What Exactly is a Free Market?
What do we mean by “free markets” or even “capitalism” for that matter? It’s probably not what you think. For many people, these terms conjure images of Wall Street bankers and multinational corporations. Perhaps they also bring to mind small businesses and scrappy startups. All of those are part of free market capitalism, but they’re only one piece of the puzzle.
To understand the whole picture, you need to start with a single individual.
Start with yourself. You have hopes and dreams, talents and passions. You want to build a life that brings you and the ones you love happiness and excitement even as you achieve independence and stability. Ultimately, you want to build a life with meaning, filled with purpose. Everyone of us wants that for ourselves. And for each one of us, that life looks as unique and diverse as we all are. For all the things we share as a community and a society, there is no getting around the fact that each of us values different things at different times in different ways. One person’s trash is another person’s treasure. No one can know you as well as you know yourself. The same is true for every one of us.
So here you are, a unique individual, out in the world trying to figure out life. Doing it the “free market” way means following three pretty simple rules.
Those are the rules of the free market: so long as you don’t hurt other people or steal their stuff, and so long as you keep your word, you’re free to do whatever you want. You’re free to work for whoever you want. You’re free to love and marry whoever you want. You’re free to worship whoever or whatever you want. You’re free to trade with whoever you want.
And with this freedom, you’re empowered to take on any problem you want to. Free markets destroy the problems in our society because they empower free people to destroy those problems and offer new solutions. Free markets empower everyone, but especially underdogs, upstarts and immigrants to take on the status quo precisely because they don’t need to seek permission first. Free markets don’t respect traditions unless those traditions are maintained peacefully. Free markets are the most radical, revolutionary force for change humanity has ever discovered. And the reason is simple. Free markets are nothing more and nothing less than each of us and all of us having the right to try our best at improving everything for each other.
Even critics of markets will usually concede that competition and innovation improves our lives. Free markets lift people out of poverty by providing incentives—typically income, benefits and social capital—for hard work and service. But as millions of workaholic Millennials fighting burnout will attest, being well-off isn’t the same thing as being well. Sure, free markets gave us Peloton and keto pizza, but do they really make us healthier?
Thank you for subscribing to Free Markets Destroy.You’ll hear from us soon.The answer is unambiguously yes. Free markets have already helped humanity conquer some of our most daunting health and wellness challenges, connecting billions of people with affordable food, clean drinking water, and life-saving medical equipment. They provided us with hours of daily free time for rest, exercise, and socializing. Since the publication of Adam Smith’s The Wealth of Nations in 1776 and the rise of free market capitalism in Europe and America, global life expectancy has gone from 29 years to more than 70.
Take a moment to let that sink in. In 250 years—an eye blink in the grand scheme of human history—the innovation, competition, and choice enabled by free markets gave us 40 extra years of life. That’s a lot of extra candles on a (vegan, sugar-free) birthday cake.
Life expectancy, 1823 to 2015
Life expectancy, 1823 to 2015
Source: Riley (2005), Clio Infra (2015), and UN Population Division (2019)
Note: Shown is period life expectancy at birth, the average number of years a newborn would live if the pattern of mortality in the given yearwere to stay the same throughout its life.
Of course, free markets are nothing more than a few basic rules and protections that help us serve one another. As the free-market advocate Leonard E. Read liked to say, a market is simply “anything that’s peaceful.” The real heroes of any free market system are the individuals and teams who dedicate their lives to solving problems. Individuals like Dr. Maurice Hilleman.
Often called the father of modern vaccines, Hilleman spent the majority of his career working at Bristol-Myers Squibb and Merck, two of the world’s most influential and life-saving pharmaceutical companies. By the time he retired at the age of 65, Hilleman had prevented pandemic flu, created the combined measles-mumps-rubella (MMR) vaccine, and developed the world’s first vaccine against cancer. Today, more than 30 years after retiring from Merck, Hilleman’s work continues to save an estimated eight million lives every year, primarily through the MMR vaccine which is still owned and produced by his former employer, Merck.
Dr. Hilleman was a brilliant scientist, but he was also an iconoclastic rule breaker. In 1963, when his daughter Jeryl Lynn came down with the classic symptoms of mumps, Hilleman swabbed the back of her throat and used the virus sample to create the first prototype mumps vaccine. To this day, the viral strain used to produce the MMR vaccine is called the Jeryl Lynn strain. Many of Dr. Hilleman’s admirers, including Dr. Anthony Fauci, have commented that Hilleman’s idiosyncratic style would be unlikely to produce such amazing results in today’s strict regulatory environment.
Impatient and entrepreneurial, Dr. Hilleman believed that academic institutions and government agencies lacked the tenacity to bring scientific innovations to market, where they would do the most good. That’s why he spent his career working for large corporations with deep pockets and a serious commitment to innovation. Hilleman maintained that scientists had a responsibility to provide a financial return on knowledge gained in the laboratory so that companies like Merck would continue to fund expensive research projects with the potential to transform the world.
And if you’ve never even heard of mumps—well, you have Dr. Hilleman and free markets to thank.
One final note: In addition to corporations like Squibb and Merck, free markets also give us massive endowed charities like the Bill & Melinda Gates Foundation and the Howard Hughes Medical Institute. These organizations, founded by famous capitalists, are doing as much as any private company or government agency to help humanity conquer disease. And they are, in the purest sense, products of the free market, conceived and launched by entrepreneurs looking to solve the problems plaguing humanity.
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Genetic-testing company 23andMe does more than trace your ancestry. The company arms customers with life-saving information about their predisposition to heart disease, cancer, diabetes, and other noncommunicable diseases.
For example, a 23andMe test can tell you if you have a genetic marker that signals a higher than average risk of breast cancer. This information helps 23andMe’s customers make smarter decisions to protect their health, whether that means drinking less, modifying their diet, or taking preventative medicine.
The company also provides opportunities for customers to participate in clinical trials for new life-saving interventions. This accelerates the pace of scientific discovery while helping individuals take control of their own health and wellness journeys. With over $786 million in funding over the last few years, 23andMe is still growing, exploring what is possible in a rapidly evolving medical marketplace. And their story is just one more example of how markets power the innovators who will produce the next great scientific breakthrough.
