Market economy

market economiesfree market economymarketmarket-based economyfree-market economymarket economicsmarket-basedpro-businesspro-marketfree economy
A market economy is an economic system in which the decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.wikipedia
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Economic system

economyeconomic systemseconomical
A market economy is an economic system in which the decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.
The analysis of economic systems traditionally focused on the dichotomies and comparisons between market economies and planned economies and on the distinctions between capitalism and socialism.

Free market

free-marketfree enterprisefree markets
Market economies range from minimally regulated "free market" and laissez-faire systems—where state activity is restricted to providing public goods and services and safeguarding private ownership —to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare. Laissez-faire is synonymous with what was referred to as strict capitalist free market economy during the early and mid-19th century as a classical liberal (right-libertarian) ideal to achieve.
In an idealized free-market economy, prices for goods and services are set freely by the forces of supply and demand and are allowed to reach their point of equilibrium without intervention by government policy.

Dirigisme

dirigistedirigistdirigism
State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides but does not substitute the market for economic planning—a form sometimes referred to as a mixed economy.
Dirigisme or dirigism is an economic doctrine in which the state plays a strong directive role, as opposed to a merely regulatory role, over a capitalist market economy.

Economic interventionism

government interventioninterventioniststate interventionism
Market economies range from minimally regulated "free market" and laissez-faire systems—where state activity is restricted to providing public goods and services and safeguarding private ownership —to interventionist forms where the government plays an active role in correcting market failures and promoting social welfare.
An economic intervention is an action taken by a government or international institution in a market economy in an effort to impact the economy beyond the basic regulation of fraud and enforcement of contracts and provision of public goods.

Mixed economy

mixed economiesmixedmixed market economy
State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides but does not substitute the market for economic planning—a form sometimes referred to as a mixed economy.
The first of these definitions refers to a mixture of markets with state interventionism, referring to capitalist market economies with strong regulatory oversight, interventionist policies and governmental provision of public services.

Price ceiling

ceiling priceprice capprice controls
Governments can intervene by establishing price ceilings or price floors in specific markets (such as minimum wage laws in the labor market), or use fiscal policy to discourage certain consumer behavior or to address market externalities generated by certain transactions (Pigovian taxes).
In unregulated market economies, price ceilings do not exist.

Market socialism

market socialistmarketright-socialist
In addition, there are many variations of market socialism where the majority of capital assets are socially-owned with markets allocating resources between socially-owned firms.
Market socialism is a type of economic system involving the public, cooperative or social ownership of the means of production in the framework of a market economy.

Indicative planning

indicative economic planningindirect economic planningnational economic planning
State-directed or dirigist economies are those where the state plays a directive role in guiding the overall development of the market through industrial policies or indicative planning—which guides but does not substitute the market for economic planning—a form sometimes referred to as a mixed economy.
Indicative planning is coordinated information that guides the choices of separate state and private entities in a market economy or mixed economy.

Capitalism

capitalistcapitalistscapitalistic
Laissez-faire is synonymous with what was referred to as strict capitalist free market economy during the early and mid-19th century as a classical liberal (right-libertarian) ideal to achieve.
In a capitalist market economy, decision-making and investment are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.

Supply and demand

demandsupplylaw of supply and demand
A market economy is an economic system in which the decisions regarding investment, production, and distribution are guided by the price signals created by the forces of supply and demand.
Demand and supply have also been generalized to explain macroeconomic variables in a market economy, including the quantity of total output and the general price level.

Neoliberalism

neoliberalneo-liberalneo-liberalism
The philosophical background is Neoliberalism or Ordoliberalism.
In the decades that followed, the use of the term "neoliberal" tended to refer to theories which diverged from the more laissez-faire doctrine of classical liberalism and which promoted instead a market economy under the guidance and rules of a strong state, a model which came to be known as the social market economy.

Competition law

antitrustanti-trustantitrust law
Characteristics of social market economies are a strong competition policy and a contractionary monetary policy.
Protecting the interests of consumers (consumer welfare) and ensuring that entrepreneurs have an opportunity to compete in the market economy are often treated as important objectives.

Classical economics

classical economistsclassicalclassical economist
Market socialism traces its roots to classical economics and the works of Adam Smith, the Ricardian socialists, and Mutualist philosophers.
These economists produced a theory of market economies as largely self-regulating systems, governed by natural laws of production and exchange (famously captured by Adam Smith's metaphor of the invisible hand).

Factor market

factor markets
These models range from systems based on employee-owned enterprises based on self-management to a combination of public ownership of the means of production with factor markets.
The existence of factor markets for the allocation of the factors of production, particularly for capital goods, is one of the defining characteristics of a market economy.

Social dividend

Profits derived from publicly owned enterprises can variously be used to reinvest in further production, to directly finance government and social services, or be distributed to the public at large through a social dividend or basic income system.
Social dividends are a key feature in many models of market socialism which are characterized by publicly owned enterprises operating to maximize profit within a market economy.

Ordoliberalism

ordoliberalordo-liberalordoliberals
The philosophical background is Neoliberalism or Ordoliberalism.
The concern is that, if the state does not take active measures to foster competition, firms with monopoly (or oligopoly) power will emerge, which will not only subvert the advantages offered by the market economy, but also possibly undermine good government, since strong economic power can be transformed into political power.

Socialist market economy

Chinese modelSocialism with Chinese characteristicscapitalism in China
Following the 1978 reforms, the People's Republic of China developed what it calls a "socialist market economy", in which most of the economy is under state ownership, with the state enterprises organized as joint-stock companies with various government agencies owning controlling shares through a shareholder system.
The system is based on the predominance of public ownership and state-owned enterprises within a market economy.

Socialist-oriented market economy

market mechanism economysocialist orientations
A similar system called "socialist-oriented market economy" has emerged in Vietnam following the Đổi Mới reforms in 1986.
It is described as a multi-sectoral market economy where the state sector plays a decisive role in directing economic development, with the eventual long-term goal of developing socialism.

Max Weber

WeberWeberianWeber, Max
But, Max Weber drew a connection between capitalism and Protestantism.
Weber is best known for his thesis combining economic sociology and the sociology of religion, elaborated in his book The Protestant Ethic and the Spirit of Capitalism, in which he proposed that ascetic Protestantism was one of the major "elective affinities" associated with the rise in the Western world of market-driven capitalism and the rational-legal nation-state.

Jeffrey Sachs

Jeffrey D. SachsJeff SachsDr. Jeffrey Sachs
The Economist Jeffrey Sachs has stated that his work was inspired by the healing characteristics of Judaism.
A trained macroeconomist, he advised a number of national governments in the transition from communism or developmentalism to market economies.

Competition

competitorcompetitionscompetitive
Due to the fractal nature of any fair market and being market participants subject to the law of competition, which impose reinvesting an increasing part of profits, the mean statistical chance of bankruptcy within the half life of any participant is also 50% and 100% whether an infinite sample of time is considered.
Competition is also a major tenet of market economies and business.

Gift economy

gift exchangegift economiesgift
Gift economy
This exchange contrasts with a barter economy or a market economy, where goods and services are primarily exchanged for value received.

Economic democracy

economic democratizationdemocratic economic systemdemocratic manner
A more contemporary model of market socialism is that put forth by the American economist John Roemer, referred to as Economic democracy.
Assuming that "democracy is not just a political value, but one with profound economic implications, the problem is not to choose between plan and market, but to integrate these institutions into a democratic framework".

Oskar R. Lange

Oscar LangeOskar Lange
In the 1930s the economists Oskar Lange and Abba Lerner developed a model of socialism that posited that a public body (dubbed the "Central Planning Board") could set prices through a trial-and-error approach until they equaled the marginal cost of production in order to achieve perfect competition and pareto optimality.
Proponents of this idea argued that it combines the advantages of a market economy with those of socialist economy.

Wage labour

wage laborlaborlabour
McNally argues that market socialism is an oxymoron when socialism is defined as an end to wage-based labor.
These transactions usually occur in a labour market where wages or salaries are market determined.