FREE MARKET - FRIEDMAN

 They contend that the spread of markets throughout the world generates a race to the bottom in terms of labor policy
and environmental control, and reinforces an unequal distribution of resources between rich and poor nations.
 The logic of economic reasoning and the evidence point in the opposite direction. Markets are the most effective
means available to improve the lot of mankind by spreading the international division of labor and increasing the
productive capacity of mankind. Increases in real income can result only from increases in real productivity, and
increases in real productivity result from improvements in labor skill, advancements in the stock of technological
knowledge, and more effective management and organization of economic production within enterprises.
 Globalization brings all three of these sources of real productivity gains from the more developed economies to the
less developed ones. Moreover, the expansion of the market area erodes the power of local monopolies and exposes
political leaders to world standards of acceptable public policy toward the least advantaged in a society.
 Its main advantage is that it is considered the best mechanism to achieve the efficient distribution of resources in an
economy, always under the framework of perfect competition. In addition, it avoids government intervention, avoiding
errors and misinformation.

FREE MARKET
 Income inequality also increases when a country is more open to free trade.
 In OECD countries free trade encourages exports of high-quality goods and services, thereby promoting employment
among highly skilled people.
 Free trade causes upward pressure on wages of highly educated people and downward pressure on those of low-
skilled people, which also increases income inequality.
 A third factor that promotes income inequality is the degree of regulation of markets for goods and services and of the
labor market. In countries with a very low minimum wage the wages of low-skilled workers are often lower than in
countries with a higher minimum wage.
 A factor of influence with regard to the regulation of product markets is governmental anti-trust policies. To the
degree that the government is more effective in combating the economic power of large companies and is preventing
them from pushing small businesses out of the market, competition will be livelier and the profit margins will therefore
be smaller. This prevents businesses like Google and Facebook from controlling a large part of the market. Because
it is often the rich who possess such large companies, helping to combat the economic power of large companies is
also a way to counteract inequality.

FREE MARKET DESCRIPTION

Characteristics of a Free Market

A free market economy is characterized by the following:
1. Private ownership of resources
Free economies exist because a significant portion of resources are owned by individuals or companies in the private sector
and not a central government agency. In this way, the owners exercise total control over the means of production, allocation,
and exchange of products. They also control the labor supply.
2. Thriving financial markets
One key factor that helps a free market economy to be successful is the presence of financial institutions. Banks and
brokerages exist so that they give individuals and companies the means to exchange goods and services, and to provide
investment services. The financial institutions then make a profit by charging interest or fees on transactions.
3. Freedom to participate
Another characteristic of a free market economy is that any one individual can take part in it. The decision to produce or
consume a particular product is totally voluntary. It means that companies or individuals can produce or purchase as much or
as little of a product as they want.
Benefits of a Free Market
The absence of governmental influence allows both companies and individuals a wide range of freedom.
1. Freedom to innovate
In a free market economy, business owners enjoy the freedom to come up with new ideas based on the consumers’ needs.
They can create new products and offer new services at any time they want to. As such, entrepreneurs rarely rely on
government agencies to notify them of consumers’ needs.
The entrepreneurs do their own research and identify popular trends. The innovation among different private companies can
lead to competition as every company tries to improve on the features of its products to make them better.
2. Customers drive choices
With a free market economic system, it is the consumers who decide which products become a success and which ones fail.
When presented with two options of products, the consumer evaluates the features of each and chooses whichever one they
want to, ideally opting for the one that offers better value for money.
To a great extent, the consumer also influences the price set on a product. As such, producers need to strike a balance
between the price point that earns them a profit but is still affordable by the average customer.
Drawbacks of a Free Market
Despite its benefits, a free economy also comes with a few drawbacks:
1. Dangers of profit motives
One disadvantage of a free market economy is that some producers are driven exclusively by their profit motives. Even
though the primary goal of any business is to generate profit, such an objective should not be prioritized over the needs of
workers and consumers. Put simply, a company should never compromise the safety of its workers or disregard
environmental standards and ethical conduct just so it can make supernormal profits.
An example took place in the early 2000s, a time when unethical behavior became prevalent among companies such as
WorldCom and Enron. In 2010, the Deepwater Horizon oil spill, which is one of the biggest environmental disasters in the
United States, happened because the company used substandard cement and other cost-reducing measures.
2. Market failures
At times, a free market economy can spin out of control, causing dire consequences. Good examples of market failure
include the Great Depression of the 1930s and the real estate market crash that happened in 2008. Market failures can lead
to devastating outcomes such as unemployment, homelessness, and lost income.
Summary
A free market is a self-regulated economy that runs on the laws of demand and supply. In a truly free market, a central
government agency does not regulate any aspect of the economy. By removing government regulations, the nature of the
free market forces businesses to provide superior products and services that address consumers’ needs. A free market
economic system also helps sellers to create affordable prices for everyone.

El marxismo y el liberalismo son teorías políticas y económicas opuestas, que plantean dos tipos de desarrollo para una
nación.
 El marxismo sostiene que los medios de producción deben ser propiedad del Estado, de modo que no existan las
diferentes clases sociales.
 El liberalismo sostiene que los medios de producción deben ser propiedad de capitales privados y que todos tengan
posibilidad de intervenir en las decisiones del mercado.
En la realidad de las sociedades modernas, ambas teorías han demostrado que no pueden ser aplicadas de manera integral,
sino que presentan fallas de mercado, es decir, situaciones en las que el balance del mercado no es alcanzado y se generan
consecuencias negativas en su funcionamiento. Por ejemplo: la competencia imperfecta, la distribución desigual de la
riqueza, la existencia de bienes públicos y la inestabilidad de los ciclos de la economía.

Seguimos cayendo en la falsedad de defender ideologías y etiquetas, cuando de lo que tenemos que hablar es de cómo
crear buenas ideas y mejores resultados.
El gobierno protege a sus empleados y grupos especiales de trabajadores a expensas de otros trabajadores. 

RESUMES FRIDMAN Y CRITICA

Freedom and equality

Friedman assumes that a free market capitalist system fosters freedom and therefore will enhance equality. However the
concept of freedom that he uses is fundamentally flawed, because it is largely negative and procedural in form. Emphasis is
placed on the right of the individual to be free of external constraints so that he can be free to choose and pursue his
individual self interest. Autonomy and self determination lies at the heart of his concept of freedom. Yet for autonomy and self
determination to be realised certain attributes and capacities are needed. In other words, some positive content must be
given to freedom. The free market cannot foster the attributes and capacities necessary for the individual to make
autonomous decisions. Smart66 rightly notes that for autonomy to have value non-market institutional spheres, such as the
educational, cultural, familial and associative spheres needs to be protected from market forces. Friedman, however, does
not restrict free-market logic to the economic system but applies such principles to nearly all spheres of life such as
education, health and welfare, thereby transforming these non-market spheres into commodities that are subject to sale in the
market, or indirectly by being subject to the norms and meanings of the market. In doing so, he neglects the significance of
non-market relations for the development of the capacities required to exercise self-determination.

Friedman's concept of equality of opportunity, is as flawed as his concept of freedom, because it does not address the crucial
question whether the conditions in and through which autonomous agency is to be constituted is fair and favourable. What
about those people that do not have equal access to education and jobs because of a lack of resources due to the systemic
legacy of political discrimination on the grounds of race or gender? The definition of equality as equality of opportunity will
necessarily be detrimental to the social development of such groups of people and will lead to their further marginalisation.
Friedman, furthermore, accentuates the voluntary cooperative nature of the free market system, but underemphasizes the
effects that continuous competition has on society. Competition does not always create opportunities, but might also inhibit
opportunities, because there are always losers in a competitive environment. Where individuals compete against each other
for scarce economic resources, they often attempt to outwit their competitors through methods which are neither fair nor
healthy. In fact, the policy of unrestricted market logic advocated by Friedman has led in many cases to rising inequality,
poverty and social exclusion, because not all people are able to compete on an equal footing. Interests of people are at times
in conflict and not all individuals are equally equipped to protect and promote their interests.
The expected benefits from transactions often do not agree with the actual benefits because factors such as a lack of
information or incompetence are often present in exchanges. The only way to address the shortcomings in the exchange
system is through regulation, something that Friedman oppose fervently.

The global economic system of free trade is currently anything but beneficial for greater equality, because there is no state
intervention and the number of losers therefore far exceeds the number of winners. International corporations have become
powerful political forces. In some cases their budgets exceeds the gross domestic production of nation states. Third world
countries are often exploited by multi-national companies that use cheap labour, dump waste in poor countries and degrade
the environment through unsustainable economic activities. Farmers, entrepreneurs and traders in third world countries find it
very difficult to compete with first world countries, because they don't have the same resources as their counterparts in first
world countries, and therefore struggle to find markets for their products. In short, the market system alone cannot be relied
upon to provide basic needs in respect to food, shelter health and education. Some kind of distributive justice will always be
needed.

The free market economy is commonly accepted today as the best or least bad economic system.

Free market economics isn't perfect, but neither are completely regulated economies. The key is to strike a balance
between free markets and the amount of government regulation needed to protect people and the environment.
When this balance is reached, the public interest is protected, and private business flourishes.
However, in a free market economy there are greater possibilities for economic growth and a more efficient
distribution of resources. In a free market economy there is no government intervention in economic activities. But
its fair intervention is required to protect consumers from market forces and to manage the social impact on the free
market. Therefore, a mixed economy can be identified as the most effective type of economy for personal and social
welfare.

HAPPINESS
 Fighting inequality is of great social significance.
 It to be one of the factors that affect human happiness in society: the more inequality, the less happy people are on
average.
 Trust in government institutions is also being affected. It is very important that citizens feel that they count in society.
As income equality grows, a larger proportion of them will feel more incluted. Affects their happiness and provides
fertile ground for behavior that rejects society.

INEQUALITIES
 The gap between poor and rich has grown in the last thirty years. Inequality is not a natural phenomenon.
 Governments can take various measures to reduce inequality.
 The estimates show that, as the government reduces tax, income inequality in a country is higher.
 When higher income groups pay relatively more tax than low income groups, inequality decreases. The tax system
will in that case provide a redistribution of income from rich to poor.
 Income inequality is a source of all kinds of other forms of inequality, such as inequality in health and access to
health care, inequality in education and inequality in the quality of the direct living environment of people.

Wealth inequality
 The inequality picture is even bleaker when looking beyond what people earn – their income – to what they own –
their assets, investments and other wealth.
 In 2021, the richest 1% of Americans owned 34.9% of the country’s wealth
 By comparison, the richest 1% in the United Kingdom and Germany owned only 22.6% and 18.6% of their country’s
wealth, respectively.
Drivers of extreme income and wealth
 Large increases in executive pay are contributing to higher levels of income inequality.
 Back in 1965, he – all CEOs were white men then, and most still are today – earned about 20 times the amount of an
average worker at the company he led.
 In 2018, the typical CEO earned 278 times as much as their typical employees.
Gender Inequility
 At the global level, in 2020, women will receive barely 35% of the income from work (compared to over 65% for men).
This share was 31% in 1990 and 33% in 2000: we can therefore see that progress exists but is extremely slow.
 In Europe, the share of women will reach 38% in 2020, which is still far from parity.

CLIMATE CHANGE
 Without action to limit and adapt to climate change, its environmental impact will continue to amplify inequalities and
could undermine development and poverty eradication.

Environmental Inequalities
 Too often, the climate debate is reduced to a comparison of average carbon emissions per country and their
evolution over time.
 We can see that the poorest 50% of the world's population have relatively reasonable levels of emissions, for
example 5 tons per capita in Europe.
 Meanwhile, the average emission reaches 29 tons for the top 10% and 89 tons for the richest 1%.
 The conclusion is obvious: we will not meet the climate challenge by cutting everyone at the same rate.
 More than ever, the planet will have to take into account the multiple inequalities that cut across it in order to
overcome the social and environmental challenges that undermine it.

 While inequality refers to differences in income or wealth across the whole range distribution, poverty concerns
individuals below a given income threshold, or lacking access to basic needs.

 By hitting the poorest hardest, climate change risks both increasing existing economic inequalities and causing
people to fall into poverty.

 Limiting the global temperature increase to 1.5°C requires reaching net zero CO2 emissions by 2050 and reducing
global emissions by approximately 50 percent in 2030, compared with 2010 levels.

 Limiting the increase in temperature to 2°C means net zero CO2 emissions should be reached by 2070, and global
emissions should be reduced by 25 percent by 2030. Every fraction of a degree counts because the impacts of
climate change increase with rising temperature in a nonlinear way.

 The need is urgent for policies to transform rapidly and profoundly the way we use energy and transportation,
produce and consume food as well as other goods, and shelter ourselves. The question is how to design these
policies.

 Climate change is a justice issue for three reasons. First, its causes are driven by social inequalities: most politically,
culturally, and economically marginalized communities and nations use vastly less fossil fuel-based energy.

 Second, the rich and poor feel its impacts unequally; this is true locally, nationally, and globally.

 Third, policies designed to manage climate change—including renewable energy sources, adaptation measures, and
geoengineering schemes—will have starkly unequal impacts within and across societies.

This is in part because decision-making processes for emissions reductions and adaptation policies tend to exclude the
politically marginalized.

 In the coming decades, climate change and natural disasters could destroy much of the progress made in lifting
households out of poverty in previous decades.
 According to one estimate, climate change could push 100 million people worldwide into poverty in the next 10 years.
Moreover, by the end of the century, as a result of climate change and climate-induced natural disasters, the ratio of
per capita GDP between the richest and poorest countries in Latin America and the Caribbean is expected to
increase dramatically.
The region needs to make a concerted effort to design policies that promote sustainability and inclusive growth.
There are three reasons why climate shocks and natural disasters exacerbate inequality.
 First, poorer countries, regions and people tend to be more exposed to the impacts of climate change and natural
disasters than their richer counterparts.
 Second, they are the ones who lose more of their wealth when climate shocks strike.
 And third, these populations have fewer resources to cope with the negative impacts of climate shocks.

For example, Brazilian states with higher temperatures have lower GDP per capita, suggesting that poor states are more
exposed to the impacts of rising temperatures.

 When climate shocks occur, the poor tend to lose a greater share of their wealth.
 These disparate wealth losses translate into unequal reductions in consumption.
 The poor are less able to cope with the negative impacts of climate shocks and to recover from their effects.
 They have fewer financial resources, not only because their social networks - or support systems - are also often
poor, but also because they have less access to formal savings, credit and insurance.
 While wealthier families are able to adjust their budgets, poor families are already devoting a significant portion of
their budgets to meeting their basic needs.
 These three factors form a feedback loop in which the poor are more likely to suffer from climate shocks and to lose
more of their wealth as a result.

Fortunately, countries are in a position to break this cycle by implementing inclusive development policies that are consistent
with climate stabilization and disaster risk management objectives and, at the same time, by reducing inequality.

The first step in this regard is to improve social safety nets and enact policies that enhance the ability of the poor to cope with
the negative impacts of climate shocks. For example:
 Achieving improvements in insurance and formal financial products.
 Providing access to health care
 Improving infrastructure services.

When natural disasters occur, governments must also provide assistance to those most in need. Without rapid assistance
following a disaster, poor households may be forced to sell productive assets, withdraw their children from school or delay
seeking medical care in order to meet their immediate needs, jeopardizing their long-term prospects.
Governments can quickly target resources to the most vulnerable by using preauthorized funds for this purpose through
existing cash transfer mechanisms.

 This is because the poor often live in slums that are more costly to protect against climate change, while possessing
less wealth that would benefit from such protection. Such discrepancies can only be resolved fairly if inequality is
explicitly taken into account and the poor are involved in decision-making.

 Unmitigated climate change threatens to have disastrous effects on both economic growth and inequality, but if
action is taken as soon as possible and poverty and inequality are taken into account in the design of public policies,
the region can preserve the social achievements of the recent past and make further progress towards its
development goals.

ENVIRONMENTAL JUSTICE MOVEMENT

 It would be a grassroots movement
 It would be aimed at achieving justice for racial and socioeconomic minorities, since they are more exposed than the
rest of society to environmental damage.
 Its interest in protecting the environment would be inextricably linked to the achievement of social equality.
Three main dimensions:
 A distributive one, which consists of controverting the unequal distribution of environmental benefits and costs,
ensuring equity.
 An epistemological one, which investigates the conceptual framework that gives rise to this unjust distribution.
 A procedural one, which seeks to ensure participation in decision-making.

Climate justice seeks to:

 Incorporate an ethical and human rights dimension into the decisions governments take to combat climate change.
Although the climate emergency represents a global threat, it does not affect all people in the same way. The environmental
crisis makes marginalized people and communities especially vulnerable, deepening social and economic inequalities.
 Strategies against global warming must take into consideration the imperatives of equality, equity and justice, as they
could have negative impacts on the environment, people and their rights, further deepening inequalities and injustices.

The devastating effects that the climate crisis will have on those who live in poverty and who directly experience the
impacts of environmental degradation, are more exposed to extreme climate phenomena and have fewer possibilities to carry
out adaptation actions.

>Vulnerabilities to climate change, and increased inequality and poverty, are critical issues to consider from a climate
justice perspective.

In order to overcome poverty, inequalities and the environmental and climate crisis, it is necessary to change the
production and consumption model.

Climate change is one of the most important global threats to the guarantee of human rights. The movement also demands
recognition of the unequal distribution of climate burdens, and calls for its consideration in the design and implementation of
all related policies.
In short, the climate crisis exacerbates the relations of inequality already present in our societies and especially affects
historically vulnerable groups.
In addition, climate change particularly affects the residents of the most climate fragile territories, who, as a general rule,
have contributed the least to historical greenhouse gas emissions and have benefited the least from the economic
development and well-being that the burning of fossil fuels has brought to humanity.

PRESENTACTION - Happier and Sustainable: Possibilities for a post-growth society

The Great Acceleration

1. The criticisms of pessimists are rooted in the idea of limits of growth.

2. The Great acceleration refers to the upsurge of per-capita income and population, which began with the industrial
revolution and took off after the second world war.
3. Mortality plummeted because the industrial revolution initiated an increase in per-capita income that brought improvements
in hygiene,food and health standards.

Some Good News

 Declining Fertility
Most of the world moved into the phase characterized by low levels of both fertility and mortality. In the this phase the
population tends to age and to decline because the fertility rate (the average number of children per woman) falls
below the replacement level, the number necessary to keep the population constant (which is estimated around 2.1
children per woman).
 Secular Stagnation
The average growth rates per decade of both total and per capita GDP have decreased since the 1950s. since the
1980s they have generally fallen below 2%. After 40 years of sluggish growth, economists realized that industrial
economies entered a phase of secular stagnation, slow growth over long term.
 The Great Deceleration
A future great deceleration: declining population and the stagnation of per-capita income will probably deflate the
global economy

The Paradox of Ecologist Impotence

Why ecologist failed?

 Current generations do not take into account the long- term costs of the affluence
 Less consumption is unattractive because it equates leading grim, unhappy existence
 Eco-friendly reforms presented as sacrifices appear expensive and uncertain

The roots of ecologist crises: Long work hours 

 Keynes's Prediction:
1930: Keynes predicted that the average Briton's work week would drop to 15 hours within a century.

 Reason for the error in Keynes's prediction :

The expected decline in the importance of money in people's lives has not occurred
Defensive growth

Defensive growth models argue that growth-related negative externalities fuel the growth process itself
Defensive growth models argue that growth-related negative externalities fuel the growth process itself
Defensive growth models argue that growth-related negative externalities fuel the growth process itsel

Defensive expenditures: spending aimed at defending from negative externalities.

Defensive growth is based on the idea that social capital provides individuals with free goods and services that can be
replaced with private goods available on the market.

When growth is defensive, the declining quality of environment and relationships, as well as the high workload, offset the
positive effects of growing income for well-being.

The tragedy of collective impotence

 Private affluence
 Common poverty
At the core of defensive growth in the distant future

2 critical hypotheses and 1 additional condition of defensive growth drive this conclusion
1. pessimistic expectations about the distant future
2. extensive distrust in politics
 plausibly mimic the current features of industrial societies

Unsustainability appears as a tragedy of collective impotence that results from the hunt for a private exit strategy from
collective problems

3. Individuals care about future generations

How much do people care about future generations? 
people care for future generations<->current well-being
Defensive growth focuses on the role of … Money  takes on a double function: it defends individuals today and it will
defend their descendants

 long work hours and economic growth to make money

 worsens the conditions of present and future commons
 feeding back the mechanism

 The rush to private protection is the problem and not the solution. 
 Environmental destruction is just one of the dark faces of a society that pursues money as compensation for the distress it
creates.

What should be done? Rebuilding trust in the political system is crucial for sustainability. 

Post-democracy
post-democracies : contemporary political systems

The growing influence of economic elites in political decision-making has caused a regression to a pre- democratic situation,
where exercise of political power was restricted to closed elites (Crouch, 2004)

Gilens and Page (2014) 

: impressive quantitative evidence of post-democracy in the US

economic elites >>> the majority of citizens

The debate on how to get out of this crisis of democracy is huge.

(especially U.S.)

democracy 
can and should be innovated to reduce the disproportionate influence of corporations on policies

 the condition to escape the tragedy of collective impotence that leads to unsustainability
Policies for social capital

What is social capital ?

 The term social capital refers to a positive product of human interaction.

 Social capital is a set of shared values or resources that allows individuals to work together in a group to effectively
achieve a common purpose.

Examples of policies for social capital

 Urban planning plays an important role in the creation of social capital.

 Some urban reforms benefit the neighborhoods’ social fabric, facilitates people’s engagement in neighborhood-
related activities, and fosters sense of community.
 Participatory teaching practices
 Cooperation with others, participation in associations, trust in institutions, and involvement in civil society.
 Advertising can be a marketing pressure which may have negative effects on social capital and social comparisons,
especially for children and teenagers
 Various western countries introduced regulation of advertising.

“Epidemiological studies showed that greater levels of social capital and well-being, and weaker social comparisons predict
substantial reductions in morbidity, and thus in healthcare spending

Conclusion
— It is possible to obtain both happiness and sustainability in current situation 
Main Points

1. Ecologist Messages 4. Derived Preference

 Threat of ecologist disasters  Future expectations
 Uncertainty perceptions of catastrophe  Political systems
 Sustainability sentences sacrifices  Innovated democracy

2. Defensive Growth 5. Consumption agenda

 Negative externalities  Decoupling life quality
 Substitutes  Expanding well-being rather than economic activity
 Offset in the long-run
6. Keynes Prediction
3. Vicious Circles  Neglect the decumlation of shared goods
 Demand for substitutes  Sharing 
 Workload vs Economic growth  Potential synergies & trade-offs
 Negative externalities

+
In reality, however, free markets are subject to manipulation, misinformation, asymmetries of power &
knowledge, and foster wealth inequality.