Free Market System
- This is a preview of the essay.
To view the full text you must login!
An economy is nothing more than citizens producing a global output. The citizens coordinate with each other to produce an aggregate set of goods. Centralized economies, such as socialist/communist systems, suffer from an inability to gather all salient information, uncertainty in how to optimize with it, and unresponsiveness to changing conditions. Additionally, since economic output is divided equally amongst the entire population, individuals have little incentive to work harder or more efficiently than what is required to minimally comply with the economic plan. Individual input is decoupled from individual output. The net effect is a sluggish, brittle, inefficient economy.
Free market economies allow individuals to exchange goods and services and enter into contracts as they see fit. Despite the fact that individuals in the economy act only to advance their own self-interests, the aggregate effect is a highly productive society. Individuals are in the best position to understand their needs and the means to satisfy them. Thus, individuals reap the direct benefits of their own good decisions and suffer the direct consequences of their bad ones...