Market Economy

A market economy is an economy in which decisions regarding investment, production and distribution are based on supply and demand, and the prices of goods and services are determined in a free price system. This is contrasted with a planned economy, where investment and production decisions are embodied in a plan of production. Market economies can range from hypothetical laissez-faire and free market variants, to regulated markets and interventionist variants. Most existing market economies include a degree of economic planning or state-directed activity, and are thus classified as mixed economies.

In the real world, market economies do not exist in pure form, as societies and governments regulate them to varying degrees rather than allow full self-regulation by market forces. The term free-market economy is sometimes used synonymously with market economy, but, as Ludwig Erhard once pointed out, this does not preclude an economy from providing various social welfare programs such as unemployment benefits, as in the case of the social market economy.

There are many variations of market socialism, ranging from the cooperative model, where employee-owned enterprises based on self-management are coordinated by markets and output of final goods and services is based on market allocation, to those based on public ownership of the means of production.

The term market economy used by itself can be somewhat misleading. For example, the United States constitutes a mixed economy (substantial market regulation, agricultural subsidies, extensive government-funded research and development, Medicare/Medicaid), yet at the same time it is foundationally rooted in a market economy. Different perspectives exist as to how strong a role the government should have in both guiding the market economy and addressing the inequalities the market produces.

Read more about Market Economy:  Capitalism, Market Socialism, Criticisms

Other articles related to "market economy, market, economy, markets":

Chinese Socialism - Socialist Market Economy
... the architect of the Chinese economic reforms, did not believe that the market economy was synonymous with capitalism or that planning was synonymous with socialism ... During his southern tour, he said, "lanning and market forces are not the essential difference between socialism and capitalism ... A planned economy is not the definition of socialism, because there is planning under capitalism the market economy happens under socialism, too ...
Socialist Market Economy
... The socialist market economy is the economic model employed by the People's Republic of China ... It is based on state-owned enterprises and an open-market economy, and has its origins in Deng Xiaoping's political platform of socialism with Chinese characteristics (simplified Chinese ... This economic system replaced the Soviety-type centrally-planned economy after the Chinese economic reforms starting in 1978 ...
Ancient Rome And Wine - Expansion of Viticulture
... As the republic grew into empire beyond the peninsula, wine's trade and market economy echoed this growth ... The Roman market economy encouraged the provinces’ exports, enhancing supply and demand ... Because of the supply-and-demand economy, citizens possessed an ample supply of coinage, suggesting the existence of a complex market economy surrounding the wine ...
Socialist Economics - Socialist Economies in Practice - People's Republic of China
... Main article Economy of the People's Republic of China China embraced a socialist planned economy after the Communist victory in its Civil War ... The Chinese economy broadly adopted a similar system of production quotas and full employment by fiat to the Russian model ... In recent decades China has opened its economy to foreign investment and to market-based trade, and has continued to experience strong economic growth ...
Market Economy - Criticisms
... Robin Hahnel and Michael Albert claim that "markets inherently produce class division." Albert states that even if everyone started out with a balanced job complex (doing a mix of ... Without taking the argument that far, it is evident that in a market system with uneven distribution of empowering work, such as Economic Democracy, some workers will be more able than others to capture the ... and manual laborers, and ultimately managers and workers, and a de facto labor market for conceptual workers (...)" ...

Famous quotes containing the words economy and/or market:

    The counting-room maxims liberally expounded are laws of the Universe. The merchant’s economy is a coarse symbol of the soul’s economy. It is, to spend for power, and not for pleasure.
    Ralph Waldo Emerson (1803–1882)

    Writing ought either to be the manufacture of stories for which there is a market demand—a business as safe and commendable as making soap or breakfast foods—or it should be an art, which is always a search for something for which there is no market demand, something new and untried, where the values are intrinsic and have nothing to do with standardized values.
    Willa Cather (1876–1947)