What is Free Market Capitalism?

Free Market Capitalism is the private ownership of the means of production for profit.It is a system in which individuals compete in a free market, frequently called free enterprise. Business people set prices for goods and services and market to the general public and sometimes to the government. This is voluntary and is driven by competition. In other words:

Free market capitalism is an economy not run by political authorities.

This is an excerpt from my book: Mastering Critical Thinking.

Competitive advantage in capitalism comes from price, quality, innovation, convenience, location, and reputation of the good or service. There are other advantages as well. You can choose from multiple businesses to purchase a product or service as a consumer.

This is the foundation of the free market capitalist system. In simple terms, it’s good for everyone to have options. Free market capitalism does three things very well due to the competitive market:

1. It lowers the prices of goods and services.
2. It raises the quality of goods and services.
3. It allows more people access to goods and services.

Businesses must continually strive to provide higher quality goods and services or lose market share to the competition. There are many positive characteristics of free market capitalism. Here are some key ones.

• Free market capitalism can only occur through volunteer transactions.
• Free market capitalism is the most efficient system that mostly rewards hard work, ingenuity, and creativity.
• Individuals and businesses make their own economic decisions.
• Free market capitalism has helped millions of people escape poverty—more than any other economic system.
• People are motivated to work hard because they have an opportunity to grow and prosper.

Free market capitalism has helped more people out of poverty than any other economic system.

Public Services and Safety Nets for Free Market Capitalism

Although free market capitalism focuses on making profits, it is compassionate when done properly. This is always a balancing act. Compassionate free market capitalism:

• Strives to provide needed goods and services for those deserving but less fortunate than others.
• Attempts to minimize goods and services for those who cheat the system.
• A compassionate free market capitalistic system provides a safety net, not a hammock.

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