Free Market Economy

Different accounts argue as to whether free market economy is either beneficial or detrimental towards both the economy and the environment. It has been said that the free market is the best economy to have, yet there are many people who feel that it is only an ideology that could be far too detrimental to the world and its population. Whether or not the free market economy is the best that we have, there is one thing that everyone can agree on - that it leaves its people with many opportunities.

Free market economy is defined as an economic system wherein the resources are allocated based on supply and demand with little to no government intervention at all (Investopedia, 2022). One of the main ideas behind a free market economy is that if a person has more money to spend, his or her needs will be met more easily than in an economy where people have less money to work with. The implications of this notion are far-reaching and complex. There are many people who believe that free market economy is destroying the environment, which will cause irreversible damage to our planet. However, there are also those who argue that, at the same time as severely damaging the environment, we have never had an opportunity to bring in more money for the world through market capitalism than what has been achieved in recent history with greater efficiency.

Many people believe that free market economies are the most suitable for globalization and environmental issues; however, other means of efficient and profitable globalization should be considered as well. There are some areas in the world where there will never be a carbon tax, or where it is impossible to go through with any type of energy-efficient improvement because of their scarcity. Although the free market economy has brought innovation and economic growth (Boyce, 2021), Charles Kolstad (2011) argues that free markets often fail to efficiently allocate resources. It is prevalent in the environmental arena wherein markets tend to under provide environmental benefits, rather, overprovide environmental hazards. In terms of the economic class system, the free market economy brought inequalities in accumulation of money such that those who were born in wealthy states tend to have a better start to life allowing the rich to accumulate money easier than the lower class. Monopolization of power is also prevalent in this type of economy since the wealthy have the ability in a free market to make their products cheaper. Letting them put other companies out of business which would leave them with no competition. This company can then raise their prices making them richer and the lower class poorer and expanding the divide between the classes. It all traces back to the upper class exploiting the lower class. Kolstad (2011) states that “While free market economy has much to offer for problems pertaining to natural resource allocation, the case for FME is weaker when dealing with environmental goods, such as providing clean air. The basic problem lies in the nature of the market failure.”

With this in mind, given the current situation of our environment wherein the environment has been greatly damaged, ethical and moral responsibilities towards economic growth must be the top priority. Economists must be ethical and morally responsible towards pursuing economic growth and thus, take consideration of the environmental issues. Thus, a free market economy is a great factor towards economic growth but on the contrary, it brings detriment towards the environmental state.

-Ms.Lendejhar-

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