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Concept of Free Market

When talking about the free market , it is necessary to keep in mind that it leads us to a conceived idea, as a tendency of exchange in which; there is no political, legal, economic or any other limitation so that the different economic factors (negotiation of goods, services, money , technology or free competition) can circulate from one country to another, they are produced in a region and they find a consumer demand in a different one. To carry out this practice, the system must guarantee the fulfillment of contracts between private entities and defend the rights of consumers and entrepreneurs.





What is the Free Market?


It is an economic structure or liberal model, where exchanges or economic agreements between people, are not subject to any control or ministerial policy and if so, would be for very specific legal reasons. It began to spread during the Cold War , to point inaccurately to countries centered on capitalism, privatization and the rule of law, although its inclination was not democratic. The economic agents, that is, the producers of goods and services on the one hand and the consumers on the other, are those who voluntarily or naturally satisfy their needs during the free transaction . In this way, the cost or value of the products is fixed through the laws that protect thesupply and demand , after agreement between sellers, service providers and buyers.


The ideal creation of a genuine free market or without pitfalls, evidences the clear existence of a division of labor, private propertyand control of production resources, therefore there is a square that favors or offers the free negotiation of products . It also suggests that the function of this economic sphere is not hindered by institutional agents, in the same way that the government, as well as the demanding and coercive social network, seek or are interested in keeping this economic method operational and, therefore, abstain to obstruct their activity and also protect it from third party infractions. 

When you are facing a free market, there is no interference from elements outside the market that affect prices, rates of wages and interest rates; Thus, according to the aforementioned assumptions, the economy is concerned with defining the function of any space, where an economic transaction that is handled freely takes place. Only at a later stage, after having concluded all the analyzes that can be done, by means of the study of this fictitious construction; the investigation focuses on the survey of the various issues, which arise due to the interruption of the free market , carried out by governments and companies that are determined to apply restrictions and compulsion.

The goods that will be produced and the price at which these products will be sold, will be determined based on what the market has in a completely free form. Without the intervention of the government, with the purpose of establishing certain economic devices such as: withholdings or internal taxes for public works, etc. This position can be applied both in the local market and in foreign trade; However, for this practice to be successful, it is necessary to implement an economic model that includes perfect competition , taking into account that the law of supply and demand is responsible for setting prices and quantities in a balanced way. 

It is to be noted, thatThe State plays a significant role within the free market , only when a sanction must be applied to those who disturb the freedom of third parties, more specifically in relation to property rights and compliance with agreements or contracts. Similarly, embezzlement and fraud are punished , as well as the detriment to people's goods and interests; It is also competition that determines prices and for this reason, free market advocates often disapprove of monopoliesThe free interrelation of the people in the market, forms the prices and these in turn, are assumed as signs of enormous value, since they possess the information that serves as a guide for the investors and only in this way the employment of the resources, which leads to an increase in welfare levels.

Free Market Examples


  • the price difference when it comes to a technology newly offered at the time of its introduction in the market and after its dissemination. In its initial moment the amount is high and only a select group manages to access it, for this reason there is a limited supply , but according to how its demand is increasing, new competitors emerge that make possible the appearance of different purchase options , which is why its cost tends to fall and its consumption becomes massive.

  • The multinational or transnational company known as Coca Cola, this company used the free market in order to generate profits or income, without the quality of the product amount and without taking into account, which may be harmful to health, despite millions of people tend to consume it on a recurring basis, providing large dividends to that firm.

  • Another example is easy to find in any supermarket: if what you need is to buy a toothpaste or a bath soap, on the shelves where those items are located; There must be several types of brands , aromas and prices. Obviously, the consumer will go for the label of their liking or for the one that provides the desired quality / price link , this indicates that it is possible to choose a product according to its cost and the quality it offers; sellers can also choose, taking as reference the quantity and excellence of the good they intend to sell, bearing in mind that they must adapt their price according to the market.

  • Just as the demand for hats tends to fall when their price rises, the same usually happens with the purchase of dollars that are needed to import or economize. Likewise, as beret manufacturers usually launch larger quantities to the market when their demand increases, the higher value of the currency leads exporters and investors to increase supply in the international market.

  • The buyers and sellers agree on the price of a shoe model in such a way that the free exchange of a certain amount of said article takes place, according to an amount of money equal to a specific amount.

  • The price of cassava that is already part of the supply when stored and if, for example, a crop is very abundant, the amount will decrease because it would not be a scarce resource. The same thing would happen, if people start buying more potatoes than cassava, in this way the demand will decrease and with it the cost; but when the supply decreases because of a drought or frost, the price will increase and also if the demand rises suddenly.


The Free Market in Argentina


In general terms in Argentina they complain about the lack of a free market, that is, governments have been populist and with a socialist tendency, which implies a lot of interference on the part of these, which has greatly restricted commercial freedom . Some economists estimate that this nation has never had a free market and that the few episodes experienced especially in the 90s were a fantasy or a type of capitalism but never a free market economy. The history of the Argentine economy reveals the favoritism on the part of the government towards certain sectors, this represents what traditional liberalismrefuses to accept Relying on capitalism, entrepreneurs have always sought the intervention of the State, not to bear the burden that the consumer means within free competition. 

The relations between the companies and the government have generated slave consumers of producers with a desire for power, which is in direct rivalry with industrialism, where the role of the state is precisely to avoid these prerogatives. We are not talking then of a simple difference of levels between the types of capitalism , but of several antagonistic systems and at the last moment the so-called librecambismo is judged, based on what is precisely contradicted. Argentina, is one of the countries that has endured several economic deteriorations during the last century, its passage from wealth to poverty has been thanks to the development of three major periods: globalization , monetary equilibrium and economic liberation (from the first half of the 19th century until the first third of the 20th century). 

The calculation of the degree of economic freedom in Argentina , which usually evaluates 40 different variables, has shown that this country since 2003 has gone through the same path of economic decline, with curvatures similar to those of countries like Venezuela. In relation to the current economic project, it is considered that since December 2015,the government led by Mauricio Macri prospered in terms of modifications that have sought to improve economic freedom , among them stand out: the reductions in the withholdings on exports and other taxes, the advance in the introduction of rates, the cancellation of the exchange rate trap , the advances in the inflationary decrease, the reestablishment of the functions of the Central Bank and the progress in free market agreements.

What is Mercado Libre


Widely used today, it is one in which the costs of goods and services are deducted according to the interaction of bidders and claimants without the influence of the State or another external delegate; There is no restriction as to the amount on which it can be sold, nor with respect to the quantity to be produced. Companies or sellers are free to negotiate what they want and consumers to choose who they can buy, where the price will be determined according to the crossing of supply and demand. 

This market model is based on free competition, this is that among the merchants there can be no scams, illegal or perfidious acts or coercion: all actions in this square will be spontaneous. However, it will result in an efficient attribution of resources, if there is a high number of sellers and purchasers, that does not negatively affect the market price. All the members of this imaginary game possess skills, various knowledge and resources, which can collide due to the rules of fairness; similarly they may not adjust, to what is considered a rational marketFrom this criterion it was proposed in the eighteenth century, that the free market depends and protects the right to private property, estimating this perspective as essential, so it is not only more correct but more equitable, although for some this type of Plaza is the only one that can be efficient, whether it is full or not and for others such a practice is the most honest, even though it is not more efficient. 

The free market in Argentina , currently relies on a leading e-commerce company in Latin America, where registered users can also buy, sell and / or auction both new and used products at a fixed price or adaptable to reality economic, private goods and services are offered via the internetWith all this, the democratization of trade and resources to maintain the region's development is being sought, nowadays it operates in 19 countries of America and has become the seventh most useful online shopping platform worldwide . Includes payment market and shops, shipping, advertising and marketing; so that people and companies buy, sell, advertise, ship or pay for goods and services. Through this type of market, small and medium enterprises can sell their products and manufacturers, retailers, wholesalers, individuals or importers and dealers, such as cars, manage to expand their economic activity.
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Jack Evans

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