Mixed Market Marvels!

This week, I would like to talk about economic systems. Specifically - Capitalism. Although I, myself, am slightly biased towards Capitalism, I believe a mixed economy is the preferred system.

A capitalistic economic system, or  a free market economy, contains right wing ideology, and it involves minimal government intervention, such as the United States. It promotes capitalism. In a free market economy, all of the resources are publicly owned, and individuals make decisions about scarcity and resources, unlike in a planned economy. All of the resources are privately owned, and the consumers influence economic decisions by choosing what to buy.

This economic system has its many benefits. For example, free market greatly promotes competition. This ensures higher quality products, for less money. In order to benefit the consumer. An example of this is computer software. The main two computer companies in the United States and Canada are PC, which is run by Microsoft and Mac, which is run by Apple.

The fact that these companies are owned privately, and not by the government means that they can sell any product for how much they’d like, as long as the consumers are buying. Even further, this means that they must make higher quality, and sell them for a better price, which increases consumer benefits. This is a great thing for our economy, and competition is crucial.

However, there are many cons to free market economies, as well. If a company is doing much better than other companies, then eventually the other companies will begin to fail, due to the stronger company’s success. This will lead to a monopoly. Which is when  one company or producer is in complete control of all the production and distribution of a single resource. If it was a planned economy, there would be some government intervention, to compete with this monopoly. However, since it is a free market economy, there is nothing that can be done about this. As long as the consumers keep buying, the company will keep selling.

A good example of this is the De Beers Diamond Company. De Beers is a company that completely dominates the industry of diamond mining, selling and trading. Even though there are obviously other diamond sellers and distributors, the main source of all their diamonds is De Beers. De Beers is in sole control of diamond mining in the world, so there is no competition. If more minor diamond selling companies want to obtain diamonds, they must buy their diamonds.

This means there is know competition for De Beers, and they can potentially sell diamonds for whatever price they choose, because there is no other producer for companies to buy from. This is bad for the economy because it prevents competition, which is an economic stimulator.

To sum it up, capitalism is a good, efficient system, but, a country cannot rely on capitalism alone. There is a need for some government involvement, and this is why a Mixed Economic System is clearly the right choice in economic systems. Join me next week for an in-depth discussion about mixed economies!