Market economy

A market economy is an economic system which is organized around the market and which rests mainly on the Lois of the market, in particular that of supply and, to control the economic activities.

Generally speaking, an market economy is born from the confrontation of the offer and the request in a competing environment .

Operation

This economic system is one of the forms of the Capitalisme, insofar as it functions on the basis of investment of private origin.

The market economy is often associated with the Economic liberalism. There exist nevertheless several forms of market economy, more or less controlled by the public intervention. One can quote the social economy of market, such as it is conceived by the European social democrats (Germany, Sweden…).

The famous political economist Adam Smith (traditional current) considers the market like an institution which autorégule thanks to the “invisible Main”. The State must thus intervene the least possible in the economy. Adam Smith did not exclude however a certain form from regulation by the public authority, unlike the neo-classics, for which the least external intervention becomes an embarrassment.

The market economy stops with difficulty on the level of one only country, however vast is it. With the international level, it is all the more developed that the various countries practice the Libre-échange.

Examples

Practically all the countries function today to differing degree on the basis of market economy, even if certain countries resulting from collectivism do not assert it: the China named itself “Socialist market economy”, but it is actually about a nationalized and bureaucratized capitalist economy. The France, after the failure of the common Program in 1984 then the beginning of large the privatizations, and a deregulation partial of the financial markets, moved away from a state-controlled economy to return towards a social economy of market.

The market economy is different from the barter economy, the planned economy and the theorized economy of the Socialisme.

It coexists with:

the underground economy which is the whole of the producing activities of goods and services which escape control from the State (drug trafficking, moonlighting, procuring, voluntary help).
the economy domesticates (ex: the kitchen garden, the baby sitting not remunerated, housewives… i.e. all that is not entered in a clear way economically but which makes it possible to circumvent the usual economy: to buy its vegetables, to engage a nurse…). When this one represents a big part of the producing activity, as that relative remains the case in certain rural areas of the third world to the variation of economic flows, one speaks about saving in subsistence.
the social economy.
public economy.

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