Traduction du texte en Français: L’intervention du gouvernement ; le pourfendeur du marché libre

There is no doubt that I am a supporter of the free market – all the amazing benefits which come from it and the overall successful implementation around the world of the system.

So what is this? Well there are many interpretation of what exactly the free market economy is. This is my definition of the free market economy though – “It [the free market economy] is an economic system which is guided by the invisible hand which is controlled by natural market forces. This hand in the market is self regulating and determines in essence what will and wont survive”.

Before you say it – “Look, the free market failed in such and such a year, in such and such a place”. My response is no – it did not fail. Why so? Well the concept of the free market is that it works without external intervention in the markets forces. What would this external intervention be?

If we look at the most recent world economic crisis (which many nations are still working out of), we will see that the leader of the recession – The United States of America’s government began interfering in the economy. When government begins to regulate banks (look at the Clinton years and the 2000’s recession), problems begin to occur. The obvious example of this would be the government forcing banks to offer loans and mortgages to people who are unable to afford the repayments. When interest rates are artificially altered (as often they are), this leads to a state in which credit often becomes so easily accessible. This will without a doubt lead to a peak of what we call a bubble. This bubble is inflated through the affordability of debt.

Then what happens? Well the bubble essentially pops and the markets go into free fall. Government at this stage (which has done enough damage), attempts to fix things by making credit more expensive (lifting the interest rates), this creates the situation in which debt becomes overwhelming and debt repayments in essence are not met. Logically, this leads to the repossession of individuals, corporations and other bodies possessions. Corporations which expanded due to the availability of cheap credit now are forced to lay off large numbers of staff members which lifts the unemployment rate.

Many economist then suggest that government will introduce social welfare programs and projects (such as done in the 1930’s with the Great Depression) which will make the recession dramatically worse and more drawn out. Now that it is rather evident that this failure of the free market system, in fact is not a product of the free market philosophy, but rather an interference from external factors of the market, we are able to look at the benefits of the free market economy.

The free market economy in essence is a market system which regulates itself. It has no government intervention and is free of all forms of external intervention. This market system is driven of the natural forces of the market, self interest, competition and supply and demand. Such a market system is often referred to as the laissez-faire approach.
This invisible hand in the economy ultimately is controlled by the forces of supply and demand and in a situation of excess of the provision of supply – it results in a certain action. What is this action? The simple answer to this is that there then is an excess of supply of the certain product which leads to a reduction in the retail price, which in essence leads to a reduction in revenue generated from the sale of the good or service. This is the perfect example of how the market is controlled by the natural forces of supply and demand and also how they regulate the market.

This market system is driven off healthy competition. Competition is what creates the best product for a consumer. It is clear that people living in markets which are monopolized are receiving a less than satisfactory end good or service from the provider of the good or service. Why is this so? Well companies who operate in the imperfect market have no competition. This means they are the price choosers and they in essence are making the choices about the quality of the end good or service. This leaves a situation in which consumers are powerless. In the free market, the economy is driven by the perfect market in which consumers own the factors of production and they are the price choosers.

This means that the consumers have full knowledge on the possible goods and services that they could receive from alternative providers and this becomes for corporations – the battle for the revenue from the consumers. What does this lead to? Well it leads to a situation of healthy competition and this is better for the consumer. The consumer now has the option to choose a homogenous good or service from a wide array of corporations all competing to make the best good or service for the lowest price.

Self interest is the driver of any economy. I would like to clarify what this means to me. I look at this and think – thats greed. Then when thinking about it – why does anyone work hard? Most people will answer – in order to future myself, my position, my business and so on. The free market economy has the ability to cleanse out the weaker elements and in doing so – it often has affects such as business going bankrupt. This must happen – business must not be propped up by government. Those employees at such companies can go onto working for other organisations which are more powerful or they can – most importantly as it is the driver of economic growth in the world – start up their own business which is driven by the same forces of supply and demand and it powered by innovation which leads to new products. Necessity is the mother of invention, however this cannot go without innovation and dedication.

The free market, because it works on self interest, is where the worlds greatest inventions and products come from as they are environment which are supportive of such growth. The country that runs the most of such principles is the United States of America – however they have even failed at doing this in its purest form. In conclusion – ask yourself which nation has made the largest number of breaking news technologies? Then ask – what economic / government style was ruling at the time. More and more, we are seeing communist nations (which by no means are free market economies) – leaning towards a more free market approach. They are backed by the free market nations – what would China be without the United States (or other free market like nations) consumption?

They would in essence be nothing!