What Are The Disadvatages Of The Free market Economy?
posted in Uncategorized |Free market economy is an economy based on market regulation where action coordination works with the help of the interaction of free private producers and free individual customers. In that economy the decisions of the customers, resource suppliers and private companies define the structure of resource distribution.
Market economy system is based not on state but on private property, free competition, freedom of choice, free from state and ancient traditions and customs.
Free market economy has the following principles:
- free enterprise
- property types diversity on investment goods
- contractual relationship between business entities
- market pricing
- limited state interference in economical activity
Side by side with indisputable free market economy profits it has really serious shortcomings and imperfections. The disadvantages of the free market economy sometimes are crucial. The impossibility of the all conditions observance of the free competition leads to failures in the market mechanism. It is seen in instability of economic development: economic activities alternate with downturns which are accompanied with such “market illnesses” as inflation and unemployment. Promoting manufacture and capital bunching competition causes its own opposition – monopoly, which radically undermine free competition conditions. With all its system of reward distribution in correspondence with property of definite resources pure capitalism leads to deep differentiation of life levels of various strata of society. The model of pure market regulation doesn’t provide for social security mechanism of these or those strata of society. That conditions deep social-economical and political conflicts.
Free market doesn’t provide stimuli for goods production and services of collective use, which are indispensable to every person and which are not the object profit for national defence, protection of nature and the management of state affairs. There is also no enough miotivation for fundamental science, for those activity categories which can’t be subordinated to only commercial criteria (public health, education, science, culture and so on). Free competitor activity often leads to undesirable effects, such as abuse of environment, food pollution by harmful substances, drug addiction development, etc.
Free market economy often disregards negative consequences of made decisions fro the society in whole, and it also doesn’t safe irreproducible resources. The disadvantages of the free market economy very often lead the country to crisis.
