Definition of Terms

This page is intended to define and clarify confusing terms and especially terms with several potentially contradictory meanings or connotations, the use of which encourages ‘doublethink’. Additional entries welcome.

Free Banking: This can mean banking that is free to retail customers. But it also refers to an economic system in which banks are subject to no special regulations beyond those applicable to most enterprises, and in which they also are free to issue their own paper currency (banknotes). In such a system there is little or no role for a central bank.

Free Market: The Financial Times lexicon defines it as: “A system of buying and selling that is not under the control of the government, and where people can buy and sell freely, or an economy where free markets exist, and most companies and property are not owned by the state.” Well yes but economic orthodoxy suggests that free markets, without government intervention, lead to the most efficient and fair allocation of resources. There is also the connotation that markets should be unregulated – and we know where that leads us!