ON THE CHARACTERISTICS OF THE FREE MARKET IN A COOPERATIVE SOCIETY Norbert N. Agbeko Email:
[email protected] ABSTRACT The key characteristic of a true free market economy is that exchanges are entirely voluntary. When there is a monopoly in the creation of currency as we have in today’s markets, you no longer have a true free market. Features of the current economic system such as central banking and taxation would be nonexistent in a free market. This paper examines how currency monopoly leads to the instabilities and imbalances that we see in today’s economy. It also proposes that currencies should emerge from the voluntary exchange of goods and services, and studies economic interaction across all scales, by considering economic action in cases where the self-interests of individuals are coincident. By examining the voluntary exchange of goods and services at the scale of an entire society, it is shown that a new currency system, which resolves a lot of the problems caused by the current fiat currency system, emerges naturally from the free market. The new currency system is robust and efficient, and provides a way for public goods and services to be provided, and its providers compensated, without the need for direct taxation. JEL Codes: E14, E42. I. INTRODUCTION In our world today, currency arises from banking. Currency is initially created by a central bank and then expanded by banks through fractional reserve banking. The question of what the best way is for currency to be created is an open one. Our currency is generated from banking because of the way it evolved.