The Free Market System
The free market system has been praised by many as the answer to theworld's economic problems. It is the economic equivalent of democracy;every merchant is free to sell goods or services at a price determined byhim- or herself. According to this system, the ideal is for an individualto pursue his or her own self-interest, which then culminates in a resultthat is also of benefit to society as a whole.
It is alsoimportant to educated the public regarding the possible impact ofproduction or consumption. Thesolution in this case is appropriate education. When these costs become too high, themarket fails. A potential solution could be government intervention bymeans of taxes, as well as education. Among the factors contributingto free market failure then include inapt government intervention, externalfactors, and a lack of relevant information. With the correctstrategies, is thus possible to optimize the free market for the publicbenefit. Whengovernment intervention is not optimized, the market outcome itself is lessthan optimal, and failure occurs, especially in terms of environmentalexploitation. Free market economists forexample feel that government intervention should be minimized, whilesocialist economists feel that more state intervention is necessary. Here proper monitoring practices can be implemented toensure that the minimum impact occurs when a good is produced. Externalities include the cost to parties outside of the directproducer or consumer of goods. There has been considerable disagreement regarding the extent ofgovernment information that is proper for the free market system. Thisappears to be linked to political philosophy. When there is a lack of information regardingimpact, the market may fail due to the consequent lack of resources. he above view is fairly idealistic, and of course in realitycircumstances often deviate from the ideal.
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