Free markets and state intervention
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A long standing debate Since decades, countries have been in a dilemma They keep juggling between whether to choose free market economy, or whether to provide state intervention for the benefit of the poor
What is a free market economy? is an economy where government does not intervene in the market Whoever produces more and sells more ends up earning more profit Whichever product has more demand in the market will earn more profit Government does not take the responsibility of ensuring the stability of the market alled a capitalist economy. USA is the biggest example of such an economy
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State intervention in market This is a model in which the state(government) has the control over the market and how it operates So, the government can give extra support to the industries which are not performing well An absolute state-controlled economy can also be compared with COMMUNALISM/SOCIALISM However, most of the countries prefer a MIXED MODEL, where the state intervenes only when required. India is a good example of such a state
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. Which model do you think is better in terms of justice?
The arguments by free market theorists Those who support free market economy sav that it is the best model for a just society Whenyou gi qual opportunities to everyone to thrive, the best will automatically ucceed and lead to the betterment o This can also compared to the SURVIVAL OF THE FITTEST theory given by Darwin the soc
And while the law of competition may be sometimes hard for the individual, it is best for the race, because it ensures the survival of the fittest in every department.
No absolute freedom However, times have changed and the society needs to respond to it Today, if we leave the market by itself, it will lead to chaos Part of this is because of the population boom happening across the world
So, the free market theorists argue that it is must to REGUALATE the market to a certain degree, if we want justice to prevail For this, the state has to intervene in the market, so that it can ensure BASIC FACILITIES to everyone
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Corporate Social Responsibility he state cannot shut down all privately owned enterprises underprivileged section of the society very corporate in India has to spend a certain amount of its income towards social causes ey might open a school, hospital, NGO, or any other organization which benefits the So,it has devised an effective way so that the Private sector contributes to the eedy his is termed CORPORATE SOCIAL RESPONSIBILITY (CSR)
The merits of a-free market economy One cannot deny that free market economy is a good way to ensure justice in the society
No discrimination When we are a part of the market, we do not care for caste, religion, or any other such barriers How many of us know if the founder of Adidas McDonalds, Nestle, Sony c is of which religion?
Quality assurance It also ensures that the consumers get GOOD QUALITY products and services If everything is left at the hands of Government, it might start taking everything for granted This will result in substandard products and services We can see this in the case of railways in India Although the railways are progressing, the rate of progress is really slow If the Government would be threatened by the entry of private companies in the Railways sector, it would automatically improve its services
Demerits of Free Market economy Though the quality given by the Private sector is good, the price is often UNREASONABLY HIGH That is why we seldom see poor people going to private hospitals So, the state must ensure that it intervenes in the Private sector from time to time, so that justice can prevail