by Per Bylund
Free market economics is often ignorantly dismissed for being “ideological” rather than scientific. It probably sounds smart to the economically illiterate, but it is decidedly not. It doesn’t mean nearly what most people assume it does. The word “free” in free market economics is not used as a normative value judgment but indicates an economy that is unaffected by exogenous (from the outside) factors.
“Free” therefore means that it is the market economy in and by itself that is subject to theoretical analysis. This is, in fact, the only way to identify any and all “pure” market mechanisms and processes.
If economics tried to inductively extract theory from data, we could never know what it is we capture in those data: is it the actual (underlying) economic mechanisms, or the effect of regulations, or of a specific temporal context, or some mix?