In economics, a free market is an idealized cognitive model of an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers.
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13 Facts About Free market
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2.
Historically, free market has been used synonymously with other economic policies.
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3.
Classical economists such as Adam Smith, the term free market refers to a market free from all forms of economic privilege, monopolies and artificial scarcities.
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4.
Free market argued that free competition could only be realized under conditions of state ownership of natural resources and land.
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Hence, competition in a free market is a consequence of the conditions of a free market, including that market participants not be obstructed from following their profit motive.
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Friedrich Hayek popularized the view that Free market economies promote spontaneous order which results in a better "allocation of societal resources than any design could achieve".
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Critics such as political economist Karl Polanyi question whether a spontaneously ordered market can exist, completely free of distortions of political policy, claiming that even the ostensibly freest markets require a state to exercise coercive power in some areas, namely to enforce contracts, govern the formation of labor unions, spell out the rights and obligations of corporations, shape who has standing to bring legal actions and define what constitutes an unacceptable conflict of interest.
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Advocates of the free market contend that government intervention hampers economic growth by disrupting the efficient allocation of resources according to supply and demand while critics of the free market contend that government intervention is sometimes necessary to protect a country's economy from better-developed and more influential economies, while providing the stability necessary for wise long-term investment.
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Critics of a laissez-faire free market have argued that in real world situations it has proven to be susceptible to the development of price fixing monopolies.
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Critics of the free market argue that it results in significant market dominance, inequality of bargaining power, or information asymmetry, in order to allow markets to function more freely.
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Critics of a free market often argue that some market failures require government intervention.
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The economic historian Karl Polanyi was highly critical of the idea of the Free market-based society in his book The Great Transformation, noting that any attempt at its creation would undermine human society and the common good.
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David McNally of the University of Houston argues in the Marxist tradition that the logic of the market inherently produces inequitable outcomes and leads to unequal exchanges, arguing that Adam Smith's moral intent and moral philosophy espousing equal exchange was undermined by the practice of the free market he championed.
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