[Snargorf]

Markets don't exist without states?

Do you not believe that markets existed 1000, 2000, 5000 years ago, in areas that were tribal or feudal or in anarchy?

Do you not believe that markets exist in Somalia and other conflict zones today, where there is no functioning government?

Markets exist any time there are two or more people with goods that they could and would trade.

[generj]

1) Tribes/Feudal Lords ARE government, albeit often not effective/efficient government.

2) You'll find that in an anarchy situation, mysteriously there is some market governing force...like a tribe, or guilds, or even just a shared understanding of how the market/society is to function. Even mob justice is a sort of governance, and the definition of what the mob will allow before uprising is the law of the land...

3) While there are markets in conflict zones, they aren't free markets. Free markets by definition require things like homogeneous products and perfect information. Perfect information has never existed in a conflict zone, and it never will.

4) In order for a market which approaches "free" to exist, there must be some governing entity to setup and enforce rules of trade, fund basic infrastructure which the market relies upon, provide peace which minimizes volatility for the market, etc. Even the staunchest of free market economists have made this point for centuries. Adam Smith and Friedman both are very much in favor of governments in some fashion or another.

I guess you could say that markets exist without governments, but they certainly aren't efficient ones.

[andrenth]

> Free markets by definition require things like homogeneous products and perfect information. Perfect information has never existed in a conflict zone, and it never will.

This is so absolutely wrong that I'm curious from which reference you got it from.

The very reason free markets work is because of heterogeneous products, allowing for competition, and for the fact that perfect information does not exist.

In a free market each actor only needs the information necessary to run his enterprise, contrary to a centrally planned economy such as a totalitarian state or today's central banks, which require (and think they have) perfect information, leading to bubbles, poverty, chaos.

[generj]

I'm conflating free markets with perfectly competitive markets. If that's incorrect, I apologize - still learning econ. Really, I'm saying that the closer a market is to a perfectly competitive market or at least a monopolistic competitive market, the closer to a free market it is.

In my head this makes intuitive sense as clearly oligopolies and monopolies aren't free markets. If free market refers exclusively to non-centrally planned market then my understanding is very flawed.

I thought the entire point was that with heterogeneous products, there is less competition, as the goods are subtly different - enough so that sometimes they are actually in separate markets. Companies who are seeking to minimize competition typically do all they can to differentiate their product - that's marketing 101. In a monopolistic competition, there is heterogeneity, but it's curtailed by a homogeneous demand between these options - e.g. restaurants.

As for perfect information, I should clarify I'm talking only about price information on the part of the consumer. Without listed prices, its hard to make rational decisions. A combat zone doesn't have good information available on prices, which could vary greatly between locales.

If you look at markets with low profit margins, they tend to have homogeneous products with perfect information on prices - for instance, commodity markets. As the best possible outcome for consumers is for a market to have zero profits but competition to drive costs down. And I know that perfectly competitive markets are only theoretical, but I'd argue that the concept of a free market is only theoretical as well.