Free Markets (1) - Definition

Calls for markets to be regulated are common, but those who make them are not very clear about what they mean. We need a clear definition of a market.

Markets exist to facilitate the exchange of goods and service between people, so that people can dispose of things they do not need and purchase things they do want. In a money economy a free exchange has three components.

1. A potential seller makes an offer.
2. A buyer accepts the offer.
3. The buyer and seller complete the exchange. The seller delivers the goods or services he has offered over to the buyer. The buyer pays the seller the price he had agreed to pay.

The free exchange can take various forms,

1. Services for money
2. Goods for money
3. Labour for money
4. Future goods for money
5. Future services for money.

Offers are the heart of a market. In a money economy, an “offer” has four elements.

1. The offer specifies the quantity of goods or services being offered for sale.
2. The offer describes the quality of the items being offered.
3. The offer specifies the price the seller is willing to accept.
4. The offer explains how and when the goods or services will be delivered to someone who accepts the offer.

An offer is quite benign. No one has to accept the offer. If everyone thinks it is a bad offer, the offer will just be ignored. Plenty of goods offered on EBay are never sold, because they are unrealistic offers. There is nothing in the scriptures suggesting that making unrealistic offers is morally wrong, although it probably is wasted effort.

An offer only becomes binding when accepted by another person. Once a buyer has accepted the offer, it becomes a binding contract. The Bible condemns those who fail to complete contracts that they have freely entered. Failure to complete the contract is theft.

The Bible also condemns false or deceptive offers. An incorrect specification of the goods or services being offered is morally wrong. A lie about the quality of the goods is fraud. Using false weights is the most obvious example of cheating customers by lying about quality or quantity of the goods being offered.

Do not have two differing weights in your bag—one heavy, one light. Do not have two differing measures in your house—one large, one small. You must have accurate and honest weights and measures, so that you may live long in the land the LORD your God is giving you (Deut 15:13-15).

This full series is at Markets and Morality.