The unpredictability of free market

We say that the market cannot be predicted, but at the same time, we say that the market can provide education, health care, and even security. Is that even consistent? That is what this article is about.

Anarcho-capitalists and libertarians claim that the market is not predictable, which can be confusing to many people. At the same time, they claim that the market will solve a lot of problems (not all of them), including security (as now we have the police, on the free market there could be security agencies), health care, education, roads and so on.

We say that the market cannot be predicted, but at the same time, we say that the market can provide education, health care, and even security. Is that even consistent? That is what this article is about.

For a better understanding, it is good to ask: What is the market? The market is nothing more than that people want something and someone else gives it to them for money or other means of exchange (even barter). That is all.

So the market is shaped according to what people want. And thus, we can predict that things, that people have always demanded (and probably also will always demand), will exist on the free market. People always want security, education, health care... they always have the need to communicate and so on.

Thus... “What” can be predicted, but “How” cannot. A hundred years ago, I could have predicted that people will communicate somehow in the 21st century. And I could have had a number of different “How” ideas. But even my greatest fantasy would not be as good as reality.

A hundred years ago, it would be very difficult to estimate that mobile phones would exist (including video calls) and that we would have Internet together with communication applications such as WhatsApp, Telegram or Signal. And social networks. And blogs... and Wikipedia. And yet, what we have today has been created by competition. Different people competing in developing the best, the fastest, the safest way to communicate have brought us where we are today.

A hundred years is quite a long time. However, the market cannot be predicted even for a shorter period of time. When I was young, I did not like the fact that television broadcasts different things at different times. When I wanted to see a film that was broadcasted on Friday night, I had no choice but to wait for it. Back then, I imagined that television could display a list of films available that day, and I would just pick one of them and watch.

My prediction did not come true. Televisions still broadcast what they want. But I do not care. Youtube, Netflix, various other streaming services operate roughly as I imagined it back then. I would even say that the reality is far better than my vision.

However, one cannot predict the market as a whole. One cannot often even predict himself. What will I be like the next year? What will I desire? What will I need? What if I suddenly get excited about something and I will demand products related to it?

In fact, the market is just a certain algorithm. Whatever are the outputs of this algorithm, they are always just a reflection of what people want. And what they want is constantly changing. The market is dynamic because people’s desires and needs are also dynamic.

If the market was predictable, it could be planned centrally.

That is all for the unpredictability of the market. We, libertarians, can have many ideas on how the market would deal with different things. Yet, the reality will be different – probably much better – from our estimates. A bunch of entrepreneurs incentivized by profit and competing with each other can come up with far better solutions than me.

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Česky: https://www.mises.cz/clanky/nepredvidatelnost-trhu-2312.aspx
Author: Matthias Lukl

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