Titarenko
Yana
Donetsk
National university of economy and trade after Michael Tugan-Baranovsky,
Ukraine
Value of
free-market economy
A free
market is a market that is free of government intervention and regulation,
besides the minimal function of maintaining the legal system and protecting
property rights], and is also free of private force and fraud. In a free market
property rights are voluntarily exchanged at a price arranged solely by the
mutual consent of sellers and buyers. By definition, buyers and sellers do not
coerce each other, in the sense that they obtain each other's property without
the use of physical force, threat of physical force, or fraud, nor is the
coerced by a third party (such as by government via transfer payments). In
addition, in a free market, force is not used to prevent competition among
buyers or among sellers (called free competition). Therefore, force is not a
determinant of price, but rather price is the effect of buying and selling
decisions en masse as described by the law of supply and demand. Free markets
contrast sharply with controlled markets or regulated markets, in which
governments directly or indirectly regulate prices or supplies, which according
to free market theory causes markets to be less efficient. In the marketplace
the price of a good or service helps communicate consumer demand to producers
and thus directs the allocation of resources toward consumer, as well as
investor, satisfaction. In a free market, price is a result of a plethora of
voluntary transactions, rather than political decree as in a controlled market.
Through free competition between vendors for the provision of products and
services, prices tend to decrease, and quality tends to increase. A free market
is not to be confused with a perfect market where individuals have perfect
information and there is perfect competition.
Free
market economics is closely associated with laissez-faire economic philosophy,
which advocates approximating this condition in the real world by mostly
confining government intervention in economic matters to regulating against
force and fraud among market participants. Hence, with government force limited
to a defensive role, government itself does not initiate force in the
marketplace beyond levying taxes in order to fund the maintenance of the free
marketplace. Some free market advocates oppose taxation as well, claiming that
the market is better at providing all valuable services of which defense and
law are no exception, and that such services can be provided without direct
taxation.
Some
economists regard the free market as a useful if simplistic model in developing
economic policies to attain social goals, others regard the free market as a
normative rather than descriptive concept, and claim that policies which deviate
from the ideal free market solution are 'wrong' even if they are believed to
have some immediate social benefit. R H Coase argued that the alternatives to
the free market price system aremuch worse.
In
political economics, one opposite extreme to the free market economy is the
command economy, where decisions regarding production, distribution, and
pricing are a matter of the state. Other opposites are the gift economy and the
subsistence economy. The mixed economy is intermediate between the position of
a planned economy and market economy.
In
social philosophy, a free market economy is a system for allocating goods
within a society: purchasing power mediated by supply and demand within the
market determines who gets what and what is produced, rather than the state.
Early proponents of a free-market economy in 18th century Europe contrasted it
with the medieval, early modern, and mercantilist economies which preceded it.
Ëèòåðàòóðà:
1. Science and Engineering Indicators.
2000, National Science Board. -Wash., 2000.-Chapter 7.
2. Marketing [Ýëåêòðîííûé ðåñóðñ]: Ðåæèì äîñòóïà: http://en.wikipedia.org/wiki/Marketing.