Question

“The standard practice of governments whereby they define the monetary unit is unnecessary

and undesirable. The private sector should be encouraged to choose its own standards in a free

competitive market” (Friedrich Hayek). Discuss.

Answer 1

Answer - The practise of the government deciding the price for the sellers in the competitive market is old. The government works for the benefit of the economy and the people. If the government will fix such a price that will be above the paying capacity of the public , they will not be able to buy the commodity.

If the private sector is made free from the pricing done by the government , as per me this will not be the good step. Private sector works for earning more and more profits. This will be attained by charging higher prices irrespective of the paying capacity of the public. Hence the government intervention is necessary in each sector to decide upon the price which should be charged in order to maximise the welfare.

Hence as per me the opinion of Friedrich Hayek does not hold good.