Real Free Market Capitalism
The foundation thinkers of capitalism (like John Stuart Mill, Adam Smith, and David Ricardo) all defined the concept of the free market not as a market free from regulation, but as a market free from rent.
They saw the old feudal lords helping themselves to the profits of the new factories that were springing up all over England. Those landlords could simply jack up the rent on the land their ancestors had conquered through violence. The factory owners had no choice but to pay their employees enough to cover these ever-increasing rents because workers require homes to be reliable and effective at their jobs.
When the lords jacked up the rents, labor costs increased, and profitability decreased. All that extra money was ending up in the hands of the old feudal landlords. The foundational thinkers of capitalism sought to fix this problem by making a distinction between earned and unearned income.
They proposed to heavily tax unearned income, so that people would be forced to earn money by actually providing goods and services. Not by hoarding assets and then charging others to access them.
Fast forward to today, and we've lost this crucial distinction between earned and unearned income. We count things like credit card fees and student loan debt toward our GDP, as if these are measures of productive capacity. These are overhead costs that inhibit the productive economy.
Today’s GOP also misuses the term free to mean free of all regulations. This is not what the founder meant. Well-run capitalist countries, like those under the Nordic model, are not free of regulations or rules. These regulations protect workers, the environment, consumers, as well as the companies themselves. They provide for a competitive marketplace free of monopolies and other anti-competitive practices.
The key to a great democracy and capitalist society is a happy, healthy, wealthy, and educated middle class. That is the goose that lays the golden egg. The GOP would have us move back in time to the old feudal lords, robber barons, or oligarchs. Pick the term you like, but it is a system of extreme wealth inequality that can only be sustained through authoritarianism.
