Question

Specify and explain the primary case against the market system. Use examples in your explanation of each point of criticism of the market order.

Answer 1

Market system is where the buyers and sellers of a product come together to exchange a product at a given price. But it has faced criticism continually over the past few years, the criticism can be explained as:

1. It has not helped in the removal of poverty- It is criticised to have only benefitted a few at the expense of many and this is why it has not helped remove poverty in the world. It is said that welfare is compromised in the search of profts.

2. The distribution of the benefits and burdens is uneven- In a market economy, those individuals who have access to more human capital earn more irrespective of the sacrifcies they make. For instance, a sweeper earns lesser than a manager even if they work equal hours and the sweeper works in an unpleasant environment.

3. Allocation of scarce resources is not efficient in free markets- When the markets are not competitive and when there are externalities, markets do not allocate efficiently, they tend to overproduce or underproduce. For instance, a manufacturer in a free market economy would not consider the damage done to the water or air  because of the emissions from his industry, in such a situation, he would produce more than the efficient level. The social costs or benefits are not accounted for in markets.