Important Aspects of a Free Market

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Discuss some important aspects of the free enterprise system or capitalism.
Three essential principles of capitalism are: production is organized for the market, the means of production are privately owned, and investment is privately controlled, and the people who use those means of production to produce goods and services, that is workers, are hired on a labor market to work in firms as employees. Capitalism is a form of market economy in which production and investment are privately controlled, and the work of production is performed by employees, hired from free labor markets. Capitalism is essential to the function of society due to the opportunities that it creates and the augmentation of an individual’s vitality. Individuals can decide which economic decisions they deem most appropriate. Many aspects of capitalism ring a bell of liberty, the positive aspects of freedom and choice, and the hope that is prevalent and the everlasting lure of riches keep the engine going. For example, you may be employed right for $9.25 an hour, but tomorrow you could become a sales person and control your income by your commissions. This mere fact, a potential exits, is inspiring and motivational and keeps the free agents content. A Scottish economist Adam Smith, laid out the foundation for free enterprise in The Wealth of Nations (1776). Smith maintained that a government should not interfere with a nation's economy but instead should let individuals act as "free agents" who pursue their own self-interest. Such free agents, he argued, would naturally act in ways that would bring about the greatest good for society "as if guided by an invisible hand." This is very similar to the idea of equilibrium price, where the quantity demanded and the quantity supplied determine the market price. Adam Smith founded what is known as classical economics. The essential doctrine of classical…...

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