Historically, the market economy is considered to be the brainchild of European capitalism that emerged in the XV-XVI centuries and evolving to this day.Wide private sector management, free competition, self-regulation of the market - all common features of a market economy.Antagonist for her rival and long type of management is the command-administrative system.Essentially, the main characteristics of a market economy stem from its decentralized nature.In the corporate fascist and socialist states was dominated by the planned economic system.In its terms all the major economic issues were subordinate to the needs of public authorities and the central government has taken over the whole range of economic issues: what to produce in what quantities, what elements to use in the production of how to distribute the final product, and so on.The main features of the market economy are derived from private ownership of the means of production.The government here is the only guarantor of constitutional norms, compliance with laws and equal opportunity.However, it does not participate in pricing, determination of wages, does not determine the direct intervention of the accelerated development of relevant industrial sectors.Essentially, this is the main feature of a market economy.From it there are other:
- appears a variety of different forms of ownership.If the command planning system means of production owned by the government, there is, apart from the state, the widespread presence of private, collective and community property rights.
- There is competition, which at a certain stage revives economic activity of society and increases the overall quality of life.The downside is that the winners of this competition to monopolize the market over time, turn into large corporations and start to intervene in social and political life of society.
- pricing occurs on the principle of supply and demand.
- need to focus on the market often forces the manufacturer to improve the quality of their own products.
Mixed economic system
However, it should be noted that, despite the widespread belief that, if the current world leaders are developing their economies through the liberalization of the market, the most popular today is a mixed type of economy.He committed the United States, Australia, Russia, Japan and many European Union countries.It represents a synthesis of market values, and the command-administrative system.Such large-scale crises, as the Great Depression in the United States, clearly revealed the negative features of a market economy and forced Western governments to draw conclusions.Then, in the 1920s, the government of Herbert Hoover did not take a long time government efforts to overcome the crisis, hoping for a successful natural self-regulation of the market.As you know, nothing good is not led.Modern progressive governments encourage the functioning of free enterprise relations and competition, but retain a very weighty arguments in the form of levers of influence fiscal policy.Due to the negative features of a market economy are smoothed.
