‘Free Markets’: Public Good or Private Greed?

The fundamental question addressed in this paper is this: does the rise of free market orthodoxy indicate the triumph of ‘efficiency’ at the expense of ‘equity’? Or does it also, and possibly even primarily, reflect an attempt to capitalise on the distributive opportunities that have been created by the deteriorating macroeconomic environment and the conservative political climate of the late ‘80s and ‘90s? And if the goal of allocative efficiency is genuine, are the chosen strategies hostage to a tunnel vision? The demand for ‘free markets’ has well defined ideological roots, most notably in the labour market. Ideological commitment can lead its bearers astray, and so it is possible that the zealots of ‘free markets’ have been blinded to the destructive aspects of untrammelled markets. Yet, radical political changes and poor macroeconomic conditions place some socio-economic groups in a strategic position which sharply increases their prospects of winning redistribution battles. With a sufficiently short time horizon, a strategy focused on redistribution (zero sum games) may indeed be more profitable than a strategy focused on genuine augmentation of efficiency (positive sum games). Distributive motives, therefore, can play an important role in fuelling the demands for ‘de-regulation’ of the labour market and removal of all restriction on short-term mobility of capital between countries. The rhetoric may appeal to wide communal support in the name of ‘efficiency’ (often referred to as a ‘win-win’ outcome), but the driving force would in this case be the lure of achieving a favourable redistribution. This paper argues that distributive motives must be recognised as serious contenders for the role of major determinant of the zeal for ‘de-regulation’ of the labour and capital markets. In addition, this paper challenges the two-pronged propositions that (a) untrammelled (free) markets are efficient in the standard sense of maximising the