My view of the free market system

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My view of the free market system

  1. 1. My View of the Free Market System Victoria Rock Unit 1 DB The free market system was set up to encourage competitions and level the playing field forboth new and existing commodities, allowing the consumer the freedom to buy any productthey want, in the amount they wish to. The basis of the competition is the freedom of choicethat exists in pursuit of monetary returns. Producers watch the market system closely andmake decisions based on the supply and demand at which point a unique price is determined.For example, if the price of a commodity is high, then market forces interact to ensureequilibrium. Based on this, there is competition between buyers and sellers in the sense that asbuyers but more items, producers react by producing more of the demand item. It is fare to argue that although the free market system is not perfect, sellers and buyersdefuse economic power within the business and households that make up the economy.Proponents feel that the system brings about optimal distribution of the country’s resources.With the vast amount of buyers and sellers that act independently, no single one can dictatethe price of the product but can determine the price by hiding the cost of production verycarefully. In a free market system, the distributions of the country’s resources are also basedon distorted market systems like monopolistic completion, and oligopoly which leads tosuboptimal distribution of a country’s resources. Also because of competition there is thefreedom of entry and exit which enables the economy to adjust to consumer preferences,technological change, and resource availability. Companies that drastically increase the price ofgoods would lose sales to competitors. The market system is a profit-and loses system due todecisions that individuals make which determines the success of a company as a whole. As I have learned this past year in school, no system is perfect. One could argue that the freemarket system is not a perfect system. How could it be when in fact it consist of players thatmake decisions based on personal or company interests without giving any regard to thegeneral economy. Those who increase the inequalities of income and wealth further leads tothe exploitation of the weak and underprivileged. The opponents of free market claim thatopenness leads to defenselessness while foreign competitors and political adversaries canexploit the situation. In my opinion the free market system is filled with greedy individuals withonly one goal in mind, to make as much profit as possible. The US and World economy nearlycollapsed in 2008 because companies made decisions they felt would enhance their profitswhen in fact all they did was put peoples economic status in jeopardy. The opponents of freemarket is correct when they claim it leads to greater inequalities, however with regards to
  2. 2. people making wrong choices that could harm, that is not acceptable. It is a democratic valuethat the freedom of choice be granted and we have to respect that choice.Reference(2009). Chapter 3; Supply and Demand. In W. Krugman, Economics 2nd edition (pp. 61-92). New York:Worth.PIPA. (n.d.). 20-Nation Poll Finds Strong Global Consensus:Support for Free Market System But Also MoreRegulation of Large Companies. Retrieved November 10, 2011, from Globe Scan:http://www.globescan.com/news_archives/pipa_market.htmlReich, R. (2010, Feburary 11). One Free Market System for Wall Street, Another Free Market System forMain Street. Retrieved November 10, 2011, from Huff Post; Business:http://www.huffingtonpost.com/robert-reich/one-free-market-system-fo_b_459023.html?Rothbard, M. N. (n.d.). Free Market. Retrieved November 11, 2011, from The Concise Encyclopedia ofEconomics: http://www.econlib.org/library/Enc/FreeMarket.html

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