Aren’t Black Markets and Free Markets mutually Exclusive?

Free markets don’t exist in any real sense anywhere today. State prohibitions, subsidies, taxes, regulation, privilege and the rest make them impossible on any substantial scale.

“Black market” as commonly understood is a problematic term, since it encompasses both harmless things that governments ban (the cannabis trade, for instance) in most places, as well as harmful things that governments also ban (murder for hire, for example).

I personally favor the market analysis given by agorist theory, which breaks down things along two axes:

• White market: State-approved, moral (i.e. non-rights-violating) (e.g. on-the-books employment)
• Gray market: Banned unless done in state-approved manner, moral (e.g. off-the-books trade)
• Black market: State ban, moral (e.g. drugs)
• Red market: State ban, immoral (e.g. murder for hire)
• Pink market: State-approved (and largely state-conducted), immoral (e.g. taxation, conscription, compulsory education)

Visual illustration on slide 7 of a powerpoint I made for a presentation to a libertarian meeting this summer at http://www.nostate.com/wordpress/wp-content/uploads/2009/06/What-Sort-of-Libertarian-Are-You1.ppt (reproduced for readers of this blog below).

The five markets