People come into proximity with one another to decrease opportunity costs (concentrate opportunities and decrease the cost of each opportunity). This is the reason productivity increases with population density: we save time and expense, increase the division of knowledge and labor, and increase the velocity of trades, so we make the cost of pursuing opportunities cheaper.
But when we come into proximity and decrease the costs of opportunities, we also increase the number of competitors both for consumption of goods, services, and information, and for the production of goods, services, and information.
So the only means of pursuing those opportunities is to reduce the cost or improve the product, service, or information. Innovators force all other producers to improve the cost and quality and diversity of their products. Unfortunately it is usually much harder to improve the quality of labor, than it is to improve goods, services, and information.
This cycle of competition and innovation keeps prices down and quality up, at the cost of forcing everyone to work harder, think harder, and spend more time working, leaving some people by the wayside because they cannot adapt themselves or their goods, services, or information fast enough to serve the interests of buyers given the available competition.
A free market refers to the territorial, political, and juridical conditions under which anyone can engage in the negotiation and voluntary trade of attention, effort, labor, goods, services, information, promises and obligations, assuming that which he trades was obtained by him by the same means.
Where one of the following sets of conditions applies:
The government does not interfere with prices or conditions of the transaction and only enforces common laws of contract and tort. (this is an ok thing)
or
The government does not interfere with prices conditions of the transactions, but forces all parties to warranty for performance, and against fraud. (This is better thing)
or
The government does not interfere with prices conditions of the transactions, but forces all parties to warranty for performance, for fully informed consent, and against fraud, and that the exchange is reciprocally productive (This is an even better thing)
or
The government does not interfere with prices, conditions of the transactions, forces involuntary warranties for performance and fully informed consent, and against fraud, and that the exchange is reciprocally productive, but prevents externalization of costs to the commons by the socialization of losses, the privatization of commons, or the consumption of a common resource without compensation to the polity. (an even better thing.)
or
The government does not interfere with prices, conditions of the transactions, forces involuntary warranties for performance and fully informed consent, and against fraud, and that the exchange is reciprocally productive, but prevents externalization of costs to the commons by the socialization of losses, the privatization of commons, or the consumption of a common resource without compensation to the polity, and that no conspiracy exists to create an artificial shortage in order to increase prices without increasing the content of the product, service, or good (an even better thing.)
A free market, may describe any of those different conditions. But only the last of those, I have listed is in fact a MORAL free market.
Free markets are too often used as an excuse to conduct parasitism rather than productivity, under the ruse of moral pretense.
Curt Doolittle
The Propertarian Institute
Kiev, Ukraine
https://www.quora.com/Why-and-how-do-free-markets-work