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Free Market System Analysis

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Free Market System
The ECONOMYWATCH website defines free market system as “a system where the buyers and sellers are solely responsible for the choices they make”. As earlier stated, world economies operate within the spectrum of market capitalism on one end and the command socialism on the other end. In between the two ends lies the mixed economy system. The free market system, in a way, “gives the absolute power to prices to determine the allocation and distribution of goods and services. These prices, in turn, are fixed by the forces of supply and demand of a respective commodity”. Chapter 1 of ‘Economics: The Study of Choice’ by the Saylor Foundation (nd,p.67) states that “No economy represents a pure case of either market capitalism or command socialism. To determine where an economy lies between these two types of systems, we evaluate the extent of government ownership of capital and natural resources and the degree to which government is involved in decisions about the use of factors of production”. …show more content…

Using Kimberly Amadeo’s words, “ a market economy functions through competition”. Competition has its own advantages which include but not limited to production of goods and services in a more efficient way to maximize profits, rewarding of innovation, improved quality of goods and services being offered and also accumulation of capital.
The demerits include disadvantaging the less privileged in society who are naturally unable to compete. Examples of the underprivileged include the elderly, children, and mentally or physically challenged people and the caretakers of such people are also disadvantaged because their energies and skills are taken up with caretaking, not competing. In a nutshell, free market favors those who are good at

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