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Different economies of the world choose one of the three economic systems: command economy, free market economy, and mixed economy to suit their needs and aims most appropriately.While each of these economic systems have their own advantages and disadvantages, most of the economies of the world are currently mixed economies.The economic systems of countries also evolve over time and may change from one particular system to another when the government, economic advisors of the country, and the public deem appropriate.
Accordingly, a free market economy may be beneficial for the rich but may be highly detrimental for the poor.
There is no example of a complete free market economy in the world but the USA comes closest to the definition of a free market or capitalist economy.
De-merit goods such as drugs, alcohol, cigarettes, and other products would be produced without interference or control from public authorities.
Public goods which are not produced for a profit but are produced because they are necessary such as street lighting, water, roads, and other such products/services are either priced very high or not produced at all.
Accordingly, governments and economic advisors devise economic policies which classify the economy into the categories of one of the three types of economic systems.
However, governments may change these policies and may also change the economic systems adopted in a country when they feel it is required, although this process may take a long period of time (Ostrom, 2010).The free market economy may also mean higher productivity levels, higher wages, and more work opportunities for individuals.This is because the economy would be in a state of rigorous competition, making room for more workers to gain higher incomes as businesses would also be competing to recruit the most talented and skilled workers.The paper sheds light upon issues such as unemployment, medical care, transport, and the increasing rate of immigrants that the country currently has to face.Countries around the globe adopt various economic systems which suit their own circumstances or which their governments feel would be most appropriate to promote prosperity in the country.The free market economy is an economic system which is purely driven by the market forces of demand and supply and the price mechanism.Thus, in the free market economy, those goods and services which are in high demand are produced and supplied and those that consumers are not willing to pay a high price for are not produced or supplied.Additionally, as there would be no or little government intervention, the public would not be provided with benefits such as welfare schemes, pension schemes, and may not even be provided with fair pay according to the cost of living.Problems such as inflation and the occurrence of monopolies would also not be prevented by the government as the government would have no major role in the economy.The free market economy is also known as the “laissez’faire” economy and producers operate upon the profit motive as the economy is in a state of pure competition (Baylis, Smith, & Owens, 2013).The advantages of a free market economy include that consumers are provided with a variety of products at potentially low prices as there are many producers competing for market share.