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Advantages And Disadvantages Of Free Market Economy

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The economic system is a system used by a country to allocate its resources to both individuals and organizations in the country. Liberal economic system upholds private property and allowed people to continue creative and compete. So, market economy is the right choice for developing country to stay competitive (especially in Indonesia). Free Market Economy Free Market Economic System is an economic system that gives freedom to the people to decide and arrange their own economic activities they want to do accordance with their ability. The freedom covers all the principal economic activity such as production, consumption, and distribution. In this economic system, the price is determined by the strength of competition in the market or in other …show more content…

The government does not intervene in the market, so that pricing occurs because the market mechanism, which is the relationship between demand (demand) and supply (supply). State interference is limited to matters that cannot be cultivated private but is a prerequisite for the implementation of the free market, such as national security. Free market economic system provides flexibility to the community to determine and regulate its own economic activity they will be doing. As a system, free market economy has its advantages and disadvantages. The advantages of free market economic system: 1. Every individual is free and has a wealth of production resources. 2. The initiative and creativity of the community in economic activity can be developed. 3. The existence of competition manufacturers to produce quality goods. 4. Efficiency and effectiveness is high, because of his actions are always based on economic principles. The weakness of the free market economic: 1. Freedom easily manipulated by those in power in economic terms to extort the weaker side. 2. The competition to dominating the market may encourage the formation of monopolies, collusion businesses that threatens a weaker employers. 3. The emergence of social inequality

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