A monopoly is the sole seller of its product so it is in “a position of economic strength” because there is no competition, the monopoly can “behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers” without losing market share. The definition represents an oligopoly to an extent because oligopolies do have competition in their market with other firms producing similar or identical products. Therefore they cannot act independently of its competitors. However, oligopolies are price makers and are in a position of economic strength. The definition is more fitting to oligopolies that collude and form cartels because they become more like a monopoly.
The picture described seems to be wonderful as it meets the communism society that Karl Marx wants: “No private property or inherited wealth. Steeply graduated income tax. Centralized control of the banking, communication and transport industries. Free public education.” (1) This is completely different from the world that Karl Marx is most familiar with—the 19th century Europe, which was fulfilled with huge increases in industrial production and profits, stagnation of wages for workers, formation of a vast impoverished working class. Nevertheless, in my opinion, the given society is indeed not communism, hence Karl Marx would not get satisfied with it.
In addition, the government cannot intervene in any economic activity but only maintain law and order in the country. Capitalism also provides many incentives to consumers, producers and owners of economic resources to use the resources available to them as soon as possible. This situation is considered as economic efficiency because it refers to the full utilization of factors of production. According to Jain and Khanna (2006), mixed economic system is a synthesis of characteristics of both capitalism and socialism. Mixed economy has two main focused which are social welfare and government interference in economic activities.
Marx believed instead that liberal democracy does not represent the best type of government since it does not correspond to a natural order but rather reflects a very human abstract view of society. Marx identifies two main “defects” in liberal democracy. Liberal democracy holds that all citizens are free and equal before politics and the law. Marx believes that this statement is partially correct. He asserts that liberal democracy makes men “politically emancipated” (Marx.
This is a very simple answer for a planned economy, which is the government or the planners decide what will be produced and how it will be produced. These planners discuss what are needs are and what luxuries we need and then decide on the quantities of output and the factors of production. Simply the government controls everything from production to consumption. This does mean that consumers often lack the freedom and choice of a free market, but many will argue that the planned economy is fairer. There is a distinct contrast between this system and that of a free market.
Capitalism and free enterprise are often seen as synonymous. In truth, they are closely related yet distinct terms with overlapping features. It is possible to have a capitalist economy without complete free enterprise, and possible to have a free market without capitalism. Any economy is capitalist as long as the factors of production are controlled by private individuals. However, a capitalist system can still be regulated by government laws and the profits of capitalist endeavors can still be taxed heavily.
Liberalism calls for a free exchange of ideas, a market economy that supports private enterprise that is relatively free, rejects any restrictions on the possession of individuals, and requires a transparent system of government. Burchill (2005) said that free trade could unify the country and society. Tom Paine, a political activist, as cited by Burchill, said that conflicts often occur in the States that do not liberate their people. The solution of the conflict is to make labor, commodities, and drive the capital freely. He assumed that free trade will bring peace and end the conflicts between society and government.
Friedman’s belief of the market’s perfection is based on the assumption that no actor would agree to a transaction if they did not find it fitting for themselves (Friedman, 1975). In other words the desire of both the businesses and consumers to gain in a transaction is what will keep the market balanced as long as there is no government intervention. Yet besides the perfect aspect of the market, Friedman does agree there are two issues the market can stumble upon, where as much as government intervention is opposed, it is critical in these instances. The only intervention needed is to assure there are no monopolies or negative externalities involved in the market. A monopoly, Friedman believed, needs anti-trust laws and legal intervention to counter any gross manipulation of the market.
Market Economy is a Poor Choice for Developing Country to Stay Competitive Introduction Market economy is an economy system the individuals are owned and controlled most of the resources and are allocated through voluntary market transactions governed by the interaction of supply and demand. The presence of market economy will make a gap or disparity in society. It is happened because people are free to play in the market. In addition, there is no interference from the government and it will lead to the exploitation. It has lead to the market economy become not an option for a country to stay competitive.
• Examples of market economies is United States of America and Japan. Role of government • To pass laws to protect businessmen and consumers • To issue money • To provide public services – police • To prevent firms from dominating • The market and to restrict the power of trade unions • Repair and maintain state properties. Advantages: • Goods and services go where they are most in demand and free market responds quickly to people’s wants and wide variety of goods and services. • No need for and overriding authority to determine allocation of goods and services • Producers and consumers are free to make changes to suit their aims • Competition and the opportunity to make large profits, greater efficiency, innovation. Disadvantages: • There is misallocation of resources • It creates inequality of incomes • It is not competent in providing certain services.