Critique of British Prime Ministers attack on the free market - Essay Example

Download file to see previous pages... The free market theory postulates that there should be numerous participants within the same market engaged in the buying and selling of numerous and varied products. All such producers have the opportunity to take part in production activities Furthermore, it argues that the ultimate gain is to consumers who enjoy the benefits of increased product diversity as well as competitive and affordable pricing on the same; in that the prevailing prices are a consequence of a “push and pull” forces of demand versus supply respectively. These ideal conditions of the free market form the basis and support for an economic practice that has become synonymous modern day trade under the banner of capitalism. For perfectly competitive markets, the ideal economics of a “free market” exist. This was the prevailing economic theory of the period of 1960-80. However, the current trends in economics suggest that big markets hardly operate under perfect competitive conditions since primarily; households are conscious about the markets; producers curve out their market shares therein effectively seeking profit and shutting out other competitors. Most markets in both the UK and the US are not “free markets” but oligopolies where a few firms control a large portion of the market (Hoetzlein).It is however unfortunate that the ideals of the free market are increasingly been used by politicians and technocrats alike as a rallying cry for free healthcare, reduced taxes, unregulated interest rates and deregulation of the aggregate economy. This has led to the erosion of the very fundamentals designed to optimize welfare to the consuming public of which they claim to be pursuant. The basic argument for the proponents of free market policies is in opposition to governmental interference in business operations and instead in favor of a natural restoration of balance within the economy. The ability and willingness to freely engage in exchange of commodities would therefore suffice in creating a natural order within the market that favors all parties involved. It is based on such an understanding that the British Prime Minister, David Cameron faults the previous regimes over their apparent apathy in regard to the exercise of free market policies. The prime minister argues that previous regime’s turbo-capitalism policies have turned a blind eye on corporate excesses plunging the economy into anarchy and violating the fundamental purposes for which it (the government) was formulated. Most apparent under his attacks on previous regimes policy of “letting capitalism rip” is the impact on oligopolies of necessity goods such as healthcare, utilities and housing. Such are the goods that are most pertinent to the civilian population as they are needed to survive; items with which households are unable to exert price elasticity. He condemns the previous regimes for denying the citizenry the enjoyment of these basic amenities at the expense of corporate greed and profit making. The recent global financial crisis has served to further the underlying weaknesses in the free market theory (Kwak). The world financial crisis is viewed as a banking crisis arising from the uncontrolled and misinformed deregulation of the United States’ financial market. This is because the world’s reserves are largely in the US currency (Roberts). Nowhere else than in the developed countries in Western Europe were the effects of the crisis mostly evidenced. However, most unfortunate is the fact that the role of most hard core free market theorists in this collapse seems to have evoked little or no interest. This further evokes questions to mind as to whether the crisis is over and if the supposed recovery is truly on course? Although many point to ...Download file to see next pagesRead More