Adam Smith wrote of the free market system in the Wealth of Nations, saying "by pursuing his own interest, [the individual] frequently promotes that of the society more effectually than when he intends to promote it."
The idea is that people act in their own best interests, and if those interests opposed other interests, they bounce off each other in a logical, mathematical way, like laser beams or those charts that David Stockton used to describe trickle down economics. As conflicting interests intersect, they cause actions which, in the end, lead to fair prices, exactly enough production, and wealth and happiness for all.
The problem here, as I see it, is that Adam Smith was INTP (like me.) He believed that people acted in their own best interests. He couldn't believe that people would act in a way that was harmful to their best interest in order to harm others. He probably said, "don't cut off your nose to spite your face" a lot. He probably saw that some people acted counter to their own self-interest in order to help others, but that would usually be small and concentrated --- like a church or a family or a small village helping others even if they sacrificed their own best interest. (Some people insist that altruism is another way of acting in one's own best interest, with the interest being "feeling good" or salvation or something. I don't care.)
But Adam Smith (OK, I'm projecting, get over it), couldn't believe that people would, for instance, refuse to hire the best person for a job because of personal dislike or prejudice. He (and by that I mean "I") couldn't believe that people would support a friend even if that friend's actions destroyed the business, family, community or whatever they were building. He certainly couldn't understand a person who supported someone she hated simply because she hated the opponent more. (The enemy of my enemy is my friend.)
The free market system, as an economic or social model, isn't going to operate the way it has been projected to act because the basic premise is wrong: people do not act in their own best interest. They are willful, ornery, and stupid. (Sorry, I meant to avoid that word.)
Now, does that mean that the other side of the dichotomy does work as predicted? Communism is based on the notion that people will act in the best interest of the community so that overall people will be better off.
That does work in some cases, but they tend to be small scale and/or short lived. Families, churches, Utopian communities all operate fairly well as communal groups. It probably worked better in the old days, and it surely works better in non-Western societies where individualism isn't as valued as it is here.
I mean, I live in SC, where people who hate guns own guns just because someone from NY City said they shouldn't. I've known people who smoked even though they wanted to quit because it pissed them off that anyone would tell them not to (OK, that was me.) I personally eat extra carbs to balance all of those poor souls on low-carb diets. (What, you always act in your own self interest?) So, what I'm saying is that if people don't act in their own self interest, they aren't going to act in the communal interest either. At least, not most people.
OK, you ask, what type of economy do you think we should have?
How should I know? I answer. I'm really thinking about myself and why I don't act in my own self interest by eating well, praying for peace, and buying locally. I'm thinking about my INTP tendency to think people will act in their own self-interest. Even if it's not mine, it's rational & I can plan for it. But no, they cut off their noses to spite their faces, and I'm left with mouth agape staring at No-nose and thinking, "Wow. I didn't see that coming." Every day. Over and over again. Every. Single. Day.
So I'm writing it in my web in the hopes that I can at least entertain myself.
Note to self: People are freakin' nuts. Drink more water.
Where have you been?
5 years ago