The Free Market System essays

The Free Market System essays The free market system has been praised by many as the answer to the world's economic problems. It is the economic equivalent of democracy; every merchant is free to sell goods or services at a price determined by him- or herself. According to this system, the ideal is for an individual to pursue his or her own self-interest, which then culminates in a result that is also of benefit to society as a whole. The above view is fairly idealistic, and of course in reality circumstances often deviate from the ideal. Among the factors contributing to free market failure then include inapt government intervention, external factors, and a lack of relevant information. There has been considerable disagreement regarding the extent of government information that is proper for the free market system. This appears to be linked to political philosophy. Free market economists for example feel that government intervention should be minimized, while socialist economists feel that more state intervention is necessary. When government intervention is not optimized, the market outcome itself is less than optimal, and failure occurs, especially in terms of environmental exploitation. A potential solution could be government intervention by means of taxes, as well as education. Externalities include the cost to parties outside of the direct producer or consumer of goods. When these costs become too high, the market fails. Here proper monitoring practices can be implemented to ensure that the minimum impact occurs when a good is produced. It is also important to educated the public regarding the possible impact of production or consumption. When there is a lack of information regarding impact, the market may fail due to the consequent lack of resources. The solution in this case is appropriate education. With the correct strategies, is thus possible to optimize the free ...