntary exchange for goods valued by all parties involved. Being able to freely trade with someone from the other side of the world without a tariff and/or embargo sounds like it gives consumers and smaller businesses more power. But I can't help but think of the unregulated wild west being treated as...well, the wild west. Think about the power someone may have with financial, product, and logistical backing when entering a market that does not even have a competitor. In a "free" market, they could effectively rob the consumers of their money by taking away any potential choice before it even arrives. Some sense of a freer market seems logically more beneficial, but within that same logic, I can see that in that complete freedom there is more opportunity for chaos.
I agree that when it comes to the free market, it is not as scary as one may take it. Each party involved in the free market transaction has the right the decline or accept the offer. Not so scary after all.
Here I totally agree. If the transaction benefits both parties then it would be smart for both parties to accept, but they are not obliged to accept if they wish not to. I like how you worded that when it comes to an entrepreneur, their main goal is to create a product to put them in the free market realm. I have not thought about it like that before. One thing I would have to disagree on is when you said that every transaction an entrepreneur enters leaves off better than before. That is not always the case. Sure more often then not, the transaction is beneficial for both parties but there are those when the agreed transaction hurts both parties. It is very true that not all products an entrepreneur creates will end in a profit. Usually more often than not, the first go -around ends in loss. But that is the beauty of the game. Trial and error, learning what you did wrong to make it better the next time. However, I would have to disagree when u said there is no going back once production has started. There is no rule/law saying once produced you cannot go back. That is what makes being an entrepreneur so unique. There is no written rule on how to go about your own business. If you do not like how production is going, go back and redo it. As you stated, a huge part of the process is being flexible and adapt when things change. In your Disruptive Innovation I agree with everything you talked about. Part of the game is thinking a few steps ahead and thinking about what businesses might come into play instead of just focusing on the companies that are currently alive. Thinking of a product that can revolutionize a generation does not just start with the generation you are currently living in but with the ones that follow.
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