Economics Dictionary of ArgumentsHome
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| Market economy:; A market economy is an economic system where decisions regarding production, investment, and distribution are primarily guided by supply and demand. Private individuals and businesses drive the economy, engaging in trade and setting prices based on competition. Government intervention is limited, allowing for free exchange and fostering innovation and efficiency. See also Supply, Demand, Markets, Interventions, Interventionism, Trade, Competition._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Donald J. Boudreaux on Market Economy - Dictionary of Arguments
Boudreaux II 34 Def Market economy/Boudreaux: By"market economy" I mean an economy in which there are no legal restraints on how far and in what direction prices can move; in which private property rights are secure; and in which people are largely free both to earn their incomes as they individually choose and to spend their incomes as they individually choose. A market economy, then, achieves two important goals simultaneously. Boudreaux II 35 1) First, a market economy permits self-interested people to prosper economically only by serving the interests of others. The greediest businessman can profit only by offering consumers deals that consumers value. Likewise, the greediest consumer can get what he or she wants only by paying suppliers arnounts that suppliers find attractive. Individual interest/egoism/market/Adam Smith: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages."(1) >Invisible Hand/Adam Smith. 2) Second, prices set in market economies "tell" people just how they can best serve others' interests. Prices are the Single most important sources of information for producers and consumers on what they can expect from others in market economies. >Price/Hayek, >Information/Economic theories. Market economy/Boudreaux: A market economy, therefore, expands the ability of each of us to pursue our own goals by harnessing the cooperation of others. Boudreaux II 36 Unlike in a firm or other organization that pursues a single goal - such as “make as much profit as possible by producing and selling automobiles” - a market economy is not aimed at attaining one unitary goal to which everyone in society must subordinate her own desires and plans. Laws/rules: In a market economy only basic and abstract rules are enforced - chiefly, the laws of property, contract, and tort, along with criminal sanctions against the initiation of violence, theft, and fraud. >Tort law, >Property rights, >Contracts. Individualism: The result is that each individual has wide scope to formulate his or her own plans - and wide scope in choosing just how to pursue those plans - without having first to secure permission from some authority. >Society/Hayek. 1. Smith, Adam. (1776) The Wealth of Nations. London: W. Strahan and T. Cadell._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
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