There is no truly free market, in the sense that it is absent from state regulation. State regulation is inherent in the notion of a market. The absence of state regulation is anarchy, in which markets do not function.
The idea of a free market is a popular one. It's a nice idea - it allows us to lay all kinds of complicated ethical questions at the feet of consent. But, as I have mentioned in the past, it's not "consent all the way down." A market must have regulation to exist, and regulation by any means but unanimous consent is inherently non-consensual.
So what does the state have to do in a market economy?
1. The state must define who is a market participant.
In other words, the state must decide whose choices and property rights must be respected.
Who may participate in the market? Who may buy and sell, or refuse to buy or sell? Who may own property?
Are men and women both proper market participants? Are children? Adolescents? The elderly? Deceased people (through documents or proxies)? Unborn people (perhaps through imaginary proxies)? Future people? Possible future people?
Are animals? Dogs? Chimpanzees? Cattle? AIs?
Are people with severe developmental disabilities proper market participants? People with moderate developmental disabilities? People with thought disorders? People with mood disorders?
Whose welfare or utility are our rules designed to maximize?
To some degree, the state must also define the unit of a market participant. Is it a single individual? Can it be a family? A business partnership? Is a single individual over his entire lifespan a market participant, or are young and old versions of the same person separate market participants?
2. The state must define what counts as property, and what belongs to each market participant.
Is one's labor one's property? Does one own one's genetic endowment?
Can people be property? Are our children our property? Our spouses or sex partners? The sexual services of our sex partners? The promised future sexual services of our sex partners?
Are animals property?
Does one have a property interest in one's feelings?
Are our bodies our property? Our organs? Blood? Semen? Ova? The years of our lives? What about antibiotic resistance - is the capacity for antibiotics to prevent infections our property? Is our appearance our property? Are the feelings that we produce in others our property?
Do we own our attention?
Is our general good behavior (not stealing, not raping) our property? Are things we have been promised our property?
Do we have a property interest in having enough air to breathe? Water to drink? Food to eat?
Can land be owned? If so, does a land owner own the wild animals on his land? The air above his property? How high up?
The related issues of (a) who is a market participant and (b) what is property are especially convoluted when we consider that some entities may be classified as either a market participant or a piece of property - or have elements of both, as with the current position of children and the historical position of women.
3. The state must define appropriate remedies for enforcing property rights.
Once the state has defined who may own property and what property may consist of, it must define what may happen when a property right is violated. Money sanctions? Specific performance? Self-help? Death or loss of a member by the breaching party? Imprisonment?
This is an especially complicated question, as the state may define different sanctions as appropriate remedies for different sorts of property violations.
4. The state must define what requires consent.
The state must define what counts as a transaction requiring consent. This is related to the above questions about what counts as property, what belongs to a person, and who is a market participant. If my money is my own, taking it from me requires my consent; but if it is not my own, it may be taken without my consent. And if I am not a market participant, my consent is not required in any case.
What counts as consent? Is affirmative consent required, or merely a failure to opt out? Must we consent to be advertised to? When can consent be presumed?
When can a substitute for consent be used? What substitutes are appropriate?
How far into the future may consent operate? Can it operate into the past?
When is apparent consent not real consent?
5. The state must define cheating.
There are many flavors of cheating that tend to undermine the market. Open up an introductory contract law text book to get an idea of the issues that must be regulated.
Is fraud okay? Accidental misrepresentation? How careful must an assertion be? What disclosures are required to make a transaction consensual?
What about coercion? Undue influence? Mutual mistake?
Is exploiting the cognitive biases of one's contract partners "cheating"? Exploiting the naivety of a contractual partner? Exploiting his illiteracy? His poor understanding of the contract's language?
Do the motives for putative cheating matter? What are the relevant states of mind?
And perhaps most importantly . . .
6. The state must define the procedure (if any) for changing the rules of the market.
As I hope I have shown, social norms affect and are affected by market rules. But social norms - and material circumstances - change, and with them, perhaps the rules of the market should change. How can this be accomplished? Majority rules? Unanimous consensus? Should there perhaps be . . . a market for establishing market rules? (And, if so, what are the rules of the meta-market?)
The State Has A Lot Of Work To Do
It's not simple. It can't be "free." And it can't be based on pure consent.