Free markets dynamism and results.
Why did neoliberalism collapse with bad performance? There is a very simple dynamic aspect to free markets that seems to have been missed.
If you have a free market of participants who are freed from government regulations, they will violate their status as isolated economic men and women by entering relationships, with another, or a few, for advantage in that market, advantage vs. others in that same market
As Adam Smith wrote in Wealth of Nations,
People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the publick, or in some contrivance to raise prices
The result of these pairings, with a few as in a conversation, or many as in a corporation, is to create a quasi monopoly that can control enough economic activity to make the participants in the conspiracy (breathing together) partners richer, and that is always at the expense of the whole , of the others – many of whom are trying to do the same thing.
The result is that the original wealth active in a free market tends, over time, to become concentrated, and anything but free, with a smaller number of increasingly wealthier winners and a larger number of increasing poor losers.
The idea of free market is consistent with the rise of early globalizing chaotic commerce, 14th to 17th centuries, and idealized in John Locke and of all people Ayn Rand for both of whom freedom was for the individual. They did not consider groupings of interests within the market.
So, the dominant ideas of free market and individual action within neoliberalism (equilibrium of free agents) came to dominate after WW2 when large government and the large business they spawned during the war, came in conflict, a conflict that was resolved for a time by the neoliberal perspective. But, like all achievements in history, over-done create resistance and finally collapse.
The problem now is that the collapse is environmental, global, leaving us with an out of control population on an increasing hot planet already undermining the living conditions of millions and soon billions.
The group psychology that let this dynamic go unrecognized as the game stopper it is is complex and amazing. The consequences disastrous. The idea of free markets more or less fit circumstances, but the “less” has undone us and we need to move on to a new way of looking at society, wealth and people.