Don't get me wrong, as a general statement I support free markets. However, Keynes' thesis (which is misinterpreted 96% of the time I hear someone talking about it) was simply that sometimes there is an economic argument for government regulation. Keynes' simply pointed out that sometimes it takes a while for some markets to readjust back to equilibrium (i.e. the invisible hand is slow) -- sometimes the market price is sticky. In these cases, the government can implement policies that incentivize the actors to do more of something (by issuing a subsidy) or do less of something (issuing a tax) in order to push the market back to equilibrium. That's the economic argument of Keynes.
The other component here is the idea of a public good. A public good is something the private sector doesn't have an incentive to do on their own (b/c they can't make money off of it), but it is something that society would benefit from. The role of government is generally to provide these public goods, such as national defense and parks.
So, the world will never have completely free markets. Besides providing national defense, the government also provides services designed specifically to protect consumers from unfair business practices, like collusion, price fixing and other monopolistic behavior (although, I just want to point out that is NOT illegal to have a monopoly in the US -- it is however illegal to monopolize -- big difference).
Phased in or decreed universally tomorrow? Free movement of people implemented immediately would mean chaos as millions of people from developing countries rush to developed nations, overwhelming infrastructure and collapsing the unskilled labor market and overburdening social welfare/entitlement programs.
Ignoring the people movement, income inequality would skyrocket, and boom-bust cycles in finance, agriculture and manufacturing would become faster and more severe.
Since no country has tried it, no one knows, but I'm sure that won't stop a bunch of sarcastic replies.
I'm going to treat this as some kind of fun thought experiment and ignore a lot of the details. I've always thought some form an ultra free market oriented society could work. But...
1: The first problems I wonder about is that the system is relying on individuals to be making actively intelligent decisions. How convinced are you of intelligence of the medium person? For power not to concentrate into too few hands, a large percentage of the population has to actively react to shifts in wealth, morality and power. I'm hesitate to declare this would work.
2: Can a free market naturally produce a safety net? Maybe. It is likely in order for society to function in a healthy manner one would need something to help the down and out. Shit happens, life isn't fair, bad decisions need help being corrected. I think it is more likely a government would have to provide some of this net. I've always thought creating a 'human right' to a basic income (say you get $5000 a year no matter what) paired with an ultra free market society would be interesting. Would it be the best? Idk. But it would certainly be interesting to try. (I think Hayek said something vaguely similar)
3: Tragedy of the commons. We aren't trapped as a species to forever repeat destroying the commons. But it sure as hell happens a lot. Pollution much like crime needs a government force to reign it in. There is no market solution to it. Something like a park system is likely similar.
But overall, as a planetary body of people, I think we're due to trying something new soon. We've spent the last 100 years or so converting most places to mixed-economy democracy. We should probably start to try other interesting systems. Kind of like what Denmark is doing. They are going in the other direction completely, but it is interesting. http://en.wikipedia.org/wiki/Economy_of_Denmark
"Can a free market naturally produce a safety net?"
When Margaret Thatcher was asked before she succumbed to dementia if she would do anything differently, she replied that she had believed, that making people rich would mean that they would help the poor, but now she realised that they don't.
* cost of goods and services drop significantly (trade 'agreements' only serve to make things more expensive for the end consumer to benefit a small number of producers)
* cost of transport of goods and people drop significantly (think self-driving vehicles)
* fiat currencies (USD, EUR, GBP, JPY etc etc) disappear to be replaced by market-chosen alternatives (gold, silver, bitcoin??)
* average standard of living across the planet increases - this is a corollary of the previous three points.
* No International standards guaranteed or enforced?
Then screws bought in one country wont keep panels in another held together.
* As in kidnap, murder and extortion not enforced?
This is my pet reply for "too much red tape". everything is a trade related regulation.
* As in no tariffs between countries.
That's not a bad idea, but a flat tariff to ensure
fair salaries of border staff would help.
* As in suddenly those countries that are not democracies
also fix all the internal problems that are not technical tariffs but act like them
Well, let me rephrase that "What if every country became
democracy tomorrow?"
* As in you can work in any country you like?
70% of all western jobs are office based, and so 70% of all jobs are probably doable from any point on the globe with a IP connection. And that needs no regulatory changes
except in countries where democracy does not apply.
Since the first round of WTO agreements in '48/49 World trade levels have leapt through the roof. Lets just keep going on the WTO rounds as they are.
The other component here is the idea of a public good. A public good is something the private sector doesn't have an incentive to do on their own (b/c they can't make money off of it), but it is something that society would benefit from. The role of government is generally to provide these public goods, such as national defense and parks.
So, the world will never have completely free markets. Besides providing national defense, the government also provides services designed specifically to protect consumers from unfair business practices, like collusion, price fixing and other monopolistic behavior (although, I just want to point out that is NOT illegal to have a monopoly in the US -- it is however illegal to monopolize -- big difference).