What is a market economy Can you elaborate?

A market economy (also known as a free market economy or free enterprise economy) is an economic system in which the production and sale of goods and services are guided entirely by the free mechanisms of the free market, rather than by the state as in the case of a planned economy. Market economy is also used as a synonym for capitalism.

In the market economy, there is no coordinated system to guide its operation, but in theory, the market will produce a complex interaction between the supply and demand of products and services, and then achieve the effect of self-organization. Proponents of the market economy often argue that the self-interest pursued by people is in fact the best interest of society. Adam Smith said

By pursuing his own interests, he often promotes the interests of society more effectively than he originally expected. I've never heard how much good is done by people who interfere with the public good by pretending to promote the public good. (The Wealth of Nations).

There are also many different criticisms of the economic principles of the market economy. These critics range from outright opposition to the market economy (communism) to proponents of a planned economy, such as socialism, or those who want a lot of regulation, or those who believe that human greed is doomed to immorality. One of the main criticisms of the market economy in practice is the assertion that market externalities (i.e., problems that cannot be reflected through the market**) can cause catastrophe, such as environmental pollution.

Another criticism argues that a market economy will create monopolies, and that the market will eventually destroy its own mechanisms.

Some proponents of the market economy believe that the freedom of the market should not be reduced, because they do not agree that there are externalities in the market itself, that it is actually created by the market, and they do not believe that there are problems in the market that need to be solved by intervention. Others believe that the market should be intervened to an appropriate extent to avoid market failures. In the model of a social market economy, the state intervenes in those parts of the market that do not meet the needs of its participants, and John Rawls is a well-known proponent of this concept.

The free-market model, as defined by economists, is a system that is completely free of intervention or other coercive forces. There may be many parts of this theoretical free market economy that cannot be legally carried out in practice, but the underground economy can be seen as the practice of a free market economy.

The market economy refers to the economic form of allocating social resources through the market. To put it simply, a market is a place or point of contact for the exchange of goods or services. Markets can be tangible or intangible.

The parties engaged in various trading activities in the market are called market entities. Market entities participate in market economic activities as buyers and sellers, and there is not only the relationship between buyers and sellers, but also the relationship between buyers and sellers.

If you do not consider the role of **, there are two sectors in the market economy system, one is the public and the other is the enterprise.

The interrelationship between the two sectors can illustrate the general principle of supply and demand in the market.

The difference and connection between the commodity economy and the market economy is that the commodity economy is a mode of economic early concealment activity directly aimed at exchange, and the relationship between commodity producers should be realized through equivalent exchange. The commodity economy is relative to the natural economy and the product economy.

A market economy is an economic operation mode that allocates resources through the market or market mechanism. In the allocation of resources, the market mechanism plays a fundamental role, and guides and regulates the behavior of enterprises and residents through the market mechanism, competition mechanism, supply and demand mechanism, and first-class mechanism. The market economy is relative to the planned economy.

The commodity economy is the basis and premise for the existence and development of the market economy, and the market economy is the commodity economy in which the market plays a fundamental role in the allocation of resources. The full development of the commodity economy will inevitably transition to the market economy, the market economy is the inevitable requirement of the development of the commodity economy, and the market economy is a developed commodity economy.

There are two general conditions for the emergence and existence of the commodity economy: first, the social division of labor; Second, the means of production and products belong to different material interest subjects.

The social division of labor is the prerequisite for the existence of the commodity economy and the general basis of all commodity production. At the end of the primitive society and the early stage of the slave society, there were three great social divisions of labor, which made production have a single nature, and the unity of production and the diversity of needs contradicted each other. However, the social division of labor does not determine that the products exchanged must take the form of commodities, and therefore cannot determine the existence of a commodity economy.