The Neoclassical School
The use of free is very common among various people. This is a term, which is uttered to mean and explain the exchanges and all aspects that take place in the larger society. Each exchange is the one, which takes place as a voluntary aspect of agreement between two or more parties that have entered and accepted to be in any form of agreement. The two parties enter to an agreement, where they can accept to interchange goods and/or services with one another, where these goods/services can be in the form of tangible or intangible products. This agreement exists because there is certain welfare, which is derived from this and which benefits both. Some researchers claim that this is not a mutual benefit instead, one party will always benefit in a bigger aspect than the other. This is explained by the fact that supply and demand at hand are the factors that motivate the trade between the two parties (Epstein, Richard, Geoffrey 67).
The supply of a good should be ensured to be constant. The rise in the normal supply of good implies that the demand will tend to go up, and so one of the parties will have to spend more money. Money is the aspect that many offer in order to get goods and/or services. This aspect is usually used from the resources, after it is acquired to manufacturing; however, some materials may be purchased to represent the final product that will reach the ending user or the customer. This aspect of choice to offer in a free and most of all voluntary way is what creates the free markets. This aspect is the one, which brings the possibility of enhancing people to sacrifice their capital to ensure that they make goods available to all customers everywhere. This is done with the motive of satisfying the unending needs and demands of all customers.
This market is the one, which makes it possible for people to save and even invest. This is what makes it possible for goods to be available, and it enhances productivity. This aspect makes it possible for all workers to receive a considerable pay, which increases the way they live. This aspect is what goes ahead to encourage innovative things in the technological factors. This makes and gives the producer the best aspects to produce better products, which are used in the satisfaction of the unending needs of the customer. Moreover, this factor makes it possible for a better system existence, involving price and investment of guide capital enhanced.
The mercantilist is one of the models that clearly disregard the free markets aspect of the two parties benefiting from each other. This model states that only one party benefits in respect to the other. This model clearly is the one, which is not basically true, about what the free markets are. Its explanation about the free markets is the one, which states that one party benefits from the other. This aspect means that the market is coerced, meaning that one party does not make voluntary decisions, an aspect that does not define the free markets. This aspect of coercion is the one, which deprives the market and some of the important savings it requires to move ahead (Forbes, Steve, Elizabeth 137).
Government is an institution that many have agreed with it to remain as coercion. This is by the fact that it introduces taxes bills, which are to be paid. These taxes may be very high, which, in turn, may lead to the economic growth. If the taxes are way up, then this may lead to the reduction of the economic growth. There is much coercion that the government has put in place and some of it may include the control of prices. This limits that certain goods reach certain prices. Other coercion includes the laws that limit any new investors in venturing in to the new market. This coercion may have a considerable change to the free will and voluntary aspect that is allowed by these markets.
The best way to decrease the coercion that is inflicted by the government is under the aspect of socialism. This aspect makes it possible for there to have no legal price for various factors that exist. The aspect of socialism is the one, which contradicts with the aspect of the market. The fact that property titles are what is exchanged during this agreement, it overlooks this issue. The growth of this market and its flourishing nature must imply that all rights and private property titles are kept protected. Socialism means that the government is the legal owner of land, capital goods, and production units. Many critics say that the rights to property seem to differ from the rights that humans have.
Free markets are known to have various contributing factors like competition. These markets increase the rate of competition between various people or companies. They do not help to improve values like spiritual or philosophical. This may bring the law that each person demolishes another. This law is the one, which is very diminishing and the one, which deteriorates the standards of living of the people. A better free market encourages and enhances the involvement of competition, which is ultimately fair and which will help to increase the lives and standards of all people.
These markets give the liberty that any fair competition is legal and should happen. This, apart from increasing the rate of standards of the people, ensures that the people enjoy the ultimate leisure, as compared to other societies, which may hold a different type of market. This makes it possible for the economy to rise and for people in this market to enjoy an ultimate success. This is compared to all the markets dominated by coercion, which remains to lag behind, as they have no success that they can boast about.
Adam Smith is one of the people, who have strongly led to the explanation of the free markets. He was a part of the group that wished to enlighten others and which wanted to get the full understanding of the different laws that lead the economy of the societies to success. Smith in many of his works has indicated some very important aspects that should be considered at all times. This aspect is the one, where he went ahead to explain that the government should be involved in regulating the market, but should play the least role. If the government would not play a part in regulation of the market, then some issues would specifically take place. Some of the aspects may be favored by the fact that people love only themselves, and they would fulfill their interests. Smith explains that free markets would not work, as all parties would enter to trade, if they gain only what they want and achieve what they want. Smith goes ahead to explain that this trade would lead to it fulfilling the needs that the society expects, and that it would be achieved without them knowing. Smith continues to explain that prices set would be the key to communicating to buyers and sellers what the society’s needs and demands are. Smith explains further that the interests of each individual would make them produce goods that all others want, and they would buy what they feel they deserve (Levinsonand 181).
Smith wanted to understand the reason, why the world was filled with people, who have selfish characterizes. This aspect is what made him dig deeper into archives to find the answer. Smith found out that people are driven by their own interests, which makes them achieve and fulfill the needs of the society in a way that they do not understand. This is what led him to establish the harmony of interest. This is what motivated the study of Smith. This study, however, was under criticism from the mercantilists, who stated that this aspect would be avoided if there was a legal body, which could take its place and in the end control all events in the market. This statement by mercantilists claimed that this regulation would become the motivator, to which good prospects would be achieved. Moreover, according to their opinion, this would lead to many chasing their interests, and they would be driven by greed, which should be regulated. Smith, however, stated that the markets were regulated by themselves, and that they have a hand that is invisible and that helps the markets to fulfill the needs of the society.
Smith continued to explain that the harmony acquired is not achieved, because the people and all their activities meet the demands of the society. He continued to explain that this is led by the normal competition that is entailed in the market. This is what the key aspect to harmony is. If the competition for a greater commodity is high, then the aspect that people want to fulfill their desires heightens as well. This is what makes various goods appear to be more attractive than others, as people want to fulfill their needs. This factor is what makes the needs that society expects to be fulfilled. This, as explained by Smith, states that competition is an aspect that prevents an individual from trying to exploit the entire society.
Smith explains further that the key to better well-being realized by a nation lies with specialization. Smith explained that when specialization is accepted, various components are broken to the smaller ones. These smaller components are what bring benefit to the nation. These components, as explained by Smith, have at least three major benefits. Some of these benefits are that they help in saving of the normal time. This ensures that the time used to perform that act is reduced. Another benefit is that it allows that task to be done multiple times, which enhances the skills of individuals performing them. Smith explained another benefit that these methods help us to achieve is performance. This implies that there can be machines, which can be applied to help to eliminate and to achieve the target. These machines ensure that the work being undertaken is achieved within the minimal timeframe. The use of breaking and specializing in various aspects ensures that the estimated timeframes are achieved (Peloso, Jennifer 197).
Smith explains that if each individual was to use their own difference, then they would have absolute advantage. This, as explained by David Ricardo, would be stated to be a comparative advantage. Some of the prominent economists still hold to the fact that each individual has their own differences, and which, if alternated with resources and focused on the comparative advantage, would help to ensure that the cost of opportunity would decrease. This is the aspect that the three benefits help us to achieve. This means that the combination of both absolute, and most of all, the comparative advantages, would ensure that this makes us achieve in an increased manner. The bad aspect of using this method is that the more the people get the knowledge of specialization, the more they increase and get the determination to conduct trade (Wolfson, Nicholas 201).
This aspect of specialization, as explained by Smith, is the one, which has the most considerable effects. This implies that the higher the level of knowledge is, the higher the level of trade is. This states that they become very dependent on each other. This will, then, revolve around the interest of each individual, which will lead to them chasing what they want. This implies that there has to be an aspect of free will, which will enhance the motivation for them to achieve what they want. This is what Smith explained; the specialization and accumulation of capital would lead to the nation achieving and acquiring wealth. This is the supporting statement to the idea that the intervention of government is not necessary and is not required.
Many economists have had studies on all the events that happen in our markets today. The transactions that happen in our markets are not exactly what we see. Many people want and wish that the environment will not be played with. This is many people’s dream, but the transactions that happen in the market make it possible for many customers to purchase goods, which go ahead to destroy the environment that many others want to protect. The most effective way to solve this conflict, which seems to have a bigger influence on our dreams, is by understanding the vision and by eliminating them from the desire of attaining the markets.
Bastiat is an economist, who has cleared his position and comes to accept the concept of Smith. Bastiat explains that the interests of individual seem to be in harmony, if they let them grow in a free market, where the regulations of the government aim at eliminating all those, who provide negative aspects to those, who carry out the process.
The aspect of harmony is the one, which has been deeply specified. This is the aspect, which implies that the company should ensure that it identifies with what customers want. The interests of individuals are what lead the market having the kind of commotion it faces. As Bastiat explained, people should ensure that they recognize that their interests should be reduced with respect to the environment. This means that the responsibilities that each individual holds should limit the interests that people hold. This aims at bringing the required harmony that exists between people’s interests and the environment. The government should also make the free markets to be regulated in the best way, in order to ensure that the interests of people are secured. Those, willing to molest others, should be taken care of. People should also ensure that they understand the issue of specialization, which is an aspect that motivates the creation of wealth that will increase the country’s development. The use of harmony leads to the various developments, including efficiency, productivity increase, and waste reduction.