The advantages of a free market economy

Kang Ouyang for his clear and concise summary of the main tendencies in Marxist philosophy in China, a country whose development is becoming ever more important to the fate of the entire world. It is an impressive list. I was especially pleased to learn of the growing interest in Marx's theory of alienation and his theory of truth, and of the widespread opposition to all kinds of dogmatism.

The advantages of a free market economy

Student Answers krishna-agrawala Student In reality there are no perfect free market economies. Even in countries like USA considered to be champions of free market, there are many areas of government control.

For example there are laws intended to check unfair trade practices. Also there are considerable restriction on what can be imported and how much quantities through the mechanism of import quotas and tariffs.

Then there are provisions like anti dumping laws. This proves that free economy has its advantages as well as limitations. The biggest advantage of free market economy is that it gives the people the power of choice.

They have greater freedom to choose how they want to spend their income. Another major advantage is that it makes best use of individual entrepreneurial abilities, which it also encourages. Major problem is that to be most effective it needs some ideal environmental conditions like full, free and instantaneous availability of all relevant information to all buyers and sellers.

It also requires complete freedom to manufacturers from one industry to another. Perfect conditions like these are possible only in theory. Lack of these ideal condition makes free market mechanism ineffective in many ways.

Thus monopolies and oligopolies develop, that may act against the interest of the consumer. Also we cannot always take it for granted that what consumer want is in his or her best interest.

The advantages of a free market economy

For example, no reasonable person will say that drugs should be freely sold to people who want to buy it. It just creates a system in which everyone ears as per his ability. Actually because of the imperfection in market mechanism, free economy tends to further increase the disparities between people.

Resources are privately owned by individuals and companies. Profit and return on investment are the main drivers of businesses.

History has shown that free market economies perform substantially better than government-run economies.

Business Efficiency

There are also disadvantages to a free market economy. Certain public goods such as roads, brudges and street lighting may not be produced because companies may not find it sufficiently profitable. Finally, because businesses seek to maximize profits, they might not consider the potentially negative social impacts of their products, e.

The advantages of a free market economy

A very high income mobility 2. A much higher GDP 3. More money spent on social programs Disadvantages:The advantages of a free market economy (and the disadvantages of command economies) 1. Efficiency. Free market economies are very competitive.

Most of their industries are assumed to be perfectly competitive, and so they will use their resources wisely and efficiently to make them more profitable. Ultimate. A free market economy has two key advantages.

First, it allows for individuals to innovate. Individuals have the freedom to create new ideas, new products, and new services to sell for profit.

Free market economies, although have been successful in developed economies, will not be so in developing countries and the only recourse for them is the model of the mixed economy or social market economy. According to the Houston Chronicle, advantages of a free market economy include freedom of innovation and the ability of customers to drive choices in addition to disadvantages such as the danger of the profit margin and market failures.

Jun 26,  · Advantages and disadvantages of market economy, command or planned economy and mixed economy About the Author Living in Houston, Gerald Hanks has been a writer since In a free market economy, firms and households act in self-interest to determine how resources get allocated, what goods get produced and who buys the goods.

A free market economy is opposite to how a command economy works, where the central government gets to keep the profits.

Explain the Advantages & Disadvantages of Free Market Economies |