Ronald Reagan is remembered for a phrase that has become almost a political cliché: freedom is not free. [1] He was speaking about liberty in the geopolitical sense, but the same observation applies equally to markets.

A free market is not a law of nature. It is a carefully constructed system that exists only where property rights are protected, contracts are enforced, courts are trusted, and governments provide sufficient stability for people to invest, innovate and build businesses with confidence. The freedom to create wealth is itself a form of liberty, and like every other liberty, it depends on institutions that must be maintained rather than assumed.

That is the case for the free market.

I have spent the latter a career at the table with founders helping to sell the businesses they spent decades building, watching value get priced, and then unlocked at the moment of sale. I believe in the system. And yet I keep returning to an uncomfortable question: are we letting the market run with too little restraint or even understanding of where it’s is leading us?

I was recently reading a piece on this in the Australian Financial Review, and it got me thinking about the free market. [2] Consider the data. A recent survey of roughly 7,000 billionaires assembled over the past 25 years found something genuinely encouraging: for the first time, half of all billionaire wealth is now reasonably fairly earned, up from a far smaller share in the early 2000s, while the portion tied to “uncompetitive” sectors — those dependent on political access such as gambling, construction, and raw materials — has actually declined since 2021.[3] Billionaires, in other words, look less like policy failures than they used to. That should complicate the reflexive “eat the rich” politics now fashionable in the liberal west.

But it does not answer a deeper question about fairness and equity.

Many of the world’s largest technology companies generate enormous revenues from consumers spread across dozens of countries while reporting much of their profit in jurisdictions offering the lowest tax burden. A customer in Sydney, Paris or Jakarta buys advertising, subscriptions or digital services, yet much of the resulting profit may ultimately be taxed somewhere entirely different.

Governments have recognised the problem. The OECD’s Pillar One reforms were designed to allocate part of multinational profits to the countries where customers actually live rather than simply where intellectual property or headquarters happen to be located. Years of negotiations, however, have produced limited progress, while unilateral digital taxes have often resulted in trade disputes rather than lasting solutions. [4]

The issue is remarkably difficult to solve. Yet it remains difficult to escape the sense that something about the current arrangement feels incomplete.

These questions are hardly new.

In 1991, in the encyclical Centesimus Annus, Pope John Paul II offered a critique of the post-Cold War moment that is now largely forgotten, partly because it was inconvenient to everyone. He did not simply laude the failure of communism. He warned of the risk of an “idolatry” of the market, and drew a sharp distinction between a free economy operating within a strong ethical and legal framework, which he judged legitimate, and one in which economic freedom is left to answer to nothing beyond itself, which he did not. It is a critique that cuts against both the socialist and the libertarian instinct, which may be exactly why it never found much traction in the liberal West – we thought we’d won and that was that![5]

Executive remuneration tells a similar story.

In 1965, the average chief executive of a large American company earned around 21 times the salary of the typical employee. [6] Today that multiple is closer to 280. Since the late 1970s, CEO pay has risen by well over 1,000 per cent, while typical worker compensation has grown only modestly, despite substantial gains in productivity. [7]

Markets did not produce that outcome in isolation. Boards, remuneration committees, consultants and shareholders collectively accepted it, year after year. Whatever one thinks of those decisions, they were institutional choices as much as market outcomes.

The same pattern shows up closer to home. Australian CEO pay has followed a similar arc: from around 17 times an average worker’s pay in the early 1990s, to a peak above 120 to 1 in 2007, before easing back to somewhere between 45 and 55 to 1 on the latest realised-pay measure. It is a narrower gap than in America, but the direction of travel, driven by bonuses and share incentives boards have been reluctant to restrain, until quite recently has been much the same.