Does the free market’s creative destruction create more than it destroys?  Do oligopoly conditions (a small number of sellers dominating an industry) undermine free market theory?

The Global Human Resources Outsourcing (GHRO) team would like to know the answers to these and related questions, so we’re sharing a discussion of the issue, which is on the agenda at The HRO Today Forum, currently taking place in Washington, D.C. at the Gaylord National.

“A Workforce Congress: Insourcing, Outsourcing, & Job Creation” is the title of a panel headed up by Richard Crespin, Global Executive Director of the HR Outsourcing Association (HROA).

Free markets contrast with controlled markets in which prices, supply or demand is directly controlled.

In a recession, existing businesses shed jobs in an effort to cut costs and hoard cash for the lean months ahead, Crespin argues.  As the economy recovers, they start to add these jobs back.  It’s “economic churn,” not new economic growth.

To move the conversation beyond economic churn, the HROA convened HR Officers from large and small companies to discuss how to can create a more competitive workforce for companies, for America, and for the world.

The HROA also hosted a debate on “Is outsourcing good for America?”  This debate directly takes on the question of whether the free market’s creative destruction creates more than it destroys.

Oligopoly is at the heart of the counter-argument about the free markets concept.  The term “free market” itself reflects an idealized mathematical notion of how people behave, in that the emergent prices are a natural “push and pull” of supply and demand. In economic theory this is called “perfect competition,” because it occurs only when there are a large number of customers and a large number of suppliers in a market for goods which are optional purchases. In a perfectly competitive market, the ideals of a free market essentially exist. This was the economic theory of the 1960s to 1980s.

What’s happening now? The current trend in economics observes that big markets rarely operate in this perfect competition – because human beings are conscious of markets, they seek profits, they shut out competitors, and they corner markets as monopolies and oligopolies.  The result: fewer jobs all around.

Let us know what you think by commenting below.