Free Market Relationships

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Paper outline

  1. Introduction
  2. Free market relationships
  • Government involvement in free market
  1. Conclusion

 


 

Free Market Relationships

Introduction

The world today is increasingly becoming a global village. This is attributed to technological breakthroughs. To help the world integrate into one single unit, there is a need to have a freer market. Historically, governments of different nations resorted to protectionist approach to trade in order to protect the domestic industries from foreign trade. This has significantly reduced in the last century as more countries now embrace free market where there are minimal trade restrictions among the countries involved.

Free market relationships

Democratic space created by political and constitutional activities in the United States of America resulted in a much freer society with people chasing different life satisfying situations. Democratic nations create equalities that are supposed to be enjoyed by all individuals in the society. Majority of the individuals in the democratic nation pursue self gratification in the daily dealing. Tocqueville (1935, KSS, p. 583) points out that individuals are after self satisfaction and physical gratification to live happily in the world. Individuals only place sight on the pursuit of world welfare and are always in a hurry to enjoy life maximally before death can catch up with them. Regardless of the fact that a majority of individuals live in abundance they are always concerned with the creation of wealth to guarantee self fulfillment (Tocqueville, 1935, KSS, p. 583)

In his discussion about the pencil, Read is of the opinion that for individuals to perform their responsibilities effectively, they need to be free. Furthermore, for anyone to realize his potential he needs freedom and liberty to perform independently. Individual tend to be creative and productive if left free of government or other coercive masters’ interference. Read advocates for a free society without any legal obstacles that may hinder the progress of individuals. By allowing the society to be free, it helps organize and harmonize it (Read, 1992, KSS, p.616). To support the argument of Read, Davies in his article “our economic past” suggests that for humans to find solutions to the present and future economic problems, they need to act freely. This allows them to come up with economic institutions that is property rights and free exchanges that will enable problem solving. Davies is of the opinion that human beings tend to be creative in finding solutions to current and future problems is granted freedom (2004, KSS, p. 613).

Free markets are necessary in encouraging healthy competition in the market place. Free market offers an opportunity for companies to work on strategies that will make them survive in the market. According to Semmens, free markets offer competitive atmosphere to companies to continually innovate in order to remain relevant at the market place. Therefore, free market is thought to positively contribute in development of intellectual properties that are essential in economic prosperity of a nation (Semmens, 2005, KSS, p. 618).

In the discussion of the contribution of liberty and liberalism to free markets, Ebeling urges that free societies should have rules that deal with misconduct. Liberty and liberalism plus the rule of law are paramount in making the public more accountable in the free market place. He also emphasizes that these elements are essential in the elimination of selfishness in the society at the same time providing property autonomy (Ebeling, 2004, KSS, p.607)

Different forms of economic classification tend to have both negative and positive impact on free market in the world. The debate on communism verses Capitalism is still unresolved. The discussion ought to take in mind of the modernity of the world and allow more integration of trade across national boundaries (Marx, & Engels, 1848, KSS, p. 597). The freedom of the members of the society to own property and have liberty is essential in integrating commerce globally. According to Marx and Engels protection of local industry is detrimental in trade of a nation since it limits the country’s competitive power with the neighboring nations. Marx and Engel advocate more free labor markets and property rules to facilitate growth and productivity of individuals and society in general (1848KSS, p.593).

Capitalism is considered to have played a crucial role in the development of the society. William emphasizes that individuals in a freer society tend to benefit from working for others. Free market provides incentives to people to invest substantially in business. William is of the opinion that capitalism has resulted in a free society hence encouraging more individual to become entrepreneurs. These free enterprises contribute a lot of wealth in more civilized societies. Furthermore, the entrepreneur profits are usually recouped back to the for business expansion hence contributing to employment in the society (William, 2005, KSS, pp.603-604).

The United States of America has been in the forefront in guaranteeing liberty and freedom to its citizen. The American constitution guarantees these freedoms through the constitution. The government of the United States has separate economic development that is independent of political interference. The constitution offers individuals right to produce any product and the right to the use of the products. The constitution further abolishes any form of political restraints to individual freedom and liberty to produce any property. According to Buffett, the individuals are free to produce products of their own choice and are entitled to the state or federal protection on the enjoyment of the fruits of their own labor. Buffett is of the opinion that the current freedom and liberties being enjoyed by American individuals is due to government interventions on economic foundations that are articulated in the constitution. The federal government recognizes and provides freedom for intellectual inventions and ensures the owners have exclusive access to their private property (Buffett, 1956, KSS, p.600).

Government involvement in the free market

Government involvement in the regulation of foreign trade through prohibitions or high duties can positively or negatively impact on the domestic home industries. Governments are motivated to impose trade regulations to limit foreign trade with a view of making the locals industries flourish. The regulations are intended to make use of the society capital resource and create more local employment. According to Smith (1776, KSS, p. 585), this closed trade result in monopolization of the local industries for private individual gains. Smith (1776, KSS, p. 585), is of the idea that trade need to be opened up to the foreign market if the countries are to reap the benefits cheap products. Nations can buy cheap foreign products using part of the domestic industry produce while taking advantage of the industry employment (1776, KSS, p. 585).

The federal and state government from time to time may intervene in the market place. Individual in a free market place is required to freely pursue their interest without violating the general rules of justice. The government may be called to intervene in situations whereby the freedom and liberty guaranteed to market participate is misused by the market participants. To stop the damage to the society and other participants the state and federal governments have clearly articulated constitutional provisions on how it can intervene. According to Ebeling, the government has duties to play in a free market place. These duties include protection of the society from violence and invasion from external societies, protection of market participants and society member from oppression any by other market players and institution of public works (Ebeling, 2004, KSS, p.607).

The government guarantees this through enforcement of law and order through the federal and state security systems. For justice matters in the free market and liberty in society, the government addresses it through the judicial system. The judiciary oversees the enforcement of contracts and business transactions as well as defining property rights and dispute resolution. However, there are certain levels that government regulations should not supersede. These are biased preferential treatment and changes in the general welfare restriction without involving free market participants (Ebeling, 2004, KSS, p.607-609).

To my opinion the federal and state government should bail out businesses experiencing financial difficulties. This is important because if the businesses are left to collapse it may lead to monopolization of the market by remaining market players. Incase the government fail to check this, it may undermine the principles of free market (Ebeling, 2004, KSS, p. 608).

Conclusion

For governments to support the concept of free market economy, they should first encourage individual freedom and liberty. Individual liberty and freedom is essential in encouraging innovation and entrepreneurship among the citizenry. By doing this government will be able to provide favorable domestic industry growth. The government may use this as a platform for encouraging free market economy.

References

Semmens, J. (2005). Wal-Mart Is Good for the Economy, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 617-619). Bellevue, NE: Bellevue University Press.

Tocqueville, A. (1935). Democratic Capitalism & Individual Liberty from Democracy in America, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 583-584). Bellevue, NE: Bellevue University Press

Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 585-587). Bellevue, NE: Bellevue University Press.

Marx, K. & Engels, F. (1848) from The Communist Manifesto, Proletarians and Communists, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 594-598). Bellevue, NE: Bellevue University Press

Marx, K. & Engels, F. (1848). The Communist Manifesto, Bourgeois and Proletarians, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 588-593). Bellevue, NE: Bellevue University Press

Williams E. W. (2005). The Entrepreneur as American Hero, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 602-604). Bellevue, NE: Bellevue University Press

Ebeling, M. E. (2004). Free Markets, the Rule of Law and Classical Liberalism, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 605-609). Bellevue, NE: Bellevue University Press

Read, E. R. (1992). I, Pencil, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 614-616). Bellevue, NE: Bellevue University Press.

Buffett, H. (1956). The Economic Foundation of Freedom, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 599-601). Bellevue, NE: Bellevue University Press.

Davies, S. (2004). Our Economic Past, in E. Rauchut & K. Mason (Eds.), Kirkpatrick signature series reader (pp. 612-613). Bellevue, NE: Bellevue University Press.