Why should the state limit the operation of free markets?
Regulation of the market is necessary to guarantee the formal freedom of its agents. But is the market itself not always-already a regulative body, that is the market is only an order established by agreement upon the laws that govern it. It is a fundamental fallacy to regard as natural that which is intrinsically customary – the market is a construct insofar as that it involves property relations that are the upshot of the commodification of natural resources and the creation of human capital. To accept the notion that the economy is a natural consequence of human being is thus to denigrate its status as a political process and thereby asserting the specific mode of production universal validity. This process of depolitization is the reason for asking why we should regulate the market. Thus the proper question to be examined is whether the state should regulate the allocation of resources by different means than those of the neoliberal ‘free’ market.
The free market in its drive to commodify all resources has partly lost its reason d’être: many property disputes in the west are now conflicts of intellectual property, but does intellectual property in its main characteristic qua non-degrading resource not overturn the logic of scarcity? How then can the market efficiently allocate this resource, the main assumption being that it, the free market, guarantees the efficient allocation of scarce resources? Hence to ensure the most efficient functioning of society the state should limit those sectors of the market that do not correspond with its basic principles. Of course, this normative statement is only valid insofar as efficiency is the aim of our project.
It must be said then that the market, while able to efficiently allocate its self-created commodities, can never actualise a society of active political participation and freedom – even the most heavily regulated market only allows for formal equality. This is due to firstly, the state being very much involved in the proliferation of the property relations that give rise to capitalism and secondly, the very nature of hierarchical distinctions introduced by the market system. Therefore, to achieve a society which abides by the principle of freedom the market must forego and with it its main proponent: the state.