How free is the free market - Essay Example

The first example which comes to mind is the labour market and western democracies such as the UK and the US pride themselves on being welfare states which regulate how the labour is governed (Chomsky, 1996). However, this governance and control may have political objectives as described by Adams (2002). Unemployment becomes an important question for governments therefore they may try to maintain low unemployment figures with the regulation of the labour market (Sloman, 2004). In essence, what should have been a free market in an economic system is turned into a controlled market.

It could be asked why a system which promotes the idea of a free market as described by Adam Smith and many others who came after him actually seeks to regulate labour at all? The notions concerning the acceptance of a free market and competition between individuals seem to run counter to labour regulations and minimum wage laws (Chomsky, 1999). The answer given to solve this apparent disjoint is that regulations are supposed to protect people from those who may exploit them. For instance, without proper regulations created by the government bodies the labour market could become imperfect as factory owners could be unfair to the labour they have employed (Botero et. al., 2004).

Richardson (1999) says that, “regulation of the labour market has been a feature of Western economies since it was proposed as an amelioration of some of the worst abuses of workers experienced during the Industrial Revolution (Richardson, 1999, Pg. 1)”. Undoubtedly, the situation during the Industrial Revolution meant that mill owners could treat their labour as they wished no regulatory controls existed on wages or work hours. The situation might be not have changed much today had there been no control on the market even though writers such as Chomsky (1999) suggest that the neoliberal agenda allows the exploitation of