As our masthead declares, the Minnesota Free Market Institute is dedicated to preservation of and education about free markets. We do so not because we have a partisan political ax to grind, but because, quite simply, history has proven free market capitalism, with all its flaws, is undeniably the most effective form of organization for providing the greatest good for the greatest number.
The collapse of the Soviet economic system, the largest controlled economy in history, is a dramatic example of the implosion of a centrally planned economy; the recognition in former Eastern Bloc countries and even in communist China that free market mechanisms are essential to growing their economies (even if the overall economy is planned and controlled) is another indicator of the power of free market capitalism, even when handicapped by government interference.
Threats to American Prosperity
As we wind down the first decade of the 21st century, American seems to be forgetting the lessons of recent history. Our government has expanded its role in the economy on an unprecedented scale. More than ever, it’s important that all of us understand the vital role economic freedom plays, not just in the prosperity of the country, but in preservation of our personal freedoms.
Economic Freedom and Personal Freedom are inseparable.
Economic freedom can exist only when individuals are free to choose how they will use their time and resources; if one is not free to use one’s time and resources as one chooses, reaping the rewards of wise choices, then the idea of personal freedom and the pursuit of happiness becomes meaningless.
Government’s Legitimate Role in a Free Market Economy
Free market capitalism, as we advocate for it, is not, however, without a role for government. Government’s role is to preserve and protect the ability of individuals to voluntarily engage in private contracts. It can legitimately do this in two ways.
First, government is responsible for enforcement of contracts, which it does by providing a civil court system for resolving individual disputes and a criminal court system for prosecuting those who would use force or fraud to make a contract. These proceedings are, however, subject to the rule of law. One party making a “bad deal” doesn’t necessarily require government to step in and invalidate a contract. Government oversteps its authority when it stops being an impartial arbitrator to contract disputes and manipulates the legal system to obtain a specific outcome.
A second role for government in a free market system is regulation and oversight that increases the probability contracts will be honored. This includes legislation that requires transparency and clarity in contractual agreements. Truth in lending requirements, for example, which require lenders to clearly state the terms and conditions of a loan, which in turn obligates borrowers to understand the terms of their loans, increases the likelihood that a contract will be honored. However, government oversteps its authority when it mandates specific terms of a voluntary contract s it does when it requires by law that insurance companies must cover specific conditions as a condition of doing business.
A Free Market is Essential for Prosperity and Personal Freedom
Numerous studies, not to mention common sense observation of history, leads to clear and unambiguous conclusion that economic freed is a direct and necessary condition for economic growth and prosperity an increased quality of life.
“When states encourage greater economic freedom, one is not surprised to find higher personal incomes, less unemployment, faster economic growth and greater entrepreneurship and innovation,” says Pat Anderson, president of the Minnesota Free Market Institute. “But often overlooked is the positive effect of economic freedom reducing poverty and inequality, creating a cleaner environment and expanding democracy.”
Thank you for visiting the Minnesota Free Market Institute website. Below are some suggested locations on our site that deal specifically with free market issues and some suggested readings on our website. Feel free to leave comments or direct questions to our staff. For those of you belonging to civic groups, The Minnesota Free Market Institute is happy to supply speakers on the free market and application of free market principles to the issues of the day.