Disputes about the pros and cons of a market economy are not abating between economists of various schools and trends. In its pure form in the modern world, the market economy is practically not represented anywhere. Most states use a mixed economy in their practice, where there is both market influence and government regulation.
Advantages of a market-based farming system
The unconditional advantages of a market economy include the fact that it makes the manufacturer strive to take into account the interests of the consumer and think about his benefits. Only complete and versatile satisfaction of the customer's needs can ensure maximum profit for the company. If an entrepreneur does not take into account this important point, his goods or services will not be in demand, and more agile competitors will occupy this market niche.
A free market presupposes, to one degree or another, competition. Competition between manufacturers is another plus of the market. It makes it possible to ensure the highest level of quality of the product, otherwise it will simply not be purchased.
The mechanism of competition protects the market space from unscrupulous manufacturers and obsolete technologies.
Market mechanisms provide participants in economic relations with relative freedom of choice. The parties to economic activity do not depend on anyone in making decisions, when choosing partners and contractors, in concluding business contracts. This "economic democracy" inherent in the market is also its strong point.
Disadvantages of market mechanisms
What are the disadvantages of a market economy and its weaknesses? Even the most perfect and well-functioning market mechanism is not able to fully protect business participants from abuse and aggressive marketing policies, in which all means are good. A particular danger is posed by companies that begin to occupy the position of monopolies, throwing out weaker competitors in their field of activity from the market.
It is only possible to effectively resist monopolistic tendencies with the help of state regulation.
Another disadvantage of market methods is that in their desire to win the attention of the consumer by any means, manufacturers often, directly or indirectly, impose goods and services of dubious value on customers. This market policy is called "needs formation" or "education" of the consumer. As a result, the buyer spends money on goods that are objectively unnecessary for him.
Most often, the market economy itself is not able to cope with the problem of producing goods and goods that are socially significant, but disadvantageous in terms of making a profit. As a rule, the state has to undertake the production of such unprofitable products.
A very significant drawback of a market economy is also that it is unable to provide social guarantees to the participants in the production process and to give a population capable of work full employment. The wave-like change in the market, accompanied by periodic crises and the closure of production, is fraught with the potential danger of unemployment.
