Free Market Essay Example | Topics and Well Written Essays - 1000 words

Free Market - Essay Example It has been highly controversial whether free market is suitable for the present world economy. It is still unknown which economic policy would solve the fundamental economic problems of the present economy. It is time to analyze whether the concept of mixed economy would find success in this present world. It is again controversial up to what extent the governmental regulation must be allowed in a mixed economy. Moreover, it is also important to review the amount of access of free market and its validity and significance in the present world economy. It will be useful if we analyze the concepts of Adam Smith and Milton Friedman and the opposition of Keynes and Karl Marx in the context of the present world economy. Adam Smith advocated the concepts of free market and explained in his work An Inquiry into the Nature and Causes of the Wealth of Nations the mechanism that he believed being operated in the economic society. According to Adam Smith, individuals strive to attain wealth by aiming only on their personal gain. These individuals however cannot consume everything that they produce and has to share it with others who value it and pay the price for it. So the public interests of the society can be satisfied by this system of division of labor and free market. Smith, the father of economics, have authored the invisible hand which is able to explain all sorts of economic phenomena in all fields. The book has included the valuable views of Adam Smith about free market. Adam Smith explained the concept and told that businessmen or entrepreneurs always aim for the best profit and consumers always do aim for the lowest price. Consumer choice thus would become the force that influences the price in the market. Consumers would demonstrate their demand or negligence towards products that appear in the market. These consumer demand or pressure would thus encourage entrepreneurs or producers to invest more on the same product and bring more of them into the markets. T hus it is nothing but the consumer demand that pressurize the producers to invest their money into the profitable industry. Thus industry brings the most demanded goods to the markets and consumers also receive their favorable products, thereby resulting in the general economic well being of the society. Adam Smith considered this market-based system as a great advantage as people are forced to respond (producers) according to the want and demands of other people. Free market is the concept in which price is regulated by the corresponding demand or supply. Trade and business would be completely voluntary in free market concept without any interference from force, rule or fraud. In a free market system, the theory of supply and demand would rule the economy bringing the prices of the products towards a typical equilibrium state that would balance the demand and the supply. Another major advocate of free market system is Milton Friedman. He opined that that there is a close and direct relationship between economic freedom and economic growth. Milton Friedman, the American economist (famous for his macro and microeconomics) was of the opinion that free markets would challenge and destroy away political centralization and political control completely. In his book, Capitalism and Freedom he mentioned that the role of a government in free market economy is to maintain political and social freedom. Freidman highly supported free market concept and explained several of its advantages. According to him, â€Å"The most important single central fact about a free market is that no exchange takes place unless both parties benefit.† He opined that the one and only way to get a lot of people cooperate together jointly is through free market. As a