There’s no such thing as the ‘free market’ – excerpt from Doughnut Economics | Kate Raworth on Twitter

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“Next time someone sings the virtues of the ‘free market’, remind them that there’s no such thing. All markets are embedded, in ways that determine who gains the benefits and who bears the costs and risks.”

Adam Smith’s great insight was to show that the marketplace can mobilise diffuse information about people’s wants and the cost of meeting them, thereby coordinating billions of buyers and sellers through a global system of prices—all without the need for a centralised grand plan. This distributed efficiency of the market is indeed extraordinary, and attempting to run an economy without it typically leads to short supplies and long queues. It was out of recognition of this power that the neoliberal scriptwriters put the market centre stage in their economic play. There is, however, a flip side to the market’s power: it only values what is priced and only delivers to those who can pay. Like fire, it is extremely efficient at what it does, but dangerous if it gets out of control. When the market is unconstrained, it degrades the living world by over-stressing Earth’s sources and sinks. It also fails to deliver essential public goods — from education and vaccines to roads and railways — on which its own success deeply depends. At the same time, as Chapter 4 will show, its inherent dynamics tend to widen social inequalities and generate economic instability. That is why the market’s power must be wisely embedded within public regulations, and within the wider economy, in order to define and delimit its terrain.

It is also why, whenever I hear someone praising the ‘free market’, I beg then, to take me there, because I’ve never seen it at work in any country that I have visited. Institutional economists – from Thorstein Veblen to Karl Polanyi – have long pointed out that markets (and hence their prices) are strongly shaped by a society’s context of laws, institutions, regulations, policies and culture. As Ha-Joon Chang writes, ‘A market looks free only because we so unconditionally accept its underlying restrictions that we fail to see them.’1 From passports to medicines and A K-47s, many things cannot be legally bought or sold without official licence. Trade unions, immigration policies, and minimum wage laws all have an effect on a country’s going wage rate. Company reporting requirements, the culture of shareholder primacy, and state-funded bailouts all influence the level of corporate profits. Forget the free market: think embedded market. And, strange though it sounds, that means there is no such thing as deregulation, only reregulation that embeds the market in a different set of political, legal and cultural rules, simply shifting who bears the risks and costs and who reaps the gains of change.2

Raworth, Kate. Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist (Kindle Locations 1208-1228). Chelsea Green Publishing. Kindle Edition.

Doughnut Economics
Published on Sep 5, 2018

Three students challenge outdated economics by debating with their professor about the nature of humankind, with rap and puppetry.

This animated film is a collaboration between economist Kate Raworth, puppet designer Emma Powell and song writer Simon Panrucker.

The critique of rational economic man is based on chapter 3 of Kate Raworth’s book Doughnut Economics: seven ways to think like a 21st century economist.

Check out the complete lyrics of the rap, with fully footnoted references to key economics texts, quotes and concepts:…

And if you want to rap your own critique of economics here’s the backing track, shared in the creative commons: CC-BY-SA.…

For more animations of 21st century economics visit

Table of Contents


  1. Chang, H.J. (2010) 23 Things They Don’t Tell You About Capitalism. London: Allen Lane, p. 1.
  2. Block, F. and Somers, M. (2014) The Power of Market Fundamentalism: Karl Polanyi’s critique. London: Harvard University Press, pp. 20–21.

One thought on “There’s no such thing as the ‘free market’ – excerpt from Doughnut Economics | Kate Raworth on Twitter

  1. Stating the free market is not acting appropriately as a free market, is like stating a flying fish is not a bird. It never was a bird in the first place.
    There is no such thing as a free market, suggesting it knows no rules, sets and boundaries. A free market is not a free concept.
    The problem with it is the concept it uses is a false interpretation of reality. Before you get this right, it does not make much sense nor is it very productive meddling with a set of inappropriate values.

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