Free Markets? Natural Order?

[Donnachaidh]

http://dissidentvoice.org/2011/06/the-illusion-of-free-markets-punishment-and-the-myth-of-natural-order/

The University of Chicago has long been the center of opposition to government economic intervention and support for the claim that free markets best serve general interests. It is a surprise to find Bernard E. Harcourt—professor of law and political science at the University of Chicago—challenging neo-conservative market extremism.

In The Illusion of Free Markets: Punishment and the Myth of Natural Order, Harcourt holds that markets will be regulated by governments or by the rich on behalf of themselves. Few markets are actually unregulated. He goes on to make the case that markets directed by dominant players in their private interest result not in greater freedom but in heavier repression.

Harcourt begins by examining the Chicago Board of Trade and the New York Stock Exchange. These exchanges are widely viewed as epitomes of the free market, but they are actually self-regulated private monopolies protected by legislation. Their rules are made by member firms and policed by internal committees that determine the methods and time of trading as well as who may participate. As should be expected, the rules favor those who make them.

The Chicago Board of Trade forbids outsiders from engaging in after-hours trading. However, the insiders who control the Board, when they agree among themselves, can modify the rules, giving themselves opportunities for exceptionally profitable trades. The Chicago Board of Trade and the New York Stock Exchange allow brokerage firms to restrict retail buyers (outsiders) from reselling for periods of thirty to ninety days. “But the same brokerage firms may allow large institutions to dump their stock in the after-market at any time.” In New York, “members of the stock exchange may get together and fix the commission rates on stock transactions of less than $500,000,” but they can “freely negotiate commissions for larger stock transactions”—which they dominate.

More at the link --