My Understanding of Market Economy
Ayattillo Azimov
Charles Milliken
ECO 203 Principles of Macro Economics
16.04.2012
My Understanding of Market Economy
Market economy began to develop much earlier than Smith wrote his “Wealth of Nations”. Even in biblical stories, people were trading among each other and self-interest was the key factor of those economic relationships. However, industrial revolution has changed the way of the development of the economy and overall situation in the market place. Today, wealth can be produced without any difficulties but there are some challenges in distribution of that wealth among nations. Capitalism is not able to distribute its wealth wisely but it distributes its resources very well. Another (not economic) argument which justifies market economy is the role self-freedom. Market economy regulates economic relationships without forcing people. Due to high competitiveness in the market economy, the quality of goods and services are always in the high level. Therefore, productivity of employees and workers is also increasing. However, new technologies have caused the level of unemployment rate to go up. Economic situation has changed a lot for last few decades and market economy does not fit all the requirements of the changing world.
People create their well-being by themselves and labor is the key factor in creating it. Socialism, especially during the Soviet Union, was based on labor but capitalism is based on self-interest and money. If self-interest is vice of human being, money is evil. Obviously, market economy is not able to eliminate unemployment rate. For example, according to David Manuel (2012), current unemployment rate situation in the United States is 8.2% and 20 years ago in 1982 it was 10.8% (Manuel, 2012). In contrast, Paul Gregory and Irwin Collier (1988) claimed, in 1930’s the Soviet Union was able to liquidate unemployment rate (Gregory & Collier, 1988). We have just looked at previous years but if we consider our days, we will find
Charles Milliken
ECO 203 Principles of Macro Economics
16.04.2012
My Understanding of Market Economy
Market economy began to develop much earlier than Smith wrote his “Wealth of Nations”. Even in biblical stories, people were trading among each other and self-interest was the key factor of those economic relationships. However, industrial revolution has changed the way of the development of the economy and overall situation in the market place. Today, wealth can be produced without any difficulties but there are some challenges in distribution of that wealth among nations. Capitalism is not able to distribute its wealth wisely but it distributes its resources very well. Another (not economic) argument which justifies market economy is the role self-freedom. Market economy regulates economic relationships without forcing people. Due to high competitiveness in the market economy, the quality of goods and services are always in the high level. Therefore, productivity of employees and workers is also increasing. However, new technologies have caused the level of unemployment rate to go up. Economic situation has changed a lot for last few decades and market economy does not fit all the requirements of the changing world.
People create their well-being by themselves and labor is the key factor in creating it. Socialism, especially during the Soviet Union, was based on labor but capitalism is based on self-interest and money. If self-interest is vice of human being, money is evil. Obviously, market economy is not able to eliminate unemployment rate. For example, according to David Manuel (2012), current unemployment rate situation in the United States is 8.2% and 20 years ago in 1982 it was 10.8% (Manuel, 2012). In contrast, Paul Gregory and Irwin Collier (1988) claimed, in 1930’s the Soviet Union was able to liquidate unemployment rate (Gregory & Collier, 1988). We have just looked at previous years but if we consider our days, we will find
References: Aberdin , A. (2009). Three Weeks in the Soviet Union. Retrieved from: http://samlib.ru/a/aberdin_a/trinedeliwsowetskomsojuze.shtml Fedotov, V Gregory, P. & Collier, I (1988). Unemployment in The Soviet Union: Evidence from The Soviet Interview Project. Retrieved from: http://www.jstor.org/stable/10.2307/1811163 Churakov, Y. (2006). Serving The Public Debt. Retrieved from: http://www.warandpeace.ru/ru/analysis/view/280/ Dhamee, Y Mankiw, G & Taylor M. (2006) Economics. Location: China Manuel, D US National Debt Clock. (2012). National Debt. Retrieved from: http://www.brillig.com/debt_clock/