WEBVTT

NOTE 12.12. Conclusion: The Free Market and Coercion

1
00:00:00.000 --> 00:00:07.760
12. Conclusion. The Free Market and Coercion.

2
00:00:07.760 --> 00:00:14.460
We have thus concluded our analysis of voluntary and free action and its consequences in the

3
00:00:14.460 --> 00:00:22.960
free market, and of violent and coercive action and its consequences in economic intervention.

4
00:00:22.960 --> 00:00:28.680
Superficially it looks to many people as if the free market is a chaotic and anarchic

5
00:00:28.680 --> 00:00:36.480
Place, while government intervention imposes order and community values upon this anarchy.

6
00:00:36.480 --> 00:00:43.160
Actually, praxeology, economics, shows us that the truth is quite the reverse.

7
00:00:43.160 --> 00:00:50.400
We may divide our analysis into the direct or palpable effects and the indirect, hidden

8
00:00:50.400 --> 00:00:53.080
effects of the two principles.

9
00:00:53.080 --> 00:01:00.080
Indirectly, voluntary action, free exchange, leads to the mutual benefit of both parties

10
00:01:00.400 --> 00:01:07.400
to the exchange. Indirectly, as our investigations have shown, the network of these free exchanges

11
00:01:08.360 --> 00:01:15.360
in society, known as the free market, creates a delicate and even awe-inspiring mechanism

12
00:01:15.740 --> 00:01:22.740
of harmony, adjustment and precision in allocating productive resources, deciding upon products

13
00:01:23.080 --> 00:01:34.080
and, gently but swiftly, guiding the economic system toward the greatest possible satisfaction of the desires of all the consumers.

14
00:01:34.080 --> 00:01:43.080
In short, not only does the free market directly benefit all parties and leave them free and uncoerced,

15
00:01:43.080 --> 00:01:48.080
it also creates a mighty and efficient instrument of social order.

16
00:01:48.080 --> 00:01:57.120
Proudhon, indeed, wrote better than he knew when he called liberty the mother, not the daughter, of order.

17
00:01:57.120 --> 00:02:01.920
On the other hand, coercion has diametrically opposite features.

18
00:02:01.920 --> 00:02:07.520
Directly, coercion benefits one party only at the expense of others.

19
00:02:07.520 --> 00:02:15.440
Coerced exchange is a system of exploitation of man by man, in contrast to the free market,

20
00:02:15.440 --> 00:02:21.920
which is a system of cooperative exchanges in the exploitation of nature alone.

21
00:02:21.920 --> 00:02:28.080
And not only does coerced exchange mean that some live at the expense of others,

22
00:02:28.080 --> 00:02:34.480
but indirectly, as we have just observed, coercion leads only to further problems.

23
00:02:34.480 --> 00:02:40.960
It is inefficient and chaotic, it cripples production, and it leads to cumulative and

24
00:02:40.960 --> 00:02:48.520
and Unforeseen Difficulties. Seemingly orderly, coercion is not only exploitative, it is also

25
00:02:48.520 --> 00:02:57.240
profoundly disorderly. The major function of praxeology, of economics, is to bring to

26
00:02:57.240 --> 00:03:03.400
the world the knowledge of these indirect, these hidden consequences of the different

27
00:03:03.400 --> 00:03:10.760
forms of human action. The hidden order, harmony and efficiency of the voluntary free market

28
00:03:10.760 --> 00:03:18.440
The hidden disorder, conflict and gross inefficiency of coercion and intervention, these are the

29
00:03:18.440 --> 00:03:25.660
great truths that economic science through deductive analysis from self-evident axioms

30
00:03:25.660 --> 00:03:28.040
reveals to us.

31
00:03:28.040 --> 00:03:35.000
Praxeology cannot by itself pass ethical judgment or make policy decisions.

32
00:03:35.000 --> 00:04:05.000
The Theory of Money and Credit

33
00:04:05.000 --> 00:04:11.680
Praxeology retires from the scene, and it is up to the citizen, the ethicist, to choose

34
00:04:11.680 --> 00:04:16.400
his political course according to the values that he holds dear.