Essay on Free Market Economy: Capitalism and Freedom by Milton Friedman

Essay on Free Market Economy: Capitalism and Freedom by Milton Friedman

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What is a free market really? By definition a “Free market” is a summary term for an array of exchanges that take place in society” (Econlib). However there is more to it than that, in fact there is much to be learned and understood from a free market. A free market is a place (physical or not) where a person(s) in a community are able to go and exchange goods based on supply and demand. A truly free market has no barriers to entrance or to exit, and many goods and services. In any case people within the market are able to distribute goods freely based on free choice in trade for whatever they have agreed upon whether that is government notary(s) or other goods or services. In this type of market there is a huge emphasis on property rights. Property rights are hypothetical constructs in economics used to determine how a resource is used and/or owned. These property rights allow resources to be owned by individuals, associations or governments, without ownership there would be no way for free trade to occur and thus no way for free markets to exist. In this way free markets are shown to be essential to freedom and vice versa. In his book Capitalism and Freedom Milton Friedman says, “Historical evidence speaks with a single voice on the relation between political freedom and a free market” (pg. 9). Friedman is right in many ways, there cannot be political freedom without a free market, and so as principle number five states “there is no better way to organize economic activity”, or “markets are the best way to organize economic activity.” Markets are not the only way or the most efficient way to organize economic activity but they are the best way, they allow for freedom in trade, dispersal of scarce resources and most of all th...


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...t Union tried this with communism, using a centrally planned economy system in which economic decisions were made by the government rather than by interaction between consumers and sellers. Market economies like the United States have allocated resources through the decentralized decisions of many firms and households as they interact in markets for goods and services. This means that Market prices reflect both the value of a product to consumers and the cost of the resources used to produce it. Therefore, decisions to buy or produce goods and services are made based on the cost to the community/society providing them.
References:
Free Market. (n.d.). Retrieved May 04, 2014, from http://www.econlib.org/library/Enc/FreeMarket.html
Friedman, Milton (2009-02-15). Capitalism and Freedom: Fortieth Anniversary Edition. University of Chicago Press. Kindle Edition.

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