The Ins and Outs of Market Economy
Our Constitution does some great things for us. In many situations, it protects us from many things, including our market economy. You have probably heard of the market economy before, but do you really know what it is? It is when free enterprise makes economical choices. It lets the laws of supply and demand to control the production of goods and services.
Supply and demand include capital, labor and demand and natural resources. The demand, of course, includes the purchases that consumers make as well as government and businesses. Producers will try and get the best prices they can for their product. While shoppers will be looking for the best prices on the things they want.
Employers and employees work the same way, workers want more while businesses are hoping for less when it comes to wages. That is where the capitalism goes to work for both. It needs a market economy to fix prices and handle distributing the goods.
Things That Are Characteristics of the Market Economy
Things that are characteristic of a market economy are definitely noticeable. A majority of goods and services will be privately owned. Leaving it to the owners to make legally bound contracts for buying, selling or leasing the property they own. Their assets give those rights to profit from their ownership. There are US laws that do exclude some assets. In 1865 you were no longer able to buy or sell humans, including yourself or any part of you.
Then you have freedom of choice, meaning owners have the right to produce, purchase and sell goods and services in a competitive market. There is a price constraint though on the capital they have. Then there is the motive of self-interest, everyone sells their things to the highest bidder while negotiating the lowest price for purchase.
Healthy competition, competitive pressure helps keep the prices on things low. It is the best way to provide good and services efficiently. When demand rises for a product so does the price. The system of markets and prices is another. For a market economy to work, it has to have a working market. Giving equal availability to information. Price changes all rely on the laws of supply and demand.
Last is a line is limited government. Its purpose is to make sure the markets are for sure working and open. The government will penalize any monopoly that tries to restrict the competition. It does not allow for anyone to manipulate markets.
The Advantages of Market Economy
When it comes to advantages there are some good ones. A business will only make things that they know will make money in the end. Goods and services are produced only in the most cost effective and quality ways possible. The more productive they are the more money they will make.
This type of market also rewards innovation. Any product that will meet the needs of consumers or better existing ones will spread to others for even more money making. Some of the best flourishing business are smart because they invest on another top of the line companies. Which gives them leads and better quality on their productions.
The Disadvantages of This Market
One of the disadvantages of this type of market is there is nothing in it for those at a competitive disadvantage. Which is anyone who is unable to compete older people, children and disabled? The caretakers are also disadvantaged as well since they are too busy caretaking they are too busy to be competitive. If they were not busy caretaking they could be helping the economy’s comparative advantage.
Which next comes human resources of the population may not be working correctly either. When someone may be the next miracle researcher or doctor may be held back from doing so. By having to take a low paying job to help pay for family needs, which pulls them from contributing as a whole.
In the last disadvantage, the value of the ones on top is reflected by society. Which is why in this type of market some have million dollar homes and private jets, while others are homeless and starving. A pure market society has to make the decision if it is a better choice to care for those in need. In cases where that did happen the people decided to let the government have more of a part in redistributing the resources. So, what it boils down to is if you take care of your people, you will have the support of your people.
US Constitution Provisions That Help the Markets Economy
There are provisions within the constitution that help protect the market. Which keeps the US market the world’s premier market economy. The most influential ones are the ones we will go over. Section I in article 8 guards everyone’s innovation as property with a copyright. Sections 9 and 10 of Article I, protect free enterprise and choice and preventing other states from being able to tax each other’s goods and services.
Then you have amendment IV that protects private property and limits government. By prohibiting people from unreasonable searches and seizures. Amendment V, protect the ownership of having private property. Amendment XIV prohibits states from taking away property, without giving you the right to due process of law. IX and X amendments limit the government’s powers to be able to interfere in any of your rights that are not stated in the Constitution.
The constitution was aiming towards promoting the general welfare. Meaning the government could take a bigger role than what a market type economy calls for. Which led to Social Security, Medicare, and food stamps.
A market economy can work, it has been working. While a market economy is not perfect, nothing is. It keeps things in check and allows for more control over privately owned things. The competitiveness of the market also assures there is enough to go around, as well as keeping prices reasonable. By allowing everyone to have access to the same information, it is keeping things fair. It gives everyone a fair chance at business instead of allowing monopolies, which would prevent and in most cases wipe out other businesses.
Additionally, it allows for people to share goods and services across state lines, without having to worry about added taxes giving everyone the choice to purchase or uses services of their choosing. It benefits the market economy as a whole. By allowing these types of freedom it can actually benefit the economy’s growth as well. The constitution works as well to give people more control over what they own, while still allowing the government to take care of needed things without crossing the line.
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