bog standard microeconomics 101 uses as an assumption that no player can thru individual choices affect prices in the market, i.e. all players do have equal leverage, zero.

"free market" has more than one usage, but economics's conclusions are valid only if the assumptions are met.

"Free market" is a political term regarding the level of government regulation.

Neither "free market" nor "competitive market" adequately describe all (or even significant) levels of power differentials between economic (and social) actors.

But the author used a “textbook” result that is only true in case of perfect competition, so he must be talking about perfect competition right?

That might be Econ 101 with fully continuous utility curves, and realized price equilbria, but anyone who has traded on a market knows that as soon as most bids are fulfilled it causes a dislocation of the price, so in reality the opposite is true: all individual choices affect prices in the market.

There is an old concept that rolls through bernanke, krugman, keynes, marx, smith, and aristotle (you're in very smart company if you make this mistake), that somehow prices represent an equivalence class of values. That's a very mistaken view of the world and also, in a perverse way, considering the progressive bona fides of some of those smart people, reflects an illiberal fetishization of the power of money and numericism.

Price, at equilibrium, is a true representation of value. But other market forces ensure that equilibrium is seldom met. Tax, tariffs, subsidies on the product and its components skew price away from value.

Also, this kind of analysis only works at market level. Individual actors all have different values. It has to be viewed in aggregate. Think anecdote vs data.

What do you mean by that?

Um... quite exactly the opposite? Very nearly the most basic assumption of all economic theory is that wealth is created through trade (which includes trading labor for a salary) because each party values the thing they are receiving more than the thing they are giving away.

We're not disagreeing. I think I could have been imprecise. It seems a lot of arguments made by economists who should know better quietly use models which which effectively ignore the "most basic assumption" or average it out, which is a nonsensical operation.

Value to an individual is very different to value to a market.

Value in this sense is the aggregate of the individual values to all of the buyers and all of the sellers.

Price and value only match when supply and demand are at equilibrium.

How do you avoid Simpson's paradoxes?

If you don't bother buying them, then the total value to you is probably less than the value of $100 for you.

It's possible that the value just happens to be equal to the value of $100. That's a vanishingly unlikely coincidence.

> employers can afford to wait for a given worker's labor prices to come down

So employers can wait.

> is affirmative evidence that the labor market is free

For employers.

> whereas the OP considers this evidence that the labor market is unfree

For employees - they can't wait (that much), see above.

That seriously underestimates the cost of a business being idle. Ample evidence for that is the devastation wreaked on businesses from the recent lockdowns.

Individually, with any positive level of unemployment, any one worker's nonparticipation is mooted by a ready waiting pool of available workers. Eventually the hold-out gets hungry. Or starves.

Blacklists operate similarly: businesses can afford the exclusion, the (unorganised) excluded cannot.

[I]n every part of Europe, twenty workmen serve under a master for one that is independent... What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen....

-- Adam Smith, Wealth of Nations, 1776

https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...

As for blacklists, there are solutions. Blacklisted people can join together and start their own enterprises. One of the nice things about a free market is you can't stop people from doing that.

The five following are the principal circumstances which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counterbalance a great one in others: first, the agreeableness or disagreeableness of the employments themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning them; thirdly, the constancy or inconstancy of employment in them; fourthly, the small or great trust which must be reposed in those who exercise them; and, fifthly, the probability or improbability of success in them.

Ibid., Book 1, Chapter 10

https://en.wikisource.org/wiki/The_Wealth_of_Nations/Book_I/...

> One of the nice things about a free market is you can't stop people from doing that.

The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it.

Ibid., Book1, Chaper 8. Immediately follows my first cite.

Notice how they used the law to prevent the free market from operating. They had to use the law because the free market did work around it.

Ibid., Book 1, Chapter 5.

Who buys and sells those guns? Using what currency? And do you really want to kick the hornets' nest of slaver repressions, traders, anti-union violence, including multiple open wars, range wars, the Johnson County War, the Great Potato Famine, Opium War, British occupation of India, China, Egypt, Palestine, et cetera, et cetera, et cetera? All in the name of commerce and markets.

I'll let you find the passages in Smith yourself where he talks of the joint-stock-company created and operated garrisons in India, Africa, and the Americas.

And just to preempt a likely upcoming reference to Weber, his famous [hrase has three conditions, not one: it conerns the monopoly on the legitimate use of force.

Absent government, what is lost isn't violence, but the monopoly on legitimacy. Ony entity that succeeds in reimposing that monopoly is by the definition a government, and absent monopoly or legitimacy what remains is illegitimate and/or multiparty violence.

(A nominal government itself may lose its claim to legitimacy, as recent public protests in the US and elsewhere have suggested).

You've managed to have numerous horses shot from under you with no apparent grieving on your part in this exchange. In sympathy with the horses, I think I've pursued this as far as I care to.

But you might care to examine your premises and their foundations a bit more carefully.

If other people are using force, that is a failure of the government, not of free markets.

Wars, for example, are not free market operations, even if they are done "in the name of".

The OP's position is IMO wrong in that (rational) employers aren't incentivized to wait for the absolute lowest-price worker because of opportunity cost. Consider the example of a successful restaurant looking to fill the role of 'marketer'. The company is already profitable and could continue indefinitely without filling the role. However, the company is looking to fill this role precisely because it believes that it stands to profit a lot, and every day that the role goes unfilled they're losing out on that profit. So here the worker has some leverage. Further, the restaurant isn't the only game in town, the worker can have offers from multiple employers and parlay them against each other for still better offers. The wage ultimately depends on the size of the opportunity (the company won't pay the marketer 100% of the opportunity or it won't be worth hiring them) and the supply of marketers. Ultimately, the restaurant wants to hire the least-expensive marketer (ignoring variance in worker quality for sake of argument) without waiting too long (losing out on the opportunity). This is what a free market looks like--the OP is arguing that because an employer can theoretically avoid bankruptcy indefinitely without filling the position that the market is not free, but I think they misunderstand what "free market" means.

Although Adam Smith grasped this better than many modern economists and was hence a strong supporter of Labour Unions.

Of course Smith had not gotten his brain poisoned by excessive reliance on overly mathematical models of the economy.

Do you have a source for this? I can't find anything but SEO junk.

Free market in the microeconomic context is a market in which no one entity can significantly move the prices of a product but deciding how much to supply, therefore they don't have price setting power.

A second condition is relative ease of entering and exiting a market for competitors.

Coase's theorem is a good place to look for when thinking about power dynamics in a free market. Essentially, perfect information is a requirement when it comes to optimal decisions. Absent that, some party will be able to absorb some surplus, one essence "getting a better deal"

>the situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

so everyone has equal leverage (zero).

These requirements are not remotely necessary for free markets to work and work well.

Most generally, transactions can be freely negotiated by either party. I.e. no force or fraud. Contracts need to be enforceable. Individual liberties must be guaranteed.

> working well

Delivering on prosperity.

To clarify, imperfect information is not fraud.

Force in this context is something proactively applied, such as your signature will be on the contract or your brains. Force is not withholding something you have that the other party needs.

Charity, voluntarily helping others in need, etc., is perfectly in line with free market principles. Unions are perfectly in line, too, although laws bestowing monopoly powers on unions are not.

A free market does not have to be a perfect free market in order to deliver prosperity. Even small amounts of free markets can have outsized positive benefits, as the Soviet Union discovered when it allowed farmers to farm small plots, sell the produce, and pocket the proceeds.

Life expectancy was a good proxy in the 1800s because it improved dramatically, but now it has asymptotically approached a biological limit so is less useful. The same for average height.

Well, sure in a way, but that includes the parts that lay people ignore like the perfect information element and perfect value optimizing decisionmaking of the rational actor model, and the absence of externalities. But most economists recognize that people aren't omniscient, don't always optimally apply the information they so have, and that you can't avoid econonicndecisions having impacts on people other than those voluntarily participating in them.

Far fewer economists (basically, just the Chicago/Austrian schools, the latter of which does so as pretty overtly an article of faith) think that if you can't magically handwave those elements of the model into reality, the rest of 101-level simplified regulation-free markets still remains desirable as an ideal.

The almost purely "logical" and "ideological" statements of 19th and early-to-mid 20th century economics have been supplanted with with more empirical methods.

See Debunking Economics by Steve Keen.

You say they are orthogonal, and I provided evidence that they are not.

To be clear, I wasn't remarking about any comments you made about my orthogonality claim.

Sure, this can be true.

> in other words, power dynamics are orthogonal to market freedom.

No, they are certainly not orthogonal. One needs to only perform a simple thought experiment and increase the corporations' power to the point which constitutes a monopoly, to see immediately that they are not orthogonal. Do the same thing with increasing the power of unions and workers and you will again quickly leave free market territory.

It's a bit astounding to make the (false) claim power dynamics are orthogonal to market freedom.

You'll find it in the same chapter of the textbooks that state “that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces.”. This is also called “perfect competition”, and you won't find a textbook to say that the marginal cost equals the marginal value without summoning this hypothesis.

Freidman and Hayek both emphasize this point in their works.

Academics hold all the power in the "free" market and have their snouts in the trough. In a truly free market Milton Friedman would be on minimum wage at best (or find a rich sponsor).