{"id":104095,"date":"2026-01-02T10:16:37","date_gmt":"2026-01-02T10:16:37","guid":{"rendered":"https:\/\/neclink.com\/index.php\/2026\/01\/02\/there-are-no-free-markets\/"},"modified":"2026-01-02T10:16:37","modified_gmt":"2026-01-02T10:16:37","slug":"there-are-no-free-markets","status":"publish","type":"post","link":"https:\/\/neclink.com\/index.php\/2026\/01\/02\/there-are-no-free-markets\/","title":{"rendered":"There Are No Free Markets"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div>\n<p>Yves here. We\u2019ve often discussed the fact that \u201cfree markets\u201d is a myth, including devoting a chapter of ECONNED to the topic: \u201cHow \u2018Free Markets\u2019 Was Sold.\u201d Richard Murphy provides a full bore take-down below. He includes the way market operations are failing in late-stage capitalism and some suggestions as to how to replace neoliberal ideology and systems.<\/p>\n<p><em><strong>By Richard Murphy, Emeritus Professor of Accounting Practice at Sheffield University Management School and a director of Tax Research LLP. Originally published at <a href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2026\/01\/01\/there-are-no-free-markets\/\" target=\"_blank\" rel=\"nofollow\">Funding the Future<\/a><\/strong><\/em><\/p>\n<p class=\"p2\">Markets are not natural, spontaneous or free. They are legal, institutional and political creations of the state. Without law, <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/M\/#money\" target=\"_blank\" rel=\"noopener nofollow\">money<\/a>, regulation, wages, <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/A\/#accounting-standards\" target=\"_blank\" rel=\"noopener nofollow\">accounting standards<\/a> and trust, markets collapse into monopoly, coercion and extraction.<\/p>\n<p class=\"p2\">In this New Year\u2019s Day video, I explain why the <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/N\/#neoliberal\" target=\"_blank\" rel=\"noopener nofollow\">neoliberal<\/a> myth of \u201cfree markets\u201d is not just wrong, but actively destructive \u2014 and why rebuilding the state, rethinking <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/C\/#capital\" target=\"_blank\" rel=\"noopener nofollow\">capital<\/a> and restoring democratic accountability must define our economic direction for 2026.<\/p>\n<p class=\"p2\">Markets are tools. It\u2019s up to society to set their purpose.<\/p>\n<p><iframe width=\"560\" height=\"315\" src=\"https:\/\/www.youtube-nocookie.com\/embed\/vAkkZXfxb9Y?si=ALgAPIyW323vZAn_\" title=\"YouTube video player\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen=\"\"><\/iframe><\/p>\n<p>This is the audio version:<\/p>\n<p><iframe title=\"There are no free markets\" src=\"https:\/\/www.podbean.com\/player-v2\/?i=724c8-1a06e14-pb&amp;from=pb6admin&amp;share=1&amp;download=1&amp;rtl=0&amp;fonts=Arial&amp;skin=f6f6f6&amp;font-color=auto&amp;logo_link=episode_page&amp;btn-skin=c73a3a\" width=\"100%\" height=\"150\" scrolling=\"no\" data-name=\"pb-iframe-player\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>This is the transcript:<\/p>\n<hr\/>\n<p>It\u2019s New Year\u2019s Day, so happy New Year, and let\u2019s talk about something that is going to be a recurring \u200a theme on this channel for 2026. That is that \u200amarkets are not free.<\/p>\n<p>The claim that \u200a markets are free is part of the neoliberal myth, and it\u2019s as antisocial as everything else that culture puts forward.<\/p>\n<p>There is no truth to this claim, and that\u2019s what this video is going to be about. But what is more, the belief that markets are somehow free and deliver better outcomes for society than government ever can is precisely what is destroying our economy. That\u2019s the issue that we need to discuss, not just today, but for the whole of 2026, because until we get our heads around this idea, we can\u2019t get our heads around what might replace this myth.<\/p>\n<p>The core claim is that markets arise naturally and are the best form of allocation of resources within society. That claim by antisocial neoliberal thinkers is just wrong. There is no evidence at all that \u200amarkets in the form that we now have them arise naturally. They \u200a do not, in fact, exist independently of the state. Markets are constructed, maintained, and enforced by a government and without the state, there are no markets of the sort that we now see. There would only be power, coercion, and extraction.<\/p>\n<p>Markets are legal constructs, and that has to be true because every market transaction depends on the existence of law. \u200aProperty rights must exist, and the law defines them, and who\u2019s behind the law? Government is.<\/p>\n<p>Contracts must be enforceable, and who defines contract law? Government does.<\/p>\n<p>Disputes must be resolved, and what is the mechanism for doing that? Law courts, and who provides them, the government does.<\/p>\n<p>Fraud must be punished because if we are to have people operate on a level playing field, which is what fair and efficient markets require, then fraudsters must be eliminated from the game, and none of that happens spontaneously because fraud itself must be identified and tackled by the government.<\/p>\n<p>In other words, it\u2019s only the existence of the state that permits markets to exist. The claim otherwise is just utterly untrue.<\/p>\n<p>What is more, the state creates the money that markets are dependent upon because markets exchange goods and services using a unit of account. What is the unit of account? \u200aIn the UK, it\u2019s the pound. Who creates the pound? The government does.<\/p>\n<p>In the USA, it\u2019s the dollar. Who creates the US dollar? The government does, and we \u200a could keep on going with that list going right around the world.<\/p>\n<p>The point is that if prices must be denominated and debts must be settled and <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/T\/#tax\" target=\"_blank\" rel=\"noopener nofollow\">tax<\/a> must be paid, \u200athey are all done using the <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/C\/#currency\" target=\"_blank\" rel=\"noopener nofollow\">currency<\/a> that the government created, and this is an operation of the state. \u200a Markets do not create money; markets use money, and it\u2019s money that creates the possibility of markets as we know them, and therefore they are utterly dependent for their existence upon the government.<\/p>\n<p>What is more, markets require participation, and that requires that there be institutions, all of which exist as a consequence of government action. Let\u2019s look at a few examples.<\/p>\n<p>Companies only exist because governments let them be incorporated by law in their state, defining what rights they have and what membership they can be constituted by and so on.<\/p>\n<p>Banks are regulated by states, and that\u2019s essential because otherwise they would not be trusted and payments would not clear.<\/p>\n<p>So trust in banks and regulation and <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/C\/#company\" target=\"_blank\" rel=\"noopener nofollow\">company<\/a> law and deposit guarantees and all the other things that go around this require the existence of the state. Remove regulation, and people will stop trusting markets.<\/p>\n<p>And markets collapse without competition rules because, \u200awithout competition rules, a monopoly becomes the normal form of supply by private companies. \u200aMonopoly represents the control of the supply of a particular type of product by a single company or one or two companies, when it\u2019s called <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/O\/#oligopoly\" target=\"_blank\" rel=\"noopener nofollow\">oligopoly<\/a>, \u200a but the difference is immaterial for our purposes. The point is that in those situations, dominance destroys choice, power replaces price signals, and innovation is suppressed, and it\u2019s only the state that can actually enforce competition through regulation, which is the supposed virtue of free markets.<\/p>\n<p>Markets themselves do the exact opposite of that. Even \u200aAdam Smith knew this in 1776 when he wrote the first ever economics book in the world called The Wealth of Nations, where he \u200a pointed out the threat from monopoly. So, without regulation, markets cease to be markets at all, and yet the free marketeers claim otherwise; they talk nonsense.<\/p>\n<p>There\u2019s another participant in markets who the free marketeers entirely ignore and yet who are absolutely essential, and that is people who can afford to buy the products that are made available for sale. A market does, of course, require buyers as well as sellers. Tell that to a neoliberal, and they\u2019ll scratch their head in puzzlement. \u201d Who are these people?\u201d, they will say. They are employees, of course, in large numbers of cases, and their ability to participate in markets as buyers, which is critical to the well-being of the market as a whole, is entirely dependent upon there being \u200afair wages, job security, predictable incomes, enforceable rights, trade union rights, even. These \u200a are not gifts from markets; they come from labour, law, collective bargaining and regulation. And again, without them, markets collapse, and demand fails, and that means there is no <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/P\/#profit\" target=\"_blank\" rel=\"noopener nofollow\">profit<\/a> motive of consequence, and yet the neoliberals ignore this.<\/p>\n<p>They also ignore the fact that regulation is the basis of the trust on which the sale of so many products depends. For example, why would you go out and buy a coffee from anyone but someone you personally knew, unless there were health and safety regulations to ensure that the product you bought was safe? \u200aYou only trust markets because products are regulated, standards are enforced, and risks are reduced. \u200a In other words, health and safety regulation \u2013 the thing that perhaps is most hated most of all by neoliberals- is in fact the thing that makes most of exchange possible.<\/p>\n<p>There\u2019s something else that markets require. This is a long list, but it\u2019s an important list, and that is that financial markets need accounting regulation because capital allocation within financial markets depends on information. In other words, if somebody\u2019s going to buy a share, they need to know why they want to buy that share, and they need reliable information to do so. That is what accountants and auditors are meant to do, and it is \u200acompany law that defines what data the users of capital markets should get to make their decisions.<\/p>\n<p>Accounting regulation \u200a ensures that the results of different companies are comparable so decisions can be made. It defines profits. It defines what an <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/A\/#asset\" target=\"_blank\" rel=\"noopener nofollow\">asset<\/a> is. It defines a <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/L\/#liability\" target=\"_blank\" rel=\"noopener nofollow\">liability<\/a>. It makes sure that risks are disclosed. This requires accounting standards, audit, and enforcement, and without that regulation, financial markets allocate capital badly, or not at all.<\/p>\n<p>We are, in other words, looking at a situation where the great neoliberal lie is completely exposed by reality.<\/p>\n<p><a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/N\/#neoliberalism\" target=\"_blank\" rel=\"noopener nofollow\">Neoliberalism<\/a> claims regulation undermines markets, but the truth is the opposite. \u200aMarkets cannot exist without regulation; they fail when regulation is removed.<\/p>\n<p>What we \u200a are seeing now is not overregulation; it is a regulatory collapse that is threatening our future well-being, and our governments are delivering that regulatory collapse under pressure from the monopoly-oriented companies like \u200athe big tech firms that are demanding it so they can exploit us.<\/p>\n<p>Everything \u200a has gone wrong. Today\u2019s markets are failing because monopolies dominate; information is hidden; tax is not paid by far too many companies \u2013 \u200a40% of small companies in the UK do not pay their <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/C\/#corporation-tax\" target=\"_blank\" rel=\"noopener nofollow\">corporation tax<\/a> liabilities \u2013 \u200a and regulators are weak and captured. These facts in combination destroy the level playing field on which fair competition takes place. In fact, competition becomes impossible, and our markets are ceasing to work as a result.<\/p>\n<p>This is the consequence of many of the failures of the conditions that I have already noted. For example, \u200awages have stagnated, job security has declined, and too many people cannot participate in markets \u200a now because they do not get the opportunity to do so, because government is refusing to support their employment.<\/p>\n<p>A market without participants is not free; it is empty. \u200aLate neoliberal capitalism is collapsing because it has excluded the very people on whom it depends, \u200a and <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/N\/#nowhere\" target=\"_blank\" rel=\"noopener nofollow\">nowhere<\/a> is this more apparent than with regard to labour.<\/p>\n<p>This is self-destruction, not state failure, that we are seeing. Let\u2019s be clear, markets have not been undermined by the state; they have been destroyed by a narrative that denies the state\u2019s essential role in the creation of markets. Neoliberalism has eaten the foundations of the system it claims to defend.<\/p>\n<p>What this means is that we require a broader understanding of capital. Markets claim that they exist to serve the interests of <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/F\/#financial-capital\" target=\"_blank\" rel=\"noopener nofollow\">financial capital<\/a>, and the entire accounting systems that we have in our economies now are designed for that sole purpose.<\/p>\n<p>The truth is, financial capital is a derivative form of capital. In other words, it has no value in itself; it only exists because there are real forms of capital which actually sustain our economy, and they are<\/p>\n<ul>\n<li>productive capital, the things that we use to make stuff;<\/li>\n<li><a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/H\/#human-capital\" target=\"_blank\" rel=\"noopener nofollow\">human capital<\/a>, the investment in our knowledge and our well-being and our health and our care;<\/li>\n<li><a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/S\/#social-capital\" target=\"_blank\" rel=\"noopener nofollow\">social capital<\/a>, the institutions of state that ensure that markets can be regulated for all the reasons I\u2019ve noted in this video, plus, of course,<\/li>\n<li><a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/E\/#environmental-capital\" target=\"_blank\" rel=\"noopener nofollow\">environmental capital<\/a>.<\/li>\n<\/ul>\n<p>We need to look after this world that we live upon.<\/p>\n<p>Ignore all of these, and we guarantee long-term failure, and yet our antisocial neoliberal system of <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/F\/#financial-capitalism\" target=\"_blank\" rel=\"noopener nofollow\">financial capitalism<\/a>ignores almost altogether the value of our productive human, social and environmental capital. So, what we need now is not deregulation; what we need is regeneration, strong institutions, effective regulation, and empowered participants in markets, which means you and me.<\/p>\n<p>Markets must be redesigned to serve society and not dominate it.<\/p>\n<p>This is the goal for 2026 and what I will be talking about. This requires a politics of care: care for people, care for institutions, care for the environment, care for the future. Markets are just tools. The state sets their purpose. We need to reset that purpose, and <a class=\"glossary\" title=\"Defined in glossary\" role=\"link\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/glossary\/D\/#democracy\" target=\"_blank\" rel=\"noopener nofollow\">democracy<\/a> provides legitimacy.<\/p>\n<p>There are no free markets. There never have been. Markets only exist because states make them possible, and they fail when regulation does. So, in that case, if we want markets that work, we must rebuild the state, rethink capital, and restore democratic accountability. That is the direction of travel we need for 2026, and that\u2019s why I\u2019ve talked about it on this New Year\u2019s Day.<\/p>\n<p>Happy New Year. It\u2019s going to be a difficult 2026, but one that is going to be worth talking through because we are going to get a better direction of travel if we understand the concepts I\u2019m talking about here.<\/p>\n<div class=\"printfriendly pf-alignleft\"><a href=\"#\" rel=\"nofollow\" onclick=\"window.print(); return false;\" title=\"Printer Friendly, PDF &amp; Email\"><img decoding=\"async\" style=\"border:none;-webkit-box-shadow:none; -moz-box-shadow: none; box-shadow:none; padding:0; margin:0\" src=\"https:\/\/cdn.printfriendly.com\/buttons\/print-button-gray.png\" alt=\"Print Friendly, PDF &amp; Email\"\/><\/a><\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.nakedcapitalism.com\/2026\/01\/there-are-no-free-markets.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Yves here. We\u2019ve often discussed the fact that \u201cfree markets\u201d is a myth, including devoting a chapter of ECONNED to the topic: \u201cHow \u2018Free Markets\u2019<\/p>\n","protected":false},"author":1,"featured_media":104096,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[153,183],"tags":[],"class_list":["post-104095","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","category-spotlight"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/posts\/104095","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/comments?post=104095"}],"version-history":[{"count":0,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/posts\/104095\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/media\/104096"}],"wp:attachment":[{"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/media?parent=104095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/categories?post=104095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/neclink.com\/index.php\/wp-json\/wp\/v2\/tags?post=104095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}