Market Economic System

A market economic system is one in which a nation's economic decisions are the result of individual decisions by buyers and sellers in the marketplace. The market system of economic organization is also commonly described as a free enterprise or lais­sez-faire, or capitalist system. We shall use all these terms to stand for a market economy. Strictly speaking, the pure market of laissez-faire system has never existed. Whenever there has been some form of political organization, the political authority has exercised some economic functions (e.g. controlling prices or levying taxation). Efficiency is best achieved through a market economy where individual producers each make their own production decisions based on their own profit motive. Some critics of the free-market argue that property rights are in conflict with "human" rights. But the critics fail to realize that in a free-market system, every person has a property right over his own person and his own labor, and that he can make free contracts for those services.

The framework of a market or capitalist system contains six essential features. They are:

1. private property

2. freedom of choice and enterprise

3. self-interest as the dominating motive

4. competition

5. a reliance on the price system

6. a very limited role for government.