Joshua Epstein and Robert Axtell have attempted to predict the properties of free markets empirically in the agent-based computer simulation "Sugarscape". They came to the conclusion that, under idealized conditions, free markets lead to a Pareto distribution of wealth.
The Heritage Foundation, a conservative think tank, tried to identify the key factors necessary to measure the degree of freedom of economy of a particular country. In 1986 they introduced the Index of Economic Freedom, which is based on some fifty variables. This and other similar indices do not define a free market, but measure the degree to which a modern economy is free, meaning in most cases free of state intervention. The variables are divided into the following major groups:
- Trade policy,
- Fiscal burden of government,
- Government intervention in the economy,
- Monetary policy,
- Capital flows and foreign investment,
- Banking and finance,
- Wages and prices,
- Property rights,
- Regulation, and
- Informal market activity.
Each group is assigned a numerical value between 1 and 5; IEF is the arithmetical mean of the values, rounded to the hundredth. Initially, countries which were traditionally considered capitalistic received high ratings, but the method improved over time. Some economists, like Milton Friedman and other Laissez-faire economists have argued that there is a direct relationship between economic growth and economic freedom, and studies suggest this is true. Continuous debates among scholars on methodological issues in empirical studies of the connection between economic freedom and economic growth still try to find out what is the relationship, if any.
Read more about this topic: Free Market
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Famous quotes containing the word studies:
“The best laws cannot make a constitution work in spite of morals; morals can turn the worst laws to advantage. That is a commonplace truth, but one to which my studies are always bringing me back. It is the central point in my conception. I see it at the end of all my reflections.”
—Alexis de Tocqueville (18051859)
“What an admirable training is science for the more active warfare of life! Indeed, the unchallenged bravery which these studies imply, is far more impressive than the trumpeted valor of the warrior.”
—Henry David Thoreau (18171862)
“His life itself passes deeper in nature than the studies of the naturalist penetrate; himself a subject for the naturalist. The latter raises the moss and bark gently with his knife in search of insects; the former lays open logs to their core with his axe, and moss and bark fly far and wide. He gets his living by barking trees. Such a man has some right to fish, and I love to see nature carried out in him.”
—Henry David Thoreau (18171862)