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Free Market Debate: Benefits and Drawbacks Essay


The issue of understanding the benefits and drawbacks of the free market is fascinating and complicated because it can be analyzed from different points of view. The perspectives of specific groups and even individuals can vary because of the arguments they make for and against the idea of free trade. The underlying concept of the free market is that transactions or exchanges of goods and services for other products, services, or money do not happen unless both parties benefit from this trade. This highly simplified approach, while seemingly ideal, does not include socioeconomic, moral, societal, and financial situations of a particular society and its members. Nevertheless, if one considers only an economic perspective while discussing this idea, it is possible to see that it sounds logical. The statement which argues that people do not engage in transactions unless both trading parties benefit from can be considered accurate from an economic perspective but only in an idealized setting.

The origins of this concept and phrase can be linked to Friedman, an economist, who believed in the creation of a free market that would not be controlled by the government (Ebenstein, 2014). His classical liberal ideology of market and government separation stated that free trade could help people recover from the financial crisis and fix major economic problems in the long run. Here, a free market is the idea of an idealized system, where both parties can benefit from each transaction. If one party needs something that another one has, both sides can reach an agreement and exchange something that they both find useful. Undoubtedly, this concept sounds great because it highlights the possible freedom of choice and the ability to refuse a harmful transaction. As the outside sources do not monitor the financial aspect of such operations, people are free to establish their own prices based on supply and demand (Davies, 2014). Moreover, people are also allowed to refuse to buy or exchange their possessed goods if they do not find the deal profitable.

This positive outlook, however, cannot be fully incorporated into people’s everyday lives. While it promotes liberty to enter the market, people do not always have the ability to refuse some transactions. For instance, the issue of purchasing necessities is not included in this statement. Economically, one can argue that by buying a necessary product, a person still receives compensation for spending money. However, the proportion of benefits for both parties is omitted from this concept. It is possible to assume that one side of the trade can often receive more benefits from a transaction than the other one. In this case, the need to purchase an item without which a person cannot function takes away one’s liberty to enter the market. According to Philo and Miller (2014), such transactions can be used by companies that take up a significant portion of a particular market. As they have a substantial influence on the product, they can manipulate people’s possibility of abstaining from transactions.

While the simple idea of mutual benefit remains logical, the rate to which both parties are satisfied in the end can differ significantly. From an economic standpoint, the statement proposed by Friedman has the right to exist. If one does not account for one’s needs and bare necessities as well as the issues of unfair pricing, monopolization, and market manipulation, a completely free market seems possible. Economic reasoning does not oppose the idea that people do not have to partake in transactions from which they will not benefit.

References

Davies, W. (2014). Neoliberalism: A bibliographic review. Theory, Culture & Society, (0)0, 1-9.

Ebenstein, L. (2014). The increasingly libertarian Milton Friedman: An ideological profile. Econ Journal Watch, 11(1), 81-86.

Philo, G., & Miller, D. (Eds.). (2014). Market killing: What the free market does and what social scientists can do about it (2nd ed.). New York, NY: Routledge.

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IvyPanda. (2020, September 15). Free Market Debate: Benefits and Drawbacks. Retrieved from https://ivypanda.com/essays/free-market-debate-benefits-and-drawbacks/

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"Free Market Debate: Benefits and Drawbacks." IvyPanda, 15 Sept. 2020, ivypanda.com/essays/free-market-debate-benefits-and-drawbacks/.

1. IvyPanda. "Free Market Debate: Benefits and Drawbacks." September 15, 2020. https://ivypanda.com/essays/free-market-debate-benefits-and-drawbacks/.


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IvyPanda. "Free Market Debate: Benefits and Drawbacks." September 15, 2020. https://ivypanda.com/essays/free-market-debate-benefits-and-drawbacks/.

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IvyPanda. 2020. "Free Market Debate: Benefits and Drawbacks." September 15, 2020. https://ivypanda.com/essays/free-market-debate-benefits-and-drawbacks/.

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IvyPanda. (2020) 'Free Market Debate: Benefits and Drawbacks'. 15 September.

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