(Original post by Kibalchich)
Seeing as free markets have never existed, I wonder what you base your assertions on?
Logic. It is the methodology of praxeology.
Suppose there is a plot of land. A populus gets its food from this land. It farms the land and it produces X food. X food can support of population of Y people. So the system regulates itself and only Y people exist.
There will not be more than Y people to a significant extent because if there was some people would be unable to feed themselves and reproduce. Thus the populus tends towards Y. That is demand would outstrip supply. Prices of food would rise and some people would be unable to pay for children they may consider concieving
Naturally as new capital and knowledge is found the ability of the plot of land to produce food will increase. And thus the population can increase.
The problem of draughts and crop failures can be solved through the price mechanism and international trade. If a crop fails then the populus can import food. It will be willing to pay more for imported food than countries without crop failures. And thus the price of food will rise to the point at which enough food is reallocted from the prior importers to the country with crop failure.
The rise in price will also incentivise more producers to enter the food market. This is the price signalling mechanism again. The new producers see the potential for profit and enter the market. As food has very flexible supply, anybody could become a farmer if they have land, this system works very well. The increase in supply is allocated towards the country with crop failure.
It is of interest to note that this phenomina could be seen as benevolance. When in reality the new producers are being guided by abstract signals of price and profit to tell them what their fellow mans needs. The new producer need not know of the famine to serve the starving. All he needs to do is be guided by self interest.
By persuing profit we are being as altruistic as we can possibly be
Here is a great video explaining this
Gov. interference such as regulations on farming, subsidies, aid, tariffs all corrupt this mechanism and cause a malallocation of resources.