A market is traditionally a place where buying and selling takes place. A free market implies the
buyer and seller transact without any form of compulsion or cohesion. Importance and benefits of
trade to general wellbeing of the society are clearly obvious: goods and services are moved towards
those who value them more; specialization(and division of labour) is encouraged; and cost of
producing goods and services are lowered(due to mass production). The big question is whether
markets should be allowed to operate freely or be regulated by controls. Should governments throw
their people into the cold “invisible hands” of market forces? Wouldn’t the “weaker” components of
the society be swallowed up by the greedy, powerful rich? A follow-up question would be if free
markets will work well in certain parts of the world but would not do so in other areas.
It is very important to note that just like natural laws are not made but discovered so economic and
political “laws” should be observed from the history of human behavior and society. The law of
gravity was not made by Sir Isaac Newton, he only observed it. This natural law is true both England
and Tanzania. The law of gravity works quite as well in the Los Angeles as in Timbuktu. It is
universal. The most efficient “laws” made to govern human society have always been those which
are gotten from detailed and insightful understanding of natural human behavior.
Down through the ages, man has always gravitated towards freedom. History abounds with stories
of men all over the world who fought oppression, manipulation and victimization. It is clear that
there is an inbuilt tendency for every human to resent any form of bondage. This is not a “western
concept” but a universal truth. This of course, does not overshadow the human desire to be
restricted. There can be no freedom without walls. Walls indicate that I’m free. If there were no walls, I would not know (nor appreciate) if I’m free or not. I’d rather wear a pair of shoes that fit
loosely than the ones that hurt my feet. I not only want to be free, I want to know that I’m free.
Proponents of regulated markets will quickly point to the fact that victor-victim scenarios will be the
order of the day. This means that free trade will result in either the buyer or seller profiting at the
expense of the other.
The success stories of free market economies point us in a different direction. From the United
States, Western Europe to upcoming China and Japan, it is obvious that the nations prosper when
people are allowed to make economic choices that they perceive are in their best interests.
Opponents of free trade must admit that free markets have proved to be successful. Contrastingly,
communist socialism where the government “plans” the economy has failed over and over again in
various nations.
This goes to show that the real reason for the great divide between the haves and haves-not might
not be a free economy. The real reason will is the absence of a level playing field; equal
opportunities to be wealthy. The real enemy of societal prosperity is not free markets but, to use De
Soto’s words, a standard form of legal documents which provide opportunities to uniformly identify
people, wealth and ownership.
In Lagos metropolis, where I live, bus fares are subject to fluctuations depending on the time of the
day. You could spend twice the price for covering the same distance depending on the weather, bus
availability or number of people at the bus stop. Drivers allegedly exploit commuters when they
observe the buses available are limited. One might argue that the best solution would be to fix bus
fares to protect the masses.
However let us carefully examine the consequences of this decision. If the fares are fixed, investors
might not be willing to invest in transport. There would be little incentive for people to buy buses.
This will reduce the number of buses on the road.
If however, the market forces are left to predict the prices of bus rides, more people will invest in
the lucrative transport business (and other goods and services whose prices are significantly affected
by the transport) and more jobs will be created. Moreover, people will begin to think of alternative
modes of transport. Eventually the transport will sector will sort itself out in the whole economy.
Thus the real problems might be high cost of entry into the transport business, high taxes and other
government regulations.
If the right conditions exist, the fears of the “exploiter and the exploited” trade will be allayed.
Without a doubt, blindly copying history will lead to disastrous consequences. This is clearly evident
in the World Bank policies that probably caused more harm than good in several African states. One
does not give the diet of a healthy man to a terribly sick patient. This does not in any way water
down the fact that a free market economy is a universal concept. It only has to be interpreted in the
local context.
African leaders should work hard at finding out the local patterns of free market economy that are
best suited to their countries. It should be clear to all and sundry that foreign aids, government
ownership of the factors of production and regulations are not sufficient to spur Africa’s
development. Government restrictions to trade must be lightened. To use the popular words, “the
government of laws must replace the government of men.” Laws that provide the framework
for a free market economy which rewards hard work and innovation are what Africa needs most.
Visionary and determined leadership is needed to steer Africa in paths of prosperity and economic
growth.